Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 17, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-16533 | ||
Entity Registrant Name | ProAssurance Corporation | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 63-1261433 | ||
Entity Address, Address Line One | 100 Brookwood Place, | ||
Entity Address, City or Town | Birmingham, | ||
Entity Address, State or Province | AL | ||
Entity Address, Postal Zip Code | 35209 | ||
City Area Code | (205) | ||
Local Phone Number | 877-4400 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | PRA | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 1,211,664,682 | ||
Entity Common Stock, Shares Outstanding (in shares) | 53,986,801 | ||
Documents Incorporated by Reference | The definitive proxy statement for the 2022 Annual Meeting of the Stockholders of ProAssurance Corporation (File No. 001-16533) is incorporated by reference into Part III of this report. | ||
Entity Central Index Key | 0001127703 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Name | Ernst & Young LLP |
Auditor Location | Birmingham, Alabama |
Auditor Firm ID | 42 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Investments | ||
Fixed maturities, available-for-sale, at fair value (amortized cost, $3,814,847 and $2,361,575, respectively; allowance for expected credit losses, none as of December 31, 2021 and $552 as of December 31, 2020) | $ 3,833,722 | $ 2,457,531 |
Fixed maturities, trading, at fair value (cost, $43,914 and $47,907, respectively) | 43,670 | 48,456 |
Equity investments, at fair value (cost, $211,356 and $113,709, respectively) | 214,807 | 120,101 |
Short-term investments | 216,987 | 337,813 |
Business owned life insurance | 81,767 | 67,847 |
Investment in unconsolidated subsidiaries | 335,576 | 310,529 |
Other investments (at fair value, $98,611 and $44,116, respectively, otherwise at cost or amortized cost) | 101,794 | 47,068 |
Total Investments | 4,828,323 | 3,389,345 |
Cash and cash equivalents | 143,602 | 215,782 |
Premiums receivable, net | 241,095 | 201,395 |
Receivable from reinsurers on paid losses and loss adjustment expenses | 14,599 | 14,370 |
Receivable from reinsurers on unpaid losses and loss adjustment expenses | 451,741 | 385,087 |
Prepaid reinsurance premiums | 24,571 | 35,885 |
Deferred policy acquisition costs | 58,940 | 47,196 |
Deferred tax asset, net | 117,613 | 57,105 |
Real estate, net | 30,342 | 30,529 |
Operating lease ROU assets | 19,595 | 19,013 |
Intangible assets, net | 73,336 | 65,720 |
Goodwill | 49,610 | 49,610 |
Other assets | 138,110 | 143,766 |
Total Assets | 6,191,477 | 4,654,803 |
Policy liabilities and accruals | ||
Reserve for losses and loss adjustment expenses | 3,579,940 | 2,417,179 |
Unearned premiums | 433,961 | 361,547 |
Reinsurance premiums payable | 22,627 | 39,998 |
Total Policy Liabilities | 4,036,528 | 2,818,725 |
Operating lease liabilities | 20,844 | 20,116 |
Other liabilities | 280,732 | 182,039 |
Debt less unamortized debt issuance costs | 424,986 | 284,713 |
Total Liabilities | 4,763,090 | 3,305,593 |
Shareholders' Equity | ||
Common shares (par value $0.01 per share, 100,000,000 shares authorized, 63,308,741 and 63,217,708 shares issued, respectively) | 633 | 632 |
Additional paid-in capital | 392,941 | 388,150 |
Accumulated other comprehensive income (loss) (net of deferred tax expense (benefit) of $4,423 and $19,386, respectively) | 16,284 | 75,227 |
Retained earnings | 1,434,491 | 1,301,163 |
Treasury shares, at cost (9,325,180 shares as of each respective period end) | (415,962) | (415,962) |
Total Shareholders’ Equity | 1,428,387 | 1,349,210 |
Total Liabilities and Shareholders' Equity | $ 6,191,477 | $ 4,654,803 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, at fair value; amortized cost | $ 3,814,847,000 | $ 2,361,575,000 |
Allowance for Expected Credit Losses | 0 | 552,000 |
Fixed maturities, trading, at fair value; cost | 43,914,000 | 47,907,000 |
Equity Investments, fair value, cost | 211,356,000 | 113,709,000 |
Other investments, fair value disclosure | $ 98,611,000 | $ 44,116,000 |
Common shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common shares, shares issued (in shares) | 63,308,741 | 63,217,708 |
Deferred tax expense (benefit) on accumulated other comprehensive income (loss) | $ 4,423,000 | $ 19,386,000 |
Treasury shares, number of shares (in shares) | 9,325,180 | 9,325,180 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Capital - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Increase (Decrease) in Stockholders' Equity: | ||||
Beginning balance | $ 1,349,210 | $ 1,511,913 | $ 1,523,002 | |
Common shares issued for compensation and effect of shares reissued to stock purchase plan | 700 | 691 | 350 | |
Share-based compensation | 4,379 | 3,845 | 3,512 | |
Net effect of restricted and performance shares issued | (287) | (936) | (2,708) | |
Dividends to shareholders | (10,796) | (24,772) | (66,669) | |
Other comprehensive income (loss) | (58,943) | 38,272 | 53,866 | |
Net income (loss) | 144,124 | (175,727) | 1,004 | |
Ending balance | 1,428,387 | 1,349,210 | $ 1,511,913 | $ 1,523,002 |
Accounting Standards Update [Extensible List] | Accounting Standards Update 2016-13 [Member] | Accounting Standards Update 2018-07 [Member] | ||
Cumulative Effect, Period of Adoption, Adjustment | ||||
Increase (Decrease) in Stockholders' Equity: | ||||
Beginning balance | (4,076) | $ (444) | ||
Ending balance | (4,076) | $ (444) | ||
Common Stock | ||||
Increase (Decrease) in Stockholders' Equity: | ||||
Beginning balance | 632 | 631 | 630 | |
Net effect of restricted and performance shares issued | 1 | 1 | 1 | |
Ending balance | 633 | 632 | 631 | 630 |
Additional Paid-in Capital | ||||
Increase (Decrease) in Stockholders' Equity: | ||||
Beginning balance | 388,150 | 384,551 | 384,713 | |
Common shares issued for compensation and effect of shares reissued to stock purchase plan | 700 | 691 | (965) | |
Share-based compensation | 4,379 | 3,845 | 3,512 | |
Net effect of restricted and performance shares issued | (288) | (937) | (2,709) | |
Ending balance | 392,941 | 388,150 | 384,551 | 384,713 |
Accumulated Other Comprehensive Income (Loss) | ||||
Increase (Decrease) in Stockholders' Equity: | ||||
Beginning balance | 75,227 | 36,955 | (16,911) | |
Other comprehensive income (loss) | (58,943) | 38,272 | 53,866 | |
Ending balance | 16,284 | 75,227 | 36,955 | (16,911) |
Retained Earnings | ||||
Increase (Decrease) in Stockholders' Equity: | ||||
Beginning balance | 1,301,163 | 1,505,738 | 1,571,847 | |
Dividends to shareholders | (10,796) | (24,772) | (66,669) | |
Net income (loss) | 144,124 | (175,727) | 1,004 | |
Ending balance | 1,434,491 | 1,301,163 | 1,505,738 | 1,571,847 |
Retained Earnings | Cumulative Effect, Period of Adoption, Adjustment | ||||
Increase (Decrease) in Stockholders' Equity: | ||||
Beginning balance | (4,076) | (444) | ||
Ending balance | (4,076) | (444) | ||
Treasury Stock | ||||
Increase (Decrease) in Stockholders' Equity: | ||||
Beginning balance | (415,962) | (415,962) | (417,277) | |
Common shares issued for compensation and effect of shares reissued to stock purchase plan | 0 | 1,315 | ||
Ending balance | $ (415,962) | $ (415,962) | $ (415,962) | $ (417,277) |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | |||
Net premiums earned | $ 971,668,000 | $ 792,715,000 | $ 847,532,000 |
Net investment income | 70,522,000 | 71,998,000 | 93,269,000 |
Equity in earnings (loss) of unconsolidated subsidiaries | 48,974,000 | (11,921,000) | (10,061,000) |
Net investment gains (losses): | |||
Impairment losses | 0 | (1,745,000) | (978,000) |
Portion of impairment losses recognized in other comprehensive income (loss) before taxes | 0 | 237,000 | 227,000 |
Net impairment losses recognized in earnings | 0 | (1,508,000) | (751,000) |
Other net investment gains (losses) | 24,310,000 | 17,186,000 | 60,625,000 |
Total net investment gains (losses) | 24,310,000 | 15,678,000 | 59,874,000 |
Other income | 8,936,000 | 6,470,000 | 9,220,000 |
Total revenues | 1,124,410,000 | 874,940,000 | 999,834,000 |
Expenses | |||
Net losses and loss adjustment expenses | 752,249,000 | 661,447,000 | 753,915,000 |
Underwriting, policy acquisition and operating expenses: | |||
Operating expense | 157,641,000 | 127,316,000 | 137,119,000 |
DPAC amortization | 110,605,000 | 110,565,000 | 115,330,000 |
SPC U.S. federal income tax expense | 1,947,000 | 1,746,000 | 1,059,000 |
SPC dividend expense (income) | 10,050,000 | 14,304,000 | 4,579,000 |
Interest expense | 19,719,000 | 15,503,000 | 16,636,000 |
Goodwill impairment | 0 | 161,115,000 | 0 |
Total expenses | 1,052,211,000 | 1,091,996,000 | 1,028,638,000 |
Gain on bargain purchase | 74,408,000 | 0 | 0 |
Income (loss) before income taxes | 146,607,000 | (217,056,000) | (28,804,000) |
Provision for income taxes: | |||
Current expense (benefit) | 1,164,000 | (20,181,000) | (1,165,000) |
Deferred expense (benefit) | 1,319,000 | (21,148,000) | (28,643,000) |
Total income tax expense (benefit) | 2,483,000 | (41,329,000) | (29,808,000) |
Net income (loss) | 144,124,000 | (175,727,000) | 1,004,000 |
Other comprehensive income (loss), after tax, net of reclassification adjustments | (58,943,000) | 38,272,000 | 53,866,000 |
Comprehensive income (loss) | $ 85,181,000 | $ (137,455,000) | $ 54,870,000 |
Earnings (loss) per share: | |||
Basic (in dollars per share) | $ 2.67 | $ (3.26) | $ 0.02 |
Diluted (in dollars per share) | $ 2.67 | $ (3.26) | $ 0.02 |
Weighted average number of common shares outstanding: | |||
Basic (in shares) | 53,962 | 53,863 | 53,740 |
Diluted (in shares) | 54,058 | 53,906 | 53,841 |
Cash dividends declared, per common share (in dollars per share) | $ 0.20 | $ 0.46 | $ 1.24 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Activities | |||
Net income (loss) | $ 144,124,000 | $ (175,727,000) | $ 1,004,000 |
Adjustments to reconcile income (loss) to net cash provided by operating activities: | |||
Goodwill impairment | 0 | 161,115,000 | 0 |
Gain on bargain purchase | (74,408,000) | 0 | 0 |
Depreciation and amortization, net of accretion | 37,247,000 | 21,375,000 | 18,665,000 |
(Increase) decrease in cash surrender value of BOLI | (1,339,000) | (1,735,000) | (2,016,000) |
Net investment (gains) losses | (24,310,000) | (15,678,000) | (59,874,000) |
Share-based compensation | 4,390,000 | 3,840,000 | 3,527,000 |
Deferred income tax expense (benefit) | 1,319,000 | (21,148,000) | (28,643,000) |
Policy acquisition costs, net of amortization (net deferral) | (11,744,000) | 8,371,000 | (1,451,000) |
Equity in (earnings) loss of unconsolidated subsidiaries | (48,974,000) | 11,921,000 | 10,061,000 |
Distributed earnings from unconsolidated subsidiaries | 35,164,000 | 36,672,000 | 25,849,000 |
Other, net | (401,000) | 2,409,000 | 2,175,000 |
Change in: | |||
Premiums receivable | 71,205,000 | 42,985,000 | 11,926,000 |
Reinsurance related assets and liabilities | 16,925,000 | (2,047,000) | (52,902,000) |
Other assets | 12,713,000 | (13,721,000) | (13,481,000) |
Reserve for losses and loss adjustment expenses | (19,684,000) | 70,653,000 | 226,679,000 |
Unearned premiums | (105,986,000) | (51,539,000) | (2,125,000) |
Other liabilities | 37,729,000 | 14,597,000 | 8,772,000 |
Net cash provided (used) by operating activities | 73,970,000 | 92,343,000 | 148,166,000 |
Purchases of: | |||
Fixed maturities, available-for-sale | (1,438,169,000) | (917,037,000) | (695,552,000) |
Equity investments | (156,747,000) | (69,406,000) | (116,092,000) |
Other investments | (73,957,000) | (35,616,000) | (28,851,000) |
Investment in unconsolidated subsidiaries | (49,650,000) | (40,093,000) | (69,411,000) |
Proceeds from sales or maturities of: | |||
Fixed maturities, available-for-sale | 1,077,379,000 | 801,580,000 | 568,572,000 |
Equity investments | 440,921,000 | 196,762,000 | 359,727,000 |
Other investments | 59,055,000 | 35,524,000 | 29,017,000 |
Net sales or (purchases) of fixed maturities, trading | 4,236,000 | (383,000) | (8,254,000) |
Return of invested capital from unconsolidated subsidiaries | 65,362,000 | 40,068,000 | 42,478,000 |
Net sales or maturities (purchases) of short-term investments | 181,619,000 | 2,361,000 | (30,718,000) |
Unsettled security transactions, net change | 29,841,000 | (12,756,000) | (6,812,000) |
Purchases of capital assets | (3,840,000) | (7,478,000) | (9,586,000) |
Repayments (advances) under Syndicate Credit Agreement | 0 | 0 | 16,009,000 |
Cash paid for acquisitions, net of cash acquired | (221,576,000) | 0 | 0 |
Other | 0 | (2,010,000) | (5,000) |
Net cash provided (used) by investing activities | (85,526,000) | (8,484,000) | 50,522,000 |
Financing Activities | |||
Repayments of Mortgage Loans | (36,113,000) | (1,502,000) | (1,447,000) |
Dividends to shareholders | (10,758,000) | (38,664,000) | (93,204,000) |
Capital contribution received from (return of capital to) external segregated portfolio cell participants | (10,376,000) | (2,345,000) | (5,024,000) |
Purchase of non-controlling interest | (3,089,000) | 0 | 0 |
Other | (288,000) | (935,000) | (4,115,000) |
Net cash provided (used) by financing activities | (60,624,000) | (43,446,000) | (103,790,000) |
Increase (decrease) in cash and cash equivalents | (72,180,000) | 40,413,000 | 94,898,000 |
Cash and cash equivalents at beginning of period | 215,782,000 | 175,369,000 | 80,471,000 |
Cash and cash equivalents at end of period | 143,602,000 | 215,782,000 | 175,369,000 |
Supplemental Disclosure of Cash Flow Information | |||
Cash paid (refunded) during the year for income taxes, net | (9,512,000) | (8,832,000) | 2,748,000 |
Cash paid during the year for interest | 14,502,000 | 14,712,000 | 14,294,000 |
Significant Non-Cash Transactions | |||
Operating ROU assets obtained in exchange for operating lease liabilities | 5,687,000 | 1,351,000 | 5,436,000 |
Dividends declared and not yet paid | 2,698,000 | 2,694,000 | 16,676,000 |
Fair value of Contribution Certificates issued in NORCAL acquisition | 174,999,000 | 0 | 0 |
Fair value of contingent consideration in NORCAL acquisition | $ 24,000,000 | $ 0 | $ 0 |
Accounting Policies
Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Accounting Policies | Accounting Policies Organization and Nature of Business ProAssurance Corporation (ProAssurance, PRA or the Company), a Delaware corporation, is an insurance holding company primarily for wholly owned specialty property and casualty and workers' compensation insurance entities including an entity that provides capital to Syndicate 1729 at Lloyd's. Risks insured are primarily liability risks located within the U.S. ProAssurance operates in five reportable segments as follows: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, Lloyd's Syndicates and Corporate. For more information on the Company's segment reporting, including the nature of products and services provided and financial information by segment, refer to Note 18. Principles of Consolidation The accompanying consolidated financial statements include the accounts of ProAssurance Corporation, its wholly owned subsidiaries and VIEs in which ProAssurance is the primary beneficiary. See Note 16 for more information on ProAssurance's VIE interests. Investments in entities where ProAssurance holds a greater than minor interest but does not hold a controlling interest are accounted for using the equity method. All significant intercompany accounts and transactions are eliminated in consolidation. ProAssurance subsidiaries located in the U.K. are normally reported on a quarter lag due to timing issues regarding the availability of information, except when information is available that is material to the current period. Furthermore, investment results associated with ProAssurance's FAL investments and certain U.S. paid administrative expenses are reported concurrently as that information is available on an earlier time frame. Reclassifications Certain insignificant prior year amounts have been reclassified to conform to the current year presentation. Basis of Presentation The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and disclosures related to these amounts at the date of the financial statements. Accounting Policies The significant accounting policies followed by ProAssurance in making estimates that materially affect financial reporting are summarized in these Notes to Consolidated Financial Statements. The Company evaluates these estimates and assumptions on an ongoing basis based on current and historical developments, market conditions, industry trends and other information that the Company believes to be reasonable under the circumstances, including the potential impacts of the COVID-19 pandemic (see "Item 1A, Risk Factors" included in this report for additional information). The Company can make no assurance that actual results will conform to its estimates and assumptions; reported results of operations may be materially affected by changes in these estimates and assumptions. Recognition of Revenues Insurance premiums are recognized as revenues pro rata over the terms of the policies, which are principally one year in duration. Losses and Loss Adjustment Expenses ProAssurance establishes its reserve for losses and LAE ("reserve for losses" or "reserve") based on estimates of the future amounts necessary to pay claims and expenses associated with the investigation and settlement of claims. The reserve for losses is determined on the basis of individual claims and payments thereon as well as actuarially determined estimates of future losses based on past loss experience, available industry data and projections as to future claims frequency, severity, inflationary trends, judicial trends, legislative changes and settlement patterns. Management establishes the reserve for losses after taking into consideration a variety of factors including premium rates, historical paid and incurred loss development trends, and management's evaluation of the current loss environment including frequency, severity, expected effect of inflation, general economic and social trends, and the legal and political environment. Management also takes into consideration the conclusions reached by internal and consulting actuaries. Management updates and reviews the data underlying the estimation of the reserve for losses each reporting period and makes adjustments to loss estimation assumptions that best reflect emerging data. Both internal and consulting actuaries perform an in-depth review of the reserve for losses on at least a semi-annual basis using the loss and exposure data of ProAssurance's subsidiaries. Consulting actuaries provide reports to management regarding the adequacy of reserves. Estimating casualty insurance reserves, and particularly long-tailed insurance reserves, is a complex process. Long-tailed insurance is characterized by the extended period of time typically required both to assess the viability of a claim and potential damages, if any, and to reach a resolution of the claim. For a high proportion of the risks insured or reinsured by ProAssurance, the period of time required to resolve a claim is often five years or more, and claims may be subject to litigation. Estimating losses for these long-tailed claims requires ProAssurance to make and revise judgments and assessments regarding multiple uncertainties over an extended period of time. As a result, reserve estimates may vary significantly from the eventual outcome. Reserve estimates and the assumptions on which these estimates are predicated are regularly reviewed and updated as new information becomes available. Any adjustments necessary are reflected in current operations. Due to the size of ProAssurance’s reserve for losses, even a small percentage adjustment to these estimates could have a material effect on earnings in the period in which the adjustment is made, as was the case in 2021, 2020 and 2019. See Note 10 for additional information on ProAssurance's reserve for losses and LAE. The effect of adjustments made to reinsured losses is mitigated by the corresponding adjustment that is made to reinsurance recoveries. Thus, in any given year, ProAssurance may make significant adjustments to gross losses that have little effect on its net losses. Reinsurance Receivables ProAssurance enters into reinsurance agreements whereby other insurance entities agree to assume a portion of the risk associated with certain policies issued by ProAssurance. In return, ProAssurance agrees to pay a premium to the reinsurer. ProAssurance uses reinsurance to provide capacity to write larger limits of liability, to provide reimbursement for losses incurred under the higher limit coverages the Company offers, to provide protection against losses in excess of policy limits, and, in the case of risk sharing arrangements, to align the Company's objectives with those of its strategic business partners and to provide custom insurance solutions for large customer groups. Receivable from reinsurers on paid losses and LAE is the estimated amount of losses already paid that will be recoverable from reinsurers. Receivable from reinsurers on unpaid losses and LAE is the estimated amount of future loss payments that will be recoverable from reinsurers. Reinsurance recoveries are the portion of losses incurred during the period that are estimated to be allocable to reinsurers. Premiums ceded are the estimated premiums that will be due to reinsurers with respect to premiums earned and losses incurred during the period. These estimates are based upon management’s estimates of ultimate losses and the portion of those losses that are allocable to reinsurers under the terms of the related reinsurance agreements. Given the uncertainty inherent in management's estimate of the ultimate amounts of losses, these estimates may vary significantly from the ultimate outcome. Management regularly reviews these estimates and any adjustments necessary are reflected in the period in which the estimate is changed. Due to the size of the receivable from reinsurers, an adjustment to these estimates could have a material effect on ProAssurance's results of operations for the period in which the adjustment is made. Reinsurance contracts do not relieve ProAssurance from its obligations to policyholders. ProAssurance continually monitors its reinsurers to minimize its exposure to significant credit losses from reinsurer insolvencies (see additional discussion below under the heading "Credit Losses"). Any amount determined to be uncollectible is written off in the period in which the uncollectible amount is identified. See Note 6 for further information. Credit Losses ProAssurance's premiums receivable and reinsurance receivables are exposed to credit losses but to-date have not experienced any significant amount of credit losses. ProAssurance measures expected credit losses on its premiums receivables and reinsurance receivables on a collective (pool) basis when similar risk characteristics exist, and the Company will reassess its pools each reporting period to ensure all receivables within the pool continue to share similar risk characteristics. If the Company determines that a receivable does not share risk characteristics with its other receivables within a pool, it will evaluate that receivable for expected credit losses on an individual basis. ProAssurance measures expected credit losses associated with its premium receivables at the segment level as each segment’s premium receivables share similar risk characteristics including term, type of financial asset and similar historical and expected credit loss patterns. ProAssurance measures expected credit losses associated with its reinsurance receivables (related to both paid and unpaid losses) at the consolidated level as its reinsurance receivables share similar risk characteristics including type of financial asset, type of industry and similar historical and expected credit loss patterns. ProAssurance measures expected credit losses over the contractual term of each pool utilizing a loss rate method. Historical internal credit loss experience for each pool is the basis for the Company’s assessment of expected credit losses; however, the Company may also consider historical credit loss information from external sources. In addition to historical credit loss data, the Company also considers reasonable and supportable forecasts of future economic conditions in its estimate of expected credit losses by utilizing industry and macroeconomic factors that it believes most relevant to the collectability of each pool. ProAssurance's available-for-sale fixed maturity investments are also exposed to credit losses. See Note 4 for information on ProAssurance's allowance for expected credit losses on its available-for-sale fixed maturities. ProAssurance's premiums receivable on its Consolidated Balance Sheet as of December 31, 2021 and 2020 is reported net of the related allowance for expected credit losses of $7.4 million and $6.1 million, respectively. The following tables present a roll forward of the allowance for expected credit losses related to the Company's premiums receivable for the years ended December 31, 2021 and 2020. (In thousands) Premiums Receivable, Net Allowance for Expected Credit Losses Balance, December 31, 2020 $ 201,395 $ 6,131 Initial allowance recognized in the period for NORCAL premiums receivable (1) 2,137 Provision for expected credit losses 439 Write offs charged against the allowance (1,533) Recoveries of amounts previously written off 262 Balance, December 31, 2021 $ 241,095 $ 7,436 (In thousands) Premiums Allowance for Expected Credit Losses Balance, December 31, 2019 $ 249,540 $ 1,590 Cumulative-effect adjustment, before tax (2) 5,160 Provision for expected credit losses 827 Write offs charged against the allowance (2,019) Recoveries of amounts previously written off 573 Balance, December 31, 2020 $ 201,395 $ 6,131 (1) Represents an initial allowance for expected credit losses recognized during the second quarter of 2021 for NORCAL's premiums receivable to conform NORCAL to ProAssurance's accounting policies. See Note 2 for more information. (2) Due to the adoption of ASU 2016-13, ProAssurance recorded a cumulative-effect adjustment to beginning retained earnings as of January 1, 2020 to increase its consolidated allowance for expected credit losses related to its premiums receivable. ProAssurance's expected credit losses associated with its reinsurance receivables (related to both paid and unpaid losses) were nominal in amount as of December 31, 2021 and 2020. ProAssurance has other financial assets and off-balance-sheet commitments that are exposed to credit losses; however, expected credit losses associated with these assets and commitments were nominal in amount as of December 31, 2021 and 2020. Retroactive Insurance Contracts In certain instances, ProAssurance’s insurance contracts cover losses both on a prospective basis and retroactive basis, and accordingly, ProAssurance bifurcates the prospective and retroactive provisions of these contracts and accounts for each component separately, where practicable. Under the retroactive provisions of a contract, all premiums received and losses assumed are recognized immediately in earnings at the inception of the contract as all of the underlying loss events occurred in the past. If the estimated losses assumed differ from the premium received related to the retroactive provision of a contract, the resulting difference is deferred and recognized over the estimated claim payment period with the periodic amortization reflected in earnings as a component of net losses and LAE. Deferred gains are included as a component of the reserve for losses and LAE, and deferred losses are included as a component of other assets on the Consolidated Balance Sheets. Subsequent changes to the estimated timing or amount of future loss payments in relation to the losses assumed under retroactive provisions also produce changes in deferred balances. Changes in such estimates are applied retrospectively, and the resulting changes in deferred balances, together with periodic amortization, are included in earnings in the period of change. See Note 5 for more information. Investments Recurring Fair Value Measurements Fair values of investment securities are primarily provided by independent pricing services. The pricing services provide an exchange-traded price, if available, or provide an estimated price determined using multiple observable inputs, including exchange-traded prices for similar assets. Management reviews valuations of securities obtained from the pricing services for accuracy based upon the specifics of the security, including class, maturity, credit rating, durations, collateral and comparable markets for similar securities. Multiple observable inputs are not available for certain of the Company's investments, including corporate debt not actively traded, certain asset-backed securities and investments in LPs/LLCs. Management values the corporate debt not actively traded and the other asset-backed securities either using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Management values certain investment funds, primarily LPs/LLCs, based on the NAV of the interest held, as provided by the fund. Nonrecurring Fair Value Measurements Management measures the fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include investments carried principally at cost, investments in tax credit partnerships, fixed assets, goodwill and other intangible assets. These assets would also include any equity method investments that do not provide a NAV. Fixed Maturities Fixed maturities are considered as either available-for-sale or trading securities. Available-for-sale securities are carried at fair value, determined as described above and in Note 3. Exclusive of impairment losses, discussed in a separate section that follows, unrealized holding gains and losses on available-for-sale securities are included, net of related tax effects, as a component of OCI in the Consolidated Statement of Income and Comprehensive Income during the period of change and as a component AOCI in shareholders' equity on the Consolidated Balance Sheet. Investment income includes amortization of premium and accretion of discount related to available-for-sale debt securities acquired at other than par value. Debt securities and mandatorily redeemable preferred stock with maturities beyond one year when purchased are classified as fixed maturities. Trading securities are carried at fair value, determined as described above, with the unrealized holding gains and losses included as a component of net investment gains (losses) in the Consolidated Statement of Income and Comprehensive Income during the period of change. Equity Investments Equity investments are carried at fair value, as described above, with the holding gains and losses included as a component of net investment gains (losses) in the Consolidated Statement of Income and Comprehensive Income during the period of change. Equity investments are primarily comprised of stocks, bond funds and investment funds. Short-term Investments Short-term investments, which have a maturity at purchase of one year or less, are primarily comprised of investments in U.S. Treasury obligations, commercial paper and money market funds. All balances are carried at fair value which approximates the cost of the securities due to their short-term nature. Other Investments Investments in convertible bond securities are carried at fair value as permitted by the accounting guidance for hybrid financial instruments, with changes in fair value recognized in income as a component of net investment gains (losses) during the period of change. Interest on convertible bond securities is recorded on an accrual basis based on contractual interest rates and is included in net investment income. Investment in Unconsolidated Subsidiaries Equity investments, primarily investments in LPs/LLCs, where ProAssurance is deemed to have influence because it holds a greater than a minor interest are accounted for using the equity method. Under the equity method, the recorded basis of the investment is adjusted each period for the investor’s pro rata share of the investee’s income or loss. Investments in unconsolidated subsidiaries include tax credit partnerships accounted for using the equity method, whereby ProAssurance’s proportionate share of income or loss is included in equity in earnings (loss) of unconsolidated subsidiaries. Tax credits received from the partnerships are recognized in the period received in the Consolidated Statements of Income and Comprehensive Income as either a reduction to current tax expense or as a component of deferred tax expense if they cannot be utilized in the period received. Business Owned Life Insurance ProAssurance owns life insurance contracts on certain management employees, which includes policies acquired from NORCAL. The life insurance contracts are carried at their current cash surrender value. Changes in the cash surrender value are included in income in the current period as investment income. Death proceeds from the contracts are recorded when the proceeds become payable under the policy terms. Realized Gains and Losses Realized investment gains and losses are recognized on the first-in, first-out basis for GAAP purposes and on the specific identification basis for tax purposes. Impairments ProAssurance evaluates its available-for-sale investment securities, which at December 31, 2021 and 2020 consisted entirely of fixed maturity securities, on at least a quarterly basis for the purpose of determining whether declines in fair value below recorded cost basis represent a credit loss. The Company considers a credit loss to have occurred: • if there is intent to sell the security; • if it is more likely than not that the security will be required to be sold before full recovery of its amortized cost basis; or • if the entire amortized basis of the security is not expected to be recovered. The assessment of whether the amortized cost basis of a security is expected to be recovered requires the Company to make assumptions regarding various matters affecting future cash flows. The choice of assumptions is subjective and requires the use of judgment. Actual credit losses experienced in future periods may differ from the Company’s estimates of those credit losses. Methodologies used to estimate the present value of expected cash flows are: The estimate of expected cash flows is determined by projecting a recovery value and a recovery time frame and assessing whether further principal and interest will be received. ProAssurance considers various factors in projecting recovery values and recovery time frames, including the following: • third-party research and credit rating reports; • the current credit standing of the issuer, including credit rating downgrades, whether before or after the balance sheet date; • the extent to which the decline in fair value is attributable to credit risk specifically associated with the security or its issuer; • internal assessments and the assessments of external portfolio managers regarding specific circumstances surrounding an investment, which indicate the investment is more or less likely to recover its amortized cost than other investments with a similar structure; • for asset-backed securities, the origination date of the underlying loans, the remaining average life, the probability that credit performance of the underlying loans will deteriorate in the future and ProAssurance's assessment of the quality of the collateral underlying the loan; • failure of the issuer of the security to make scheduled interest or principal payments; • any changes to the rating of the security by a rating agency; • recoveries or additional declines in fair value subsequent to the balance sheet date; • adverse legal or regulatory events; • significant deterioration in the market environment that may affect the value of collateral (e.g., decline in real estate prices); • significant deterioration in economic conditions; and • disruption in the business model resulting from changes in technology or new entrants to the industry. If deemed appropriate and necessary, a discounted cash flow analysis is performed to confirm whether a credit loss exists and, if so, the amount of the credit loss. ProAssurance uses the single best estimate approach for available-for-sale debt securities and considers all reasonably available data points, including industry analyses, credit ratings, expected defaults and the remaining payment terms of the debt security. For fixed rate available-for-sale debt securities, cash flows are discounted at the security's effective interest rate implicit in the security at the date of acquisition. If the available-for-sale debt security’s contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, for example, the prime rate, the LIBOR, or the U.S. Treasury bill weekly average, that security’s effective interest rate is calculated based on the factor as it changes over the life of the security. If ProAssurance intends to sell a debt security or believes it will more likely than not be required to sell a debt security before the amortized cost basis is recovered, any existing allowance will be written off against the security's amortized cost basis, with any remaining difference between the debt security's amortized cost basis and fair value recognized as an impairment loss in earnings. Exclusive of securities where there is an intent to sell or where it is not more likely than not that the security will be required to be sold before recovery of its amortized cost basis, impairment for debt securities is separated into a credit component and a non-credit component. The credit component of an impairment is the difference between the security’s amortized cost basis and the present value of its expected future cash flows, while the non-credit component is the remaining difference between the security’s fair value and the present value of expected future cash flows. An allowance for expected credit losses will be recorded for the expected credit losses through income and the non-credit component is recognized in OCI. The amount of impairment recognized is limited to the excess of the amortized cost over the fair value of the available-for-sale debt security. Derivatives ProAssurance records derivative instruments at fair value in the Consolidated Balance Sheets. ProAssurance accounts for the changes in fair value of derivatives depending on whether the derivative is designated as a hedging instrument and if so, the type of hedging relationship. For derivative instruments not designated as hedging instruments, ProAssurance recognizes the change in fair value of the derivative in earnings during the period of change. As of December 31, 2021 and 2020, ProAssurance has not designated any derivative instruments as hedging instruments and does not use derivative instruments for trading purposes. Cash and Cash Equivalents For purposes of the Consolidated Balance Sheets and Consolidated Statements of Cash Flows, ProAssurance considers all demand deposits and overnight investments to be cash equivalents. Foreign Currency The functional currency of all ProAssurance foreign subsidiaries is the U.S. dollar. In recording foreign currency transactions, revenue and expense items are converted to U.S. dollars at the exchange rate prevailing at the transaction date. Monetary assets and liabilities originating in currencies other than the U.S. dollar are remeasured to U.S. dollars at the rates of exchange in effect as of the balance sheet date. The resulting foreign currency gains or losses are recognized in the Consolidated Statements of Income and Comprehensive Income as a component of other income. Monetary assets and liabilities include investments, cash and cash equivalents, accrued expenses and other liabilities. In addition, monetary assets and liabilities include certain premiums receivable and reserve for losses and LAE as a result of reinsurance transactions conducted with foreign cedents denominated in their local functional currencies. Pension As a result of the NORCAL acquisition, the Company sponsors a frozen qualified defined benefit pension plan which covers substantially all NORCAL employees (except those that were previous employees of Medicus Insurance Company and FD Insurance Company, employees of PPM RRG as well as new hires after December 31, 2013). Accounting for pension benefits requires the use of assumptions for the valuation of the PBO and the expected performance of the plan assets. The Company uses December 31 as the measurement date for calculating its obligation related to this defined benefit pension plan and for estimating net periodic benefit cost (credit) for the subsequent year. The PBO for pension benefits represents the present value of all future benefits earned as of the measurement date for vested and non-vested employees. At each measurement date, the Company reviews the various assumptions impacting the amounts recorded for the pension plan including the discount rates, which impacts the recorded value of the PBO and interest costs, and the expected return on plan assets. To estimate the discount rate at the measurement date, the Company uses a bond yield curve model, developed based on pricing and yield information for high quality corporate bonds. The assumption for the expected return on plan assets is based on the anticipated returns that will be earned by the portfolio over the long term. The expected return is influenced, but not determined, by historical portfolio performance. Accounting standards provide for the delayed recognition of differences between actual results and expected or estimated results. This delayed recognition of the differences is amortized into earnings over time. The differences between actual results and expected or estimated results are recognized in full in AOCI. Amounts recognized in AOCI are reclassified to earnings in a systematic manner over the average future service period of participants. Deferred Policy Acquisition Costs; Ceding Commission Income Costs that vary with and are directly related to the successful production of new and renewal premiums (primarily premium taxes, commissions and underwriting salaries) are deferred to the extent they are recoverable against unearned premiums and are amortized as related premiums are earned. Unearned ceding commission income is reported as an offset to DPAC, and ceding commission earned is reported as an offset to DPAC amortization. ProAssurance evaluates the recoverability of DPAC typically at the segment level each reporting period, or in a manner that is consistent with the way the Company manages its business. Any amounts estimated to be unrecoverable are charged to expense in the current period. As part of the evaluation of the recoverability of DPAC, ProAssurance also evaluates unearned premium for premium deficiencies. A premium deficiency is recognized if the sum of anticipated losses and loss adjustment expenses, unamortized DPAC and maintenance costs, net of anticipated investment income, exceeds the related unearned premium. If a premium deficiency is identified, the associated DPAC is written off, and a PDR is recorded for the excess deficiency as a component of net losses and loss adjustment expenses in the Consolidated Statements of Income and Comprehensive Income and as a component of the reserve for losses on the Consolidated Balance Sheets. Income Taxes/Deferred Taxes ProAssurance files a consolidated federal income tax return. Tax-related interest and penalties are recognized as components of tax expense. ProAssurance evaluates tax positions taken on tax returns and recognizes positions in the financial statements when it is more likely than not that the position will be sustained upon resolution with a taxing authority. If recognized, the benefit is measured as the largest amount of benefit that has a greater than fifty percent probability of being realized. Uncertain tax positions are reviewed each period by considering changes in facts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law, and adjustments would be made if considered necessary. Adjustments to unrecognized tax benefits may affect income tax expense, and the settlement of uncertain tax positions may require the use of cash. Other than differences related to timing, no significant adjustments were considered necessary during the years ended December 31, 2021 or 2020. Deferred federal income taxes arise from the recognition of temporary differences between the basis of assets and liabilities determined for financial reporting purposes and the basis determined for income tax purposes. ProAssurance’s temporary differences principally relate to loss reserves, unearned and advanced premiums, DPAC, NOL and tax credit carryforwards, compensation related items, unrealized investment gains (losses) and basis differentials in fixed assets, intangible assets and operating leases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be in effect when such benefits are realized. ProAssurance reviews its deferred tax assets quarterly for impairment. If management determines that it is more likely than not that some or all of a deferred tax asset will not be realized, a valuation allowance is recorded to reduce the carrying value of the asset. In assessing the need for a valuation allowance, management is required to make certain judgments and assumptions about the future operations of ProAssurance based on historical experience and information as of the measurement period regarding reversal of existing temporary differences, carryback capacity, future taxable income of the appropriate character (including its capital and operating characteristics) and tax planning strategies. Goodwill/Intangibles Intangible Assets Intangible assets with definite lives are amortized over the estimated useful life of the asset. Amortizable intangible assets primarily consist of policyholder relationships, renewal rights and trade names. Intangible assets with an indefinite life, primarily state licenses, are not amortized. Indefinite lived intangible |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | Business Combination On May 5, 2021, ProAssurance completed its acquisition of NORCAL by purchasing 98.8% of its stock in exchange for total consideration transferred of $448.8 million. On September 16, 2021, ProAssurance acquired the remaining 1.2% interest in NORCAL for $3.1 million of cash. The NORCAL transaction provides strategic and financial benefits including additional scale and geographic diversification in the physician professional liability market. On May 5, 2021, ProAssurance funded the acquisition with $248.0 million of cash on hand, and NORCAL paid $1.8 million to policyholders who elected to receive a discounted cash option for their allocated share of the converted company's equity. Additional consideration transferred, with a principal amount of $191.0 million and a fair value of $175.0 million, is in the form of Contribution Certificates issued to certain NORCAL policyholders in the conversion, and those instruments are an obligation of NORCAL Insurance Company, the successor of NORCAL Mutual Insurance Company (see Note 13 for further discussion of the terms of the Contribution Certificates). Policyholders who tendered NORCAL stock to ProAssurance are also eligible for a share of contingent consideration in an amount of up to approximately $84.0 million depending upon the after-tax development of NORCAL's ultimate net losses between December 31, 2020 and December 31, 2023. The estimated fair value of this contingent consideration was $24.0 million as of May 5, 2021 and December 31, 2021. ProAssurance's results for the year ended December 31, 2021 included NORCAL's results since the date of acquisition (revenue of $230.3 million and net income of $9.7 million). ProAssurance incurred expenses related to the acquisition of approximately $25.0 million during the year ended December 31, 2021 and approximately $1.8 million during the year ended December 31, 2020. These expenses were included as a component of operating expenses in the period incurred in ProAssurance's Consolidated Statements of Income and Comprehensive Income. ProAssurance accounted for its acquisition of NORCAL in accordance with GAAP relating to business combinations. The total acquisition consideration was allocated to the acquired tangible and identifiable intangible assets and assumed liabilities of NORCAL based on their preliminary estimated fair values on the acquisition date, as shown in the following table. The amounts reflect preliminary allocation of assets acquired and liabilities assumed. The acquisition date fair value of certain assets acquired and liabilities assumed, including intangible assets, deferred income tax assets and liabilities and reserves for losses and loss adjustment expenses are preliminary estimates and are subject to revisions within one year of acquisition date. Subsequent to the preliminary valuation of net assets acquired, any adjustment identified associated with the purchase price allocation will be evaluated to determine whether the adjustment represents a measurement period adjustment in accordance with GAAP. If the adjustment is deemed to be a measurement period adjustment and is identified within one year of the acquisition, then the measurement period adjustment will be recorded in the current reporting period with a corresponding adjustment to the gain on bargain purchase. A $74.4 million gain on bargain purchase was recognized on the date of the acquisition as the fair value of the consideration transferred was less than the fair value of the net assets acquired. This gain is presented as a separate line item in ProAssurance's Consolidated Statements of Income and Comprehensive Income for the year ended December 31, 2021. ProAssurance believes it was able to acquire NORCAL for less than the fair value of its net assets due to several contributing factors including the soft medical professional liability market at the time the transaction was initially announced and the value attributed to certain assets. Before the acquisition, NORCAL had recorded a valuation allowance against the full value of its net deferred tax assets. In conjunction with acquisition accounting, ProAssurance recorded $46.8 million of net deferred tax assets reflecting the remeasurement of NORCAL's historical net deferred tax assets, as such deferred taxes were subject to recalculation following application of all purchase accounting adjustments, and its assessment of the realizability of NORCAL's historical deferred tax assets. Based upon the assessment of the realizability of NORCAL's historical deferred tax assets, ProAssurance management concluded that these deferred tax assets are now realizable, which increased the net assets acquired. In addition, based upon the historical performance of NORCAL, ProAssurance did not attribute any value to intangible assets in determining the initial base consideration of $450.0 million per the acquisition agreement, whereas ProAssurance identified $14.0 million of intangible assets as a part of its estimated allocation of final acquisition consideration. Other changes in the fair values of NORCAL's assets and liabilities from the time ProAssurance entered into the definitive acquisition agreement in February 2020 to the close of the transaction in May 2021 also contributed to the increase in net assets acquired and gain on bargain purchase. The preliminary allocation of acquisition consideration is shown in the table below. (In thousands) Fixed maturities, available for sale $ 1,100,058 Equity investments, available for sale 374,484 Short-term investments 61,289 Business owned life insurance 12,581 Investment in unconsolidated subsidiaries 26,948 Other investments 32,461 Cash and cash equivalents 28,233 Premiums receivable 110,905 Receivable from reinsurers on paid losses and loss adjustment expenses 266 Receivable from reinsurers on unpaid losses and loss adjustment expenses 93,342 Prepaid reinsurance premiums 9,238 Deferred tax asset, net 46,759 Operating lease ROU assets 4,385 Intangible assets 14,000 Other assets 38,648 Reserve for losses and loss adjustment expenses (1,182,445) Unearned premiums (178,400) Reinsurance premiums payable (12,981) Operating lease liabilities (5,275) Other liabilities (51,279) Total identifiable net assets acquired $ 523,217 Gain on bargain purchase (74,408) Total acquisition consideration $ 448,809 The estimated fair values of intangible assets were determined based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Intangible assets were identified that met either the separability criterion or the contractual-legal criterion under the acquisition method of accounting. Intangible assets acquired included the following: (In thousands) Estimated Fair Value on Acquisition Date Estimated Useful Life Trade name $ 1,000 3 Licenses 13,000 Indefinite Total $ 14,000 The estimated fair value of the reserve for losses and loss adjustment expenses and related reinsurance recoverables was based on three components: an actuarial estimate of the expected future net cash flows, a reduction to those cash flows for the time value of money determined utilizing the U.S. Treasury Yield Curve and a risk margin adjustment to reflect the net present value of profit that an investor would demand in return for the assumption of the development risk associated with the reserve. The fair value of the net reserve, including the risk margin adjustment and related reinsurance receivables, exceeded the actuarial estimate of NORCAL’s undiscounted loss reserve as of May 5, 2021. On May 5, 2021, the fair value adjustment on the gross reserve of approximately $42.2 million was recorded to the reserve for losses and loss adjustment expenses and the fair value adjustment on the related reinsurance recoverables of approximately $3.5 million was recorded to the receivable from reinsurers on unpaid losses and loss adjustment expenses on the Consolidated Balance Sheets. These net fair value adjustments of $38.7 million will be amortized over a period utilizing loss payment patterns as a net reduction to prior accident year net losses and loss adjustment expenses. The estimated fair value of VOBA was determined based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date estimated using the income approach. The estimated negative VOBA recorded on the assumed unearned premium of $12.4 million was recorded to the reserve for losses and loss adjustment expenses and the fair value adjustment on the related reinsurance recoverables of $0.7 million was recorded to receivable from reinsurers on unpaid losses and loss adjustment expenses on the Consolidated Balance Sheets. The net VOBA on unearned premium of $11.7 million will be amortized over a period in proportion to the earn-out of the premium as a reduction to current accident year net losses and loss adjustment expenses. The estimated negative VOBA recorded on the assumed DDR reserve totaling $3.5 million was also recorded to the reserve for losses and loss adjustment expenses on the Consolidated Balance Sheets and will be amortized over a period in proportion to the approximate consumption of losses as a reduction to prior accident year net losses and loss adjustment expenses. ProAssurance recognized a total of approximately $14.6 million during the year ended December 31, 2021 related to the amortization of the fair value adjustment on the net reserve for losses and loss adjustment expenses, the negative net VOBA recorded on the assumed unearned premium and negative VOBA recorded on the DDR reserve. The following table details the remaining expected amortization of these adjustments for the four years following the acquisition and thereafter. (In thousands) Amount at May 5, 2021 Estimated amortization period (years) Expected pre-tax amortization for year following the acquisition 2022 2023 2024 2025 Thereafter Fair value adjustment on reserves, net (1) $ 38,701 7 $ 10,595 $ 8,090 $ 5,083 $ 3,107 $ 4,058 Unearned premium VOBA, net (2) 11,676 1 4,939 — — — — DDR reserve VOBA (1) 3,467 15 224 243 243 243 2,375 Total $ 53,844 $ 15,758 $ 8,333 $ 5,326 $ 3,350 $ 6,433 (1) Amortization will be recorded as a reduction to prior accident year net losses and loss adjustment expenses. (2) Amortization will be recorded as a reduction to current accident year net losses and loss adjustment expenses. Unaudited Supplemental Pro Forma Information The following table provides Pro Forma Consolidated Results and Actual Consolidated Results for the years ended December 31, 2021 and 2020 as if the NORCAL transaction had occurred on January 1, 2020. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the operating results that may have actually occurred had the acquisition of NORCAL been completed on January 1, 2020. In addition, the unaudited pro forma financial information does not give effect to any anticipated cost savings, operating efficiencies or other synergies that may be associated with the acquisition, or any estimated costs that have been or will be incurred to integrate the assets and operations of NORCAL. Year Ended December 31 (In thousands) 2021 2020 Revenue: ProAssurance Pro Forma Consolidated Results $ 1,247,272 $ 1,275,459 ProAssurance Actual Consolidated Results $ 1,124,410 $ 874,940 Net income (loss): ProAssurance Pro Forma Consolidated Results $ 88,223 $ (113,557) ProAssurance Actual Consolidated Results $ 144,124 $ (175,727) The ProAssurance Pro Forma Consolidated Results reflect pro forma adjustments, net of related tax effects, to give effect to certain events that are directly attributable to the acquisition. These pro forma adjustments primarily include: • The addition of NORCAL's operating results prior to the acquisition to ProAssurance's Actual Consolidated Results in all periods shown. • A reduction in expenses for the year ended December 31, 2021 and a corresponding increase for the year ended December 31, 2020 for transaction-related costs, including other costs associated with the acquisition such as compensation costs related to change in control payments. • The effect of the amortization of intangible assets, VOBA and the fair value adjustment on the reserve. See previous amortization schedules for reference. • The non-taxable gain on bargain purchase of $74.4 million that was included in ProAssurance's Actual Consolidated Results for the year ended December 31, 2021 has been reported in the Pro Forma Consolidated Results as being recognized during the year ended December 31, 2020. • An adjustment to net investment income for the amortization of the fair value adjustment to NORCAL's investments. • An increase to interest expense for the interest on the Contribution Certificates (see Note 13 for further discussion of the terms of the Contribution Certificates). |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level hierarchy has been established for valuing assets and liabilities based on how transparent (observable) the inputs are that are used to determine fair value, with the inputs considered most observable categorized as Level 1 and those that are the least observable categorized as Level 3. Hierarchy levels are defined as follows: Level 1: quoted (unadjusted) market prices in active markets for identical assets and liabilities. For ProAssurance, Level 1 inputs are generally quotes for securities actively traded in exchange or over-the-counter markets. Level 2: market data obtained from sources independent of the reporting entity (observable inputs). For ProAssurance, Level 2 inputs generally include quoted prices in markets that are not active, quoted prices for similar assets or liabilities, and results from pricing models that use observable inputs such as interest rates and yield curves that are generally available at commonly quoted intervals. Level 3: the reporting entity’s own assumptions about market participant assumptions based on the best information available in the circumstances (non-observable inputs). For ProAssurance, Level 3 inputs are used in situations where little or no Level 1 or 2 inputs are available or are inappropriate given the particular circumstances. Level 3 inputs include results from pricing models for which some or all of the inputs are not observable, discounted cash flow methodologies, single non-binding broker quotes and adjustments to externally quoted prices that are based on management judgment or estimation. Fair values of assets measured at fair value on a recurring basis as of December 31, 2021 and December 31, 2020 are shown in the following tables. Where applicable, the tables also indicate the fair value hierarchy of the valuation techniques utilized to determine those fair values. For some assets, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When this is the case, the asset is categorized based on the level of the most significant input to the fair value measurement. Assessments of the significance of a particular input to the fair value measurement require judgment and consideration of factors specific to the assets being valued. December 31, 2021 Fair Value Measurements Using Total (In thousands) Level 1 Level 2 Level 3 Fair Value Assets: Fixed maturities, available-for-sale U.S. Treasury obligations $ — $ 238,507 $ — $ 238,507 U.S. Government-sponsored enterprise obligations — 20,234 — 20,234 State and municipal bonds — 519,196 — 519,196 Corporate debt, multiple observable inputs — 1,851,427 — 1,851,427 Corporate debt, limited observable inputs — — 47,129 47,129 Residential mortgage-backed securities — 453,644 297 453,941 Agency commercial mortgage-backed securities — 14,141 — 14,141 Other commercial mortgage-backed securities — 231,483 — 231,483 Other asset-backed securities — 451,459 6,205 457,664 Fixed maturities, trading — 43,670 — 43,670 Equity investments Financial 6,615 855 — 7,470 Industrial — — 2,500 2,500 Bond funds 187,059 — — 187,059 All other 17,778 — — 17,778 Short-term investments 174,944 42,043 — 216,987 Other investments 1,889 95,288 1,434 98,611 Other assets — 649 — 649 Total assets categorized within the fair value hierarchy $ 388,285 $ 3,962,596 $ 57,565 4,408,446 Assets carried at NAV, which approximates fair value and which are not categorized within the fair value hierarchy, reported as a part of: Investment in unconsolidated subsidiaries 270,816 Total assets at fair value $ 4,679,262 Liabilities: Other liabilities $ — $ — $ 24,000 $ 24,000 Total liabilities categorized within the fair value hierarchy $ — $ — $ 24,000 $ 24,000 December 31, 2020 Fair Value Measurements Using Total (In thousands) Level 1 Level 2 Level 3 Fair Value Assets: Fixed maturities, available-for-sale U.S. Treasury obligations $ — $ 107,059 $ — $ 107,059 U.S. Government-sponsored enterprise obligations — 12,261 — 12,261 State and municipal bonds — 332,920 — 332,920 Corporate debt, multiple observable inputs — 1,326,077 — 1,326,077 Corporate debt, limited observable inputs — — 3,265 3,265 Residential mortgage-backed securities — 274,509 2,032 276,541 Agency commercial mortgage-backed securities — 13,310 — 13,310 Other commercial mortgage-backed securities — 113,092 — 113,092 Other asset-backed securities — 266,345 6,661 273,006 Fixed maturities, trading — 48,456 — 48,456 Equity investments Financial 13,810 — — 13,810 Utilities/Energy 564 — — 564 Consumer oriented 1,262 — — 1,262 Industrial 2,240 — — 2,240 Bond funds 69,475 — — 69,475 All other 20,202 — — 20,202 Short-term investments 307,695 30,118 — 337,813 Other investments 1,509 42,607 — 44,116 Other assets — 329 — 329 Total assets categorized within the fair value hierarchy $ 416,757 $ 2,567,083 $ 11,958 2,995,798 Assets carried at NAV, which approximates fair value and which are not categorized within the fair value hierarchy, reported as a part of: Equity investments 12,548 Investment in unconsolidated subsidiaries 233,711 Total assets at fair value $ 3,242,057 The fair values for securities included in the Level 2 category, with the few exceptions described below, were developed by one of several third-party, nationally recognized pricing services, including services that price only certain types of securities. Each service uses complex methodologies to determine values for securities and subject the values they develop to quality control reviews. Management selected a primary source for each type of security in the portfolio and reviewed the values provided for reasonableness by comparing data to alternate pricing services and to available market and trade data. Values that appeared inconsistent were further reviewed for appropriateness. Any value that did not appear reasonable was discussed with the service that provided the value and adjusted, if necessary. There were no material changes to the values supplied by the pricing services during the years ended December 31, 2021 and 2020. Level 2 Valuations Below is a summary description of the valuation methodologies primarily used by the pricing services for securities in the Level 2 category, by security type: U.S. Treasury obligations were valued based on quoted prices for identical assets, or, in markets that are not active, quotes for similar assets, taking into consideration adjustments for variations in contractual cash flows and yields to maturity. U.S. Government-sponsored enterprise obligations were valued using pricing models that consider current and historical market data, normal trading conventions, credit ratings and the particular structure and characteristics of the security being valued, such as yield to maturity, redemption options, and contractual cash flows. Adjustments to model inputs or model results were included in the valuation process when necessary to reflect recent regulatory, government or corporate actions or significant economic, industry or geographic events affecting the security’s fair value. State and municipal bonds were valued using a series of matrices that considered credit ratings, the structure of the security, the sector in which the security falls, yields and contractual cash flows. Valuations were further adjusted, when necessary, to reflect the expected effect on fair value of recent significant economic or geographic events or ratings changes. Corporate debt, multiple observable inputs consisted primarily of corporate bonds. The methodology used to value Level 2 corporate bonds was the same as the methodology previously described for U.S. Government-sponsored enterprise obligations. Bank loans were valued based on an average of broker quotes for the loans in question, if available. If quotes were not available, the loans were valued based on quoted prices for comparable loans or, if the loan was newly issued, by comparison to similar seasoned issues. Broker quotes were compared to actual trade prices to permit assessment of the reliability of the quotes; unreliable quotes were not considered in quoted averages. Residential and commercial mortgage-backed securities were valued using a pricing matrix which considers the issuer type, coupon rate and longest cash flows outstanding. The matrix used was based on the most recently available market information. Agency and non-agency collateralized mortgage obligations were both valued using models that consider the structure of the security, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Other asset-backed securities were valued using models that consider the structure of the security, monthly payment information, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Spreads and prepayment speeds consider collateral type. Fixed maturities, trading are held by the Lloyd's Syndicates segment and include U.S. Treasury obligations, corporate debt with multiple observable inputs and other asset-backed securities. These securities were valued using the respective valuation methodologies discussed above for each security type. Equity investments were securities not traded on an exchange on the valuation date. The securities were valued using the most recently available quotes for the securities. Short-term investments were securities maturing within one year, carried at fair value which approximated the cost of the securities due to their short-term nature. Other investments consisted primarily of convertible bonds valued using a pricing model that incorporated selected dealer quotes as well as current market data regarding equity prices and risk free rates. If dealer quotes were unavailable for the security being valued, quotes for securities with similar terms and credit status were used in the pricing model. Dealer quotes selected for use were those considered most accurate based on parameters such as underwriter status and historical reliability. Other assets consisted of an interest rate cap derivative instrument valued using a model which considers the volatilities from other instruments with similar maturities, strike prices, durations and forward yield curves. Under the terms of the interest rate cap agreement, ProAssurance paid a premium of $2 million for the right to receive cash payments based upon a notional amount of $35 million if and when the three-month LIBOR rises above 2.35%. Level 3 Valuations Below is a summary description of the valuation methodologies used as well as quantitative information regarding securities in the Level 3 category, by security type: Level 3 Valuation Methodologies Corporate debt, limited observable inputs consisted of corporate bonds valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were determined by management if not available. At December 31, 2021, 100% of the securities were rated and the average rating was BBB. At December 31, 2020, 100% of the securities were rated and the average rating was BB+. Residential mortgage-backed and other asset-backed securities consisted of securitizations of receivables valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were subjectively determined by management if not available. At December 31, 2021, 100% of the securities were rated and the average rating was BBB+. At December 31, 2020, 51% of the securities were rated and the average rating was AA-. Equity investments consisted of preferred stock for which limited observable inputs were available at December 31, 2021. The equity securities were primarily priced using broker/dealer quotes and internal models with some inputs that are unobservable. Other investments consisted of one convertible security for which limited observable inputs were available at December 31, 2021. The security was valued internally based on expected cash flows, including the expected final recovery, discounted at a yield that considered the lack of liquidity and the financial status of the issuer. Other liabilities consisted of the contingent consideration which is a portion of the purchase price for the NORCAL acquisition and is recorded at fair value each reporting period. The ultimate payout under the contingent consideration is dependent on the after-tax development of NORCAL's ultimate net losses over a three-year period beginning December 31, 2020 and may total up to $84 million. See further discussion around the contingent consideration in Note 2 and Note 11. Quantitative Information Regarding Level 3 Valuations Fair Value at ($ in thousands) December 31, 2021 December 31, 2020 Valuation Technique Unobservable Input Range Assets: Corporate debt, limited observable inputs $47,129 $3,265 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Residential mortgage-backed securities $297 $2,032 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Other asset-backed securities $6,205 $6,661 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Equity investments $2,500 $— Discounted Cash Flows Comparability Adjustment 0% - 10% (5%) Other investments $1,434 $— Discounted Cash Flows Comparability Adjustment 0% - 10% (5%) Liabilities: Other liabilities $24,000 $— Stochastic Model/Discounted Cash Flows N/A 0% - 10% (8%) The significant unobservable inputs used in the fair value measurement of the above listed securities were the valuations of comparable securities with similar issuers, credit quality and maturity. Changes in the availability of comparable securities could result in changes in the fair value measurements. Fair Value Measurements - Level 3 Assets The following tables present summary information regarding changes in the fair value of assets measured using Level 3 inputs. December 31, 2021 Level 3 Fair Value Measurements – Assets (In thousands) Corporate Debt Asset-backed Securities Equity Investments Other Investments Total Balance, December 31, 2020 $ 3,265 $ 8,693 $ — $ — $ 11,958 Total gains (losses) realized and unrealized: Included in earnings, as a part of: Net investment income 1 (3) — — (2) Net investment gains (losses) (14) (11) 15 (774) (784) Included in other comprehensive income 27 (403) — — (376) Purchases 57,586 31,204 9,083 205 98,078 Sales (3,277) (800) (5,799) — (9,876) Transfers in 858 — 69 3,586 4,513 Transfers out (11,317) (32,178) (868) (1,583) (45,946) Balance, December 31, 2021 $ 47,129 $ 6,502 $ 2,500 $ 1,434 $ 57,565 Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end $ — $ — $ 10 $ (774) $ (764) December 31, 2020 Level 3 Fair Value Measurements – Assets (In thousands) Corporate Debt Asset-backed Securities Other Investments Total Balance, December 31, 2019 $ 5,079 $ 2,992 $ 3,086 $ 11,157 Total gains (losses) realized and unrealized: Included in earnings, as a part of: Net investment income (2) (18) — (20) Net investment gains (losses) — (8) 151 143 Included in other comprehensive income 216 109 — 325 Purchases 2,869 20,490 — 23,359 Sales (2,178) (4,346) — (6,524) Transfers in 945 605 — 1,550 Transfers out (3,664) (11,131) (3,237) (18,032) Balance, December 31, 2020 $ 3,265 $ 8,693 $ — $ 11,958 Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end $ — $ — $ 151 $ 151 Fair Value Measurements - Level 3 Liabilities There was no change in the fair value of the contingent consideration from the date of the NORCAL acquisition on May 5, 2021 to December 31, 2021. Transfers Transfers shown in the preceding Level 3 tables were as of the end of the period in which the transfer occurred. All transfers were to or from Level 2. All transfers in and out of Level 3 during 2021 and 2020 related to securities held for which the level of market activity for identical or nearly identical securities varies from period to period. The securities were valued using multiple observable inputs when those inputs were available; otherwise the securities were valued using limited observable inputs. Fair Values Not Categorized At December 31, 2021 and 2020, certain LPs/LLCs and investment funds measure fund assets at fair value on a recurring basis and provide a NAV for ProAssurance's interest. The carrying value of these interests is based on the NAV provided and was considered to approximate the fair value of the interests. For investment in unconsolidated subsidiaries, ProAssurance recognizes any changes in the NAV of its interests in equity in earnings (loss) of unconsolidated subsidiaries during the period of change. In accordance with GAAP, the fair value of these investments was not classified within the fair value hierarchy. The amount of ProAssurance's unfunded commitments related to these investments as of December 31, 2021 and fair values of these investments as of December 31, 2021 and 2020 were as follows: Unfunded Fair Value (In thousands) December 31, 2021 December 31, 2021 December 31, 2020 Equity investments: Mortgage fund (1) None $ — $ 12,548 Investment in unconsolidated subsidiaries: Private debt funds (2) $8,817 18,465 16,387 Long/short equity funds (3) None 655 596 Non-public equity funds (4) $52,938 160,219 138,357 Credit funds (5) $55,237 47,300 34,848 Strategy focused funds (6) $31,939 44,177 43,523 270,816 233,711 Total investments carried at NAV $ 270,816 $ 246,259 Below is additional information regarding each of the investments listed in the table above as of December 31, 2021. (1) This investment fund was focused on the structured mortgage market. The fund primarily invested in U.S. Agency mortgage-backed securities. Redemptions are allowed at the end of any calendar quarter with a prior notice requirement of 65 days and are paid within 45 days at the end of the redemption dealing day. (2) This investment is comprised of interests in two unrelated LP funds that are structured to provide interest distributions primarily through diversified portfolios of private debt instruments. One LP allows redemption by special consent, while the other does not permit redemption. Income and capital are to be periodically distributed at the discretion of the LPs over an anticipated time frame that spans from three (3) This investment holds primarily long and short North American equities and targets absolute returns using strategies designed to take advantage of market opportunities. Redemptions are permitted; however, redemptions above specified thresholds (lowest threshold is 90%) may be only partially payable until after a fund audit is completed and are then payable within 30 days. (4) This investment is comprised of interests in multiple unrelated LP funds, each structured to provide capital appreciation through diversified investments in private equity, which can include investments in buyout, venture capital, debt including senior, second lien and mezzanine, distressed debt, collateralized loan obligations and other private equity-oriented LPs. Two of the LPs allow redemption by terms set forth in the LP agreements; the others do not permit redemption. Income and capital are to be periodically distributed at the discretion of the LP over time frames that are anticipated to span up to ten years. (5) This investment is comprised of multiple unrelated LP funds. Two funds seek to obtain superior risk-adjusted absolute returns through a diversified portfolio of debt securities, including bonds, loans and other asset-backed instruments. The remaining funds focus on private middle market company mezzanine and senior secured loans, opportunities across the credit spectrum, mortgage backed-loans, as well as various types of loan-backed investments. Three of the funds allow redemptions at any quarter-end with prior notice requirements that vary from 90 to 180 days while two other funds allow for redemptions with consent of the General Partner. The remaining funds do not allow redemptions. For the funds that do not allow redemptions, income and capital are to be periodically distributed at the discretion of the LP over time frames throughout the remaining life of the funds. (6) This investment is comprised of multiple unrelated LPs/LLCs funds. One fund is an LLC focused on investing in North American consumer products companies, comprised of equity and equity-related securities, as well as debt instruments. A second fund is focused on aircraft investments, along with components and assets related to aircrafts. For both funds, redemptions are not permitted. Another fund is an LP focused on North American energy infrastructure assets that allows redemption with consent of the General Partner. The remaining funds are real estate focused LPs, one of which allows for redemption with prior notice. ProAssurance may not sell, transfer or assign its interest in any of the above LPs/LLCs without special consent from the LPs/LLCs. Nonrecurring Fair Value Measurement During the third quarter of 2020, ProAssurance recognized a nonrecurring fair value measurement related to the goodwill in its Specialty P&C reporting unit with a carrying value of $161.1 million prior to the fair value measurement. This nonrecurring fair value measurement resulted in the goodwill being written down to its implied fair value of zero resulting in an impairment of goodwill of $161.1 million. The inputs used in the fair value measurement were non-observable and, as such, were categorized as a Level 3 valuation. ProAssurance did not have any other assets or liabilities that were measured at fair value on a nonrecurring basis at December 31, 2021 or 2020. Financial Instruments - Methodologies Other Than Fair Value The following table provides the estimated fair value of the Company's financial instruments that, in accordance with GAAP for the type of investment, are measured using a methodology other than fair value. Fair values provided primarily fall within the Level 3 fair value category. December 31, 2021 December 31, 2020 (In thousands) Carrying Fair Carrying Fair Financial assets: BOLI $ 81,767 $ 81,767 $ 67,847 $ 67,847 Other investments $ 3,183 $ 3,183 $ 2,952 $ 2,952 Other assets $ 40,581 $ 40,583 $ 31,128 $ 31,141 Financial liabilities: Senior notes due 2023* $ 250,000 $ 264,000 $ 250,000 $ 269,160 Mortgage Loans* $ — $ — $ 36,113 $ 36,113 Contribution Certificates $ 175,900 $ 179,892 $ — $ — Other liabilities $ 52,332 $ 52,332 $ 30,334 $ 30,334 * Carrying value excludes unamortized debt issuance costs. The fair value of the BOLI was equal to the cash surrender value associated with the policies on the valuation date. Other investments listed in the table above include FHLB common stock carried at cost and an annuity investment carried at amortized cost. Three of ProAssurance's insurance subsidiaries are members of an FHLB. The estimated fair value of the FHLB common stock was based on the amount the subsidiaries would receive if their memberships were canceled, as the memberships cannot be sold. The fair value of the annuity represents the present value of the expected future cash flows discounted using a rate available in active markets for similarly structured instruments. Other assets and other liabilities primarily consisted of related investment assets and liabilities associated with funded deferred compensation agreements. The fair value of the funded deferred compensation assets was based upon quoted market prices, which is categorized as a Level 1 valuation, and had a fair value of $39.5 million and $30.6 million at December 31, 2021 and 2020, respectively. The fair value of the funded deferred compensation assets as of December 31, 2021 included rabbi trust assets acquired as a result of the NORCAL acquisition, which consists entirely of cash equivalents and mutual funds with a total fair value of $5.2 million (see Note 2 for additional information on NORCAL acquisition). Other assets also included an unsecured note receivable under a separate line of credit agreement. The fair value of the note receivable was based on the present value of expected cash flows from the note receivable, discounted at market rates on the valuation date for receivables with similar credit standings and similar payment structures. Other liabilities primarily consisted of liabilities associated with funded deferred compensation agreements. The reported balance is determined based on the amount of elective deferrals and employer contributions adjusted for periodic changes in the fair value of the participant balances based on the performance of the funds selected by the participants and had a fair value of $52.3 million and $30.3 million at December 31, 2021 and December 31, 2020, respectively. The fair value of the funded deferred compensation liabilities as of December 31, 2021 included liabilities assumed as a result of the NORCAL acquisition, with a total fair value of $18.4 million (see Note 2 for additional information). The fair value of the debt, excluding the Contribution Certificates, was estimated based on the present value of expected future cash outflows, discounted at rates available on the valuation date for similar debt issued by entities with a similar credit standing to ProAssurance. The fair value of the Contribution Certificates was estimated based on a binomial option pricing model. The Contribution Certificates is a portion of the purchase consideration for the NORCAL acquisition and are issued to certain NORCAL policyholders in the conversion, and those instruments are an obligation of NORCAL Insurance Company, the successor of NORCAL Mutual Insurance Company (see Note 2 and 13 for further discussion of the terms of the Contribution Certificates). |
Investments
Investments | 12 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Available-for-sale fixed maturities at December 31, 2021 and December 31, 2020 included the following: December 31, 2021 (In thousands) Amortized Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturities, available-for-sale U.S. Treasury obligations $ 239,765 $ 1,166 $ 2,424 $ 238,507 U.S. Government-sponsored enterprise obligations 20,467 29 262 $ 20,234 State and municipal bonds 511,750 9,620 2,174 $ 519,196 Corporate debt 1,884,455 29,050 14,949 $ 1,898,556 Residential mortgage-backed securities 455,438 4,254 5,751 $ 453,941 Agency commercial mortgage-backed securities 13,909 294 62 $ 14,141 Other commercial mortgage-backed securities 231,226 2,530 2,273 $ 231,483 Other asset-backed securities 457,837 2,747 2,920 $ 457,664 $ 3,814,847 $ 49,690 $ 30,815 $ 3,833,722 December 31, 2020 (In thousands) Amortized Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturities, available-for-sale U.S. Treasury obligations $ 104,097 $ — $ 2,985 $ 23 $ 107,059 U.S. Government-sponsored enterprise obligations 12,103 — 158 — 12,261 State and municipal bonds 316,022 — 16,937 39 332,920 Corporate debt 1,267,992 552 63,204 1,302 1,329,342 Residential mortgage-backed securities 269,752 — 7,171 382 276,541 Agency commercial mortgage-backed securities 12,623 — 687 — 13,310 Other commercial mortgage-backed securities 109,244 — 4,788 940 113,092 Other asset-backed securities 269,742 — 4,006 742 273,006 $ 2,361,575 $ 552 $ 99,936 $ 3,428 $ 2,457,531 The recorded cost basis and estimated fair value of available-for-sale fixed maturities at December 31, 2021, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. (In thousands) Amortized Due in one Due after Due after Due after Total Fair Fixed maturities, available-for-sale U.S. Treasury obligations $ 239,765 $ 20,327 $ 131,030 $ 85,457 $ 1,693 $ 238,507 U.S. Government-sponsored enterprise obligations 20,467 4,412 11,646 4,033 143 20,234 State and municipal bonds 511,750 21,480 166,434 194,053 137,229 519,196 Corporate debt 1,884,455 94,395 864,520 821,209 118,432 1,898,556 Residential mortgage-backed securities 455,438 453,941 Agency commercial mortgage-backed securities 13,909 14,141 Other commercial mortgage-backed securities 231,226 231,483 Other asset-backed securities 457,837 457,664 $ 3,814,847 $ 3,833,722 Excluding obligations of the U.S. Government, U.S. Government-sponsored enterprises and a U.S. Government obligations money market fund, no investment in any entity or its affiliates exceeded 10% of shareholders’ equity at December 31, 2021. Cash and securities with a carrying value of $56.7 million at December 31, 2021 were on deposit with various state insurance departments to meet regulatory requirements. As a member of Lloyd's, ProAssurance is required to maintain capital at Lloyd's, referred to as FAL, to support underwriting by Syndicate 1729. At December 31, 2021, ProAssurance's FAL investments were comprised of available-for-sale fixed maturities with a fair value of $36.6 million and cash and cash equivalents of $1.2 million on deposit with Lloyd's in order to satisfy these FAL requirements. During the second and fourth quarters of 2021, ProAssurance received a return of approximately $24.5 million and $8.0 million, respectively, of cash from its FAL balances given the reduction in the Company's participation in the results of Syndicate 1729, to 5% from 29%, and Syndicate 6131, to 50% from 100%, for the 2021 underwriting year. Further, during the fourth quarter of 2021, ProAssurance received a return of approximately $26.6 million of cash from its FAL balances given Syndicate 6131 ceased underwriting on a quota share basis with Syndicate 1729 as Syndicate 6131's business is retained within Syndicate 1729 beginning with the 2022 underwriting year (see Note 18 for additional information). Investments Held in a Loss Position The following tables provide summarized information with respect to investments held in an unrealized loss position at December 31, 2021 and December 31, 2020, including the length of time the investment had been held in a continuous unrealized loss position. December 31, 2021 Total Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Loss Value Loss Value Loss Fixed maturities, available-for-sale U.S. Treasury obligations $ 190,054 $ 2,424 $ 181,689 $ 2,206 $ 8,365 $ 218 U.S. Government-sponsored enterprise obligations 16,287 262 16,287 262 — — State and municipal bonds 175,442 2,174 171,930 2,039 3,512 135 Corporate debt 945,196 14,949 866,731 11,828 78,465 3,121 Residential mortgage-backed securities 326,248 5,751 290,019 4,320 36,229 1,431 Agency commercial mortgage-backed securities 4,529 62 4,355 54 174 8 Other commercial mortgage-backed securities 151,827 2,273 145,467 1,884 6,360 389 Other asset-backed securities 278,915 2,920 271,463 2,796 7,452 124 $ 2,088,498 $ 30,815 $ 1,947,941 $ 25,389 $ 140,557 $ 5,426 December 31, 2020 Total Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Loss Value Loss Value Loss Fixed maturities, available-for-sale U.S. Treasury obligations $ 14,390 $ 23 $ 14,390 $ 23 $ — $ — State and municipal bonds 6,416 39 6,416 39 — — Corporate debt 94,695 1,302 79,436 1,020 15,259 282 Residential mortgage-backed securities 34,928 382 34,509 381 419 1 Other commercial mortgage-backed securities 18,766 940 18,480 935 286 5 Other asset-backed securities 43,739 742 37,850 701 5,889 41 $ 212,934 $ 3,428 $ 191,081 $ 3,099 $ 21,853 $ 329 As of December 31, 2021, excluding U.S. Government or U.S. Government-sponsored enterprise obligations, there were 1,766 debt securities (45.8% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 998 issuers. The greatest and second greatest unrealized loss positions among those securities were each approximately $0.4 million. The securities were evaluated for impairment as of December 31, 2021. As of December 31, 2020, excluding U.S. Government or U.S. Government-sponsored enterprise obligations, there were 292 debt securities (11.1% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 229 issuers. The greatest and second greatest unrealized loss positions among those securities were approximately $0.4 million and $0.2 million, respectively. The securities were evaluated for impairment as of December 31, 2020. Each quarter, ProAssurance performs a detailed analysis for the purpose of assessing whether any of the securities it holds in an unrealized loss position has suffered an impairment due to credit or non-credit factors. A detailed discussion of the factors considered in the assessment is included in Note 1. Fixed maturity securities held in an unrealized loss position at December 31, 2021, excluding asset-backed securities, have paid all scheduled contractual payments and are expected to continue. Expected future cash flows of asset-backed securities, excluding those issued by GNMA, FNMA and FHLMC, held in an unrealized loss position were estimated as part of the December 31, 2021 impairment evaluation using the most recently available six-month historical performance data for the collateral (loans) underlying the security or, if historical data was not available, sector based assumptions, and equaled or exceeded the current amortized cost basis of the security. The following tables present a roll forward of the allowance for expected credit losses on available-for-sale fixed maturities for the years ended December 31, 2021 and 2020. Year Ended December 31, 2021 (In thousands) Corporate Debt Total Balance, at December 31, 2020 $ 552 $ 552 Reductions related to: Securities sold during the period (552) (552) Balance, at December 31, 2021 $ — $ — Year Ended December 31, 2020 (In thousands) Corporate Debt Total Balance, at December 31, 2019 $ — $ — Additional credit losses related to securities for which: No allowance for credit losses has been previously recognized 1,508 1,508 Reductions related to: Securities sold during the period (956) (956) Balance, at December 31, 2020 $ 552 $ 552 Other information regarding sales and purchases of fixed maturity available-for-sale securities is as follows: Year Ended December 31 (In millions) 2021 2020 2019 Proceeds from sales (exclusive of maturities and paydowns) $ 504.0 $ 354.4 $ 177.1 Purchases $ 1,438.2 $ 917.0 $ 695.6 Equity Investments ProAssurance's equity investments are carried at fair value with changes in fair value recognized in income as a component of net investment gains (losses) during the period of change. Equity investments on the Consolidated Balance Sheets as of December 31, 2021 and 2020 primarily included stocks, bond funds and investment funds. Short-term Investments ProAssurance's short-term investments, which have a maturity at purchase of one year or less, are primarily comprised of investments in U.S. treasury obligations, commercial paper and money market funds. Short-term investments are carried at fair value which approximates the cost of the securities due to their short-term nature. BOLI ProAssurance holds BOLI policies that are carried at the current cash surrender value of the policies (original cost $43 million), which includes the BOLI policies acquired from NORCAL (original cost $10 million). All insured individuals were members of ProAssurance or NORCAL management at the time the policies were acquired. The primary purpose of the program is to offset future employee benefit expenses through earnings on the cash value of the policies. ProAssurance is the owner and beneficiary of these policies. Net Investment Income Net investment income by investment category was as follows: Year Ended December 31 (In thousands) 2021 2020 2019 Fixed maturities $ 74,437 $ 69,308 $ 72,593 Equities 2,539 4,369 17,650 Short-term investments, including Other 1,969 2,683 7,493 BOLI 2,698 2,023 2,017 Investment fees and expenses (11,121) (6,385) (6,484) Net investment income $ 70,522 $ 71,998 $ 93,269 Investment in Unconsolidated Subsidiaries ProAssurance's investment in unconsolidated subsidiaries were as follows: December 31, 2021 Carrying Value (In thousands) Percentage December 31, December 31, Qualified affordable housing project tax credit partnerships See below $ 12,424 $ 27,719 All other investments, primarily investment fund LPs/LLCs See below 323,152 282,810 $ 335,576 $ 310,529 Qualified affordable housing project tax credit partnership interests held by ProAssurance generate investment returns by providing tax benefits to fund investors in the form of tax credits and project operating losses. The carrying value of these investments reflects ProAssurance's total commitments (both funded and unfunded) to the partnerships, less any amortization. ProAssurance's ownership percentage relative to two of the tax credit partnership interests is almost 100%; these interests had a carrying value of $3.2 million and $9.4 million at December 31, 2021 and 2020, respectively. ProAssurance's ownership percentage relative to the remaining tax credit partnership interests is less than 20%; these interests had a carrying value of $9.2 million and $18.3 million at December 31, 2021 and 2020, respectively. Since ProAssurance has the ability to exert influence over the partnerships but does not control them, all are accounted for using the equity method. See further discussion of the entities in which ProAssurance holds passive interests in Note 16. ProAssurance holds interests in investment fund LPs/LLCs and other equity method investments and LPs/LLCs which are not considered to be investment funds. ProAssurance's ownership percentage relative to four of the LPs/LLCs is greater than 25%, which is expected to be reduced as the funds mature and other investors participate in the funds; these investments had a carrying value of $49.0 million and $46.2 million at December 31, 2021 and 2020, respectively. ProAssurance's ownership percentage relative to the remaining investments and LPs/LLCs is less than 25%; these interests had a carrying value of $274.2 million and $236.6 million at December 31, 2021 and 2020, respectively. ProAssurance does not have the ability to exert control over any of these funds. Equity in Earnings (Loss) of Unconsolidated Subsidiaries Equity in earnings (loss) of unconsolidated subsidiaries included losses from qualified affordable housing project tax credit partnerships and a historic tax credit partnership. Investment results recorded reflect ProAssurance's allocable portion of partnership operating results. Tax credits reduce income tax expense in the period they are recognized. The results recorded and tax credits recognized related to ProAssurance's tax credit partnership investments were as follows: Year Ended December 31 (In thousands) 2021 2020 2019 Qualified affordable housing project tax credit partnerships Losses recorded $ 15,239 $ 18,684 $ 19,231 Tax credits recognized $ 13,160 $ 17,465 $ 21,933 Historic tax credit partnership* Losses (gains) recorded $ (182) $ 1,092 $ 1,672 Tax credits recognized $ — $ 412 $ — *ProAssurance holds a historic tax credit partnership which was fully amortized in 2020. This partnership generated investment returns by providing benefits to fund investors in the form of tax credits, tax deductible project operating losses and positive cash flows. ProAssurance received a distribution associated with this investment during the first quarter of 2021, as a result of positive cash flows from a completed project, which was recognized as an operating gain. The tax credits generated from the Company's tax credit partnership investments of $13.2 million, $17.9 million and $18.2 million for the years ended December 31, 2021, 2020 and 2019, respectively, were deferred and are expected to be utilized in future periods. For the year ended December 31, 2021, ProAssurance utilized approximately $2.0 million of tax credits carried forward from 2019 and, as of December 31, 2021, the Company had approximately $46.7 million of available tax credit carryforwards generated from its investments in tax credit partnerships which we expect to utilize in future years (see further discussion in Note 7). Tax credits provided by the underlying projects of the Company's historic tax credit partnership are typically available in the tax year in which the project is put into active service, whereas the tax credits provided by qualified affordable housing project tax credit partnerships are provided over approximately a ten year period. Net Investment Gains (Losses) Realized investment gains and losses are recognized on the first-in, first-out basis. The following table provides detailed information regarding net investment gains (losses): Year Ended December 31 (In thousands) 2021 2020 2019 Total impairment losses: Corporate debt $ — $ (1,745) $ (978) Portion of impairment losses recognized in other comprehensive income before taxes: Corporate debt — 237 227 Net impairment losses recognized in earnings — (1,508) (751) Gross realized gains, available-for-sale fixed maturities 14,311 13,855 3,786 Gross realized (losses), available-for-sale fixed maturities (1,218) (2,501) (538) Net realized gains (losses), trading fixed maturities (20) 288 74 Net realized gains (losses), equity investments 7,337 13,192 20,577 Net realized gains (losses), other investments 8,660 3,883 1,626 Change in unrealized holding gains (losses), trading fixed maturities (529) 501 705 Change in unrealized holding gains (losses), equity investments (2,941) (16,287) 30,674 Change in unrealized holding gains (losses), convertible securities, carried at fair value (1,701) 3,850 3,653 Other 411 405 68 Net investment gains (losses) $ 24,310 $ 15,678 $ 59,874 For the year ended December 31, 2021, ProAssurance did not recognize any credit-related impairment losses in earnings or non-credit impairment losses in OCI. For the year ended December 31, 2020, ProAssurance recognized credit-related impairment losses in earnings of $1.5 million and a nominal amount of non-credit impairment losses in OCI. The credit-related impairment losses recognized in 2020 primarily related to corporate bonds in the energy and consumer sectors. Additionally, 2020 included credit-related impairment losses related to four corporate bonds in various sectors, which were sold during 2020. The non-credit impairment losses recognized in 2020 related to three corporate bonds in the energy and consumer sectors. For the year ended December 31, 2019, ProAssurance recognized credit-related impairment losses in earnings of $0.8 million and nominal amount of non-credit impairment losses in OCI, both of which related to three corporate bonds in the energy and consumer sectors. ProAssurance recognized $24.3 million of net investment gains during 2021, driven primarily by realized gains on the sale of certain available-for-sale fixed maturities and other investments. ProAssurance recognized $15.7 million of net investment gains during 2020, driven primarily by realized gains on the sale of available-for-sale fixed maturities and equity investments, partially offset by unrealized holding losses resulting from decreases in the fair value on the Company's equity portfolio due to the volatility in the global financial markets related to COVID-19. ProAssurance recognized $59.9 million of net investment gains during 2019 driven by both realized gains from the sale of equity investments and unrealized holding gains on the Company's equity portfolio due to the improvement in the market, which caused the Company's equity securities to increase in value. The most significant sectors that benefited from the improvement in the market in 2019 were the financial and energy sectors. The following table presents a roll forward of cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the impairment was recorded in OCI. Year Ended December 31 (In thousands) 2021 2020 2019 Balance beginning of period $ 552 $ 470 $ 93 Additional credit losses recognized during the period, related to securities for which: No impairment has been previously recognized — 1,064 377 Impairment has been previously recognized — 258 — Reductions due to: Securities sold during the period (realized) (552) (1,240) — Balance December 31 $ — $ 552 $ 470 |
Retroactive Insurance Contracts
Retroactive Insurance Contracts | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Retroactive Insurance Contracts | Retroactive Insurance ContractsProAssurance offers custom alternative risk solutions which include assumed reinsurance. In the first quarter of 2021, ProAssurance entered into an assumed reinsurance arrangement with a regional hospital group. As the contract included both prospective coverage and retroactive coverage, ProAssurance bifurcated the provisions of the contract and accounted for each component separately. In the first quarter of 2021, ProAssurance recognized total net premiums written of $4.5 million, comprised of $2.2 million of prospective coverage and $2.3 million of retroactive coverage, total net premiums earned of $3.0 million, comprised of $0.7 million of prospective coverage and $2.3 million of retroactive coverage and total net losses and loss adjustment expenses of $2.9 million in the Consolidated Statements of Income and Comprehensive Income. See Note 1 for additional information regarding ProAssurance's accounting policy for retroactive insurance contracts.Reserve for Losses and Loss Adjustment Expenses The reserve for losses is established based on estimates of individual claims and actuarially determined estimates of future losses based on ProAssurance’s past loss experience, available industry data and projections as to future claims frequency, severity, inflationary trends and settlement patterns. Estimating the reserve, particularly the reserve appropriate for liability exposures, is a complex process. For a high proportion of the risks insured or reinsured by ProAssurance, claims may be resolved over an extended period of time, often five years or more, and may be subject to litigation. Estimating losses requires ProAssurance to make and revise judgments and assessments regarding multiple uncertainties over an extended period of time. As a result, the reserve estimate may vary considerably from the eventual outcome. The assumptions used in establishing ProAssurance’s reserve are regularly reviewed and updated by management as new data becomes available. Changes to estimates of previously established reserves are included in earnings in the period in which the estimate is changed. ProAssurance believes that the methods it uses to establish reserves are reasonable and appropriate. Each year, ProAssurance uses internal actuaries to review the reserve for losses of each insurance subsidiary. ProAssurance also engages consulting actuaries to review ProAssurance claims data and provide observations regarding cost trends, rate adequacy and ultimate loss costs. The statutory filings of each insurance company with the insurance regulators must be accompanied by a consulting actuary's certification as to their respective reserves. ProAssurance considers the views of the actuaries as well as other factors, such as premium rates, historical paid and incurred loss development trends and an evaluation of the current loss environment including frequency, severity, expected effect of inflation, general economic and social trends, and the legal and political environment in establishing the amount of its reserve for losses. The Company expects there will be impacts to these factors as well as to the timing of loss emergence and ultimate loss ratios for certain coverages it underwrites as a result of COVID-19 and the related economic shutdown; however, the extent to which COVID-19 impacts these factors is highly uncertain and cannot be predicted (see "Item 1A, Risk Factors" included in this report for additional information). As a result of COVID-19, the industry is experiencing new conditions, including the postponement of court cases, changes in settlement trends and a significant reduction in economic activity and insured exposure in some classes. ProAssurance's booked reserves as of December 31, 2021 include consideration of these factors, but the duration and degree to which these issues persist, along with potential legislative, regulatory or judicial actions, could result in significant changes to the Company's reserve estimates in future periods. ProAssurance partitions its reserve by accident year, which is the year in which the claim becomes its liability. For claims-made policies, the insured event generally becomes a liability when the event is first reported to the Company. For occurrence policies, the insured event becomes a liability when the event takes place. For retroactive coverages, the insured event becomes a liability at inception of the underlying contract. As claims are incurred (reported) and claim payments are made, they are aggregated by accident year for analysis purposes. ProAssurance also partitions its reserve by reserve type: case reserves and IBNR reserves. Case reserves are established by the claims department based upon the particular circumstances of each reported claim and represent ProAssurance’s estimate of the future loss costs (often referred to as expected losses) that will be paid on reported claims. Case reserves are decremented as claim payments are made and are periodically adjusted upward or downward as estimates regarding the amount of future losses are revised; a reported loss for an individual claim equates to the case reserve at any point in time plus the claim payments that have been made to date. IBNR reserves represent an estimate, in the aggregate, of future development on losses that have been reported to ProAssurance plus an estimate of losses that have been incurred but not reported. Acquired Reserve The acquisition of NORCAL increased ProAssurance's net reserves by $1.1 billion which represented the fair value of NORCAL's reserve, net of the fair value of related reinsurance recoverables, at the time of acquisition including a fair value adjustment on the reserve as well as negative VOBA recorded on NORCAL's unearned premium and DDR reserve. The reserve fair value adjustment will be amortized utilizing loss payment patterns and the negative VOBAs will be amortized over a period in proportion to the earn-out of the premium or in-line with the approximate consumption of losses. Such amortization is recorded as a reduction to net losses and loss adjustment expenses. See Note 2 for more information. Development of Prior Accident Years In addition to setting the initial reserve for the current accident year, each period ProAssurance reassesses the amount of reserve required for prior accident years. The foundation of ProAssurance’s reserve re-estimation process is an actuarial analysis that is performed by both the internal and consulting actuaries. This detailed analysis projects ultimate losses based on partitions which include line of business, geography, coverage layer and accident year. The procedure uses the most representative data for each partition, capturing its unique patterns of development and trends. ProAssurance believes that the use of consulting actuaries provides an independent view of the loss data as well as a broader perspective on industry loss trends. Reserving Methodologies For the HCPL, Medical Technology Liability and Workers’ Compensation lines of business, the analysis performed by the consulting actuaries analyzes each partition of the business in a variety of ways and uses multiple actuarial methodologies in performing these analyses, including: Bornhuetter-Ferguson (Paid and Reported) Method, Paid Development Method, Reported (Incurred) Development Method, Average Paid Value Method and Average Reported Value Method. Generally, methods such as the Bornhuetter-Ferguson Method are used on more recent accident years where there is less data available on which to base the analysis. As time progresses and an increased amount of data is available for a given accident year, management gives more confidence to the development and average methods, as these methods typically rely more heavily on ProAssurance's own historical data. These methods emphasize different aspects of loss reserve estimation and provide a variety of perspectives for ProAssurance's decisions. For the Workers’ Compensation line of business in both the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance segments, ProAssurance utilizes the Reported (Incurred) Development Method, Paid Loss Development Method and Bornhuetter-Ferguson Method, to develop the reserve for each accident year. The actuarial review includes the stratification of claims data (lost time claims and medical only claims) using different variations that allow for identification of trends that may not be readily identifiable if the data was evaluated only in the aggregate. Reported and paid loss development factors are key assumptions in the reserve estimation process and are based on ProAssurance’s historical reported and paid loss development patterns. As accident years mature, the various actuarial methodologies produce more consistent loss estimates. For the Lloyd’s Syndicates segment business, losses are initially estimated using the loss assumptions by risk category incorporated into the business plan submitted to Lloyd’s with consideration given to loss experience incurred to date. These assumptions were influenced by loss results reflected in Lloyd’s historical data for similar risks. As losses are reported and resolved and loss experience becomes more credible from a statistical perspective, actual loss experience is incorporated into the estimates. Certain of the methodologies utilized to estimate the ultimate losses for each partition of the reserve consider the actual amounts paid. Paid data is particularly influential when a large portion of known claims have been closed, as is the case for older accident years. In selecting a point estimate for each partition, management considers the extent to which trends are emerging consistently for all partitions and known industry trends. Thus, actual, rather than estimated severity trends are given more consideration. If actual severity trends are lower than those estimated at the time that reserves were previously established, the recognition of favorable development is indicated. This is particularly true for older accident years where actuarial methodologies give more weight to actual loss costs (severity). The various actuarial methods discussed above are applied in a consistent manner from period to period. In addition, ProAssurance performs statistical reviews of claims data such as claim counts, average settlement costs and severity trends when establishing the reserve. Selected point estimates of ultimate losses are utilized to develop estimates of ultimate losses recoverable from reinsurers, based on the terms and conditions of ProAssurance’s reinsurance agreements. An overall estimate of the amount receivable from reinsurers is determined by combining the individual estimates. ProAssurance’s net reserve estimate is the gross reserve point estimate less the estimated reinsurance recovery. Activity in the reserve for losses and loss adjustment expenses is summarized as follows: (In thousands) 2021 2020 2019 Balance, beginning of year $ 2,417,179 $ 2,346,526 $ 2,119,847 Less reinsurance recoverables on unpaid losses and loss adjustment expenses 385,087 390,708 343,820 Net balance, beginning of year 2,032,092 1,955,818 1,776,027 Net reserves acquired from acquisitions 1,089,103 — — Net losses: Current year (1)(2)(3) 797,732 711,846 765,698 Favorable development of reserves established in prior years, net (45,483) (50,399) (11,783) Total 752,249 661,447 753,915 Paid related to: Current year (4) (109,925) (83,204) (115,133) Prior years (4) (635,320) (501,969) (458,991) Total paid (745,245) (585,173) (574,124) Net balance, end of year 3,128,199 2,032,092 1,955,818 Plus reinsurance recoverables on unpaid losses and loss adjustment expenses 451,741 385,087 390,708 Balance, end of year $ 3,579,940 $ 2,417,179 $ 2,346,526 (1) Current year net losses for the year ended December 31, 2019 included incurred losses of $2.1 million related to a loss portfolio transfer entered into during 2019 in the Specialty P&C segment. In addition, current year net losses in 2019 included a PDR of $9.2 million associated with the unearned premium of a large national healthcare account's claims-made policy in the Specialty P&C segment. Current year net losses for the year ended December 31, 2020 included the amortization of the aforementioned $9.2 million PDR which offsets the impact of the losses incurred associated with the premium earned related to the large national healthcare account's claims-made policy. (2) During 2020, the aforementioned large national healthcare account did not renew on terms offered by the Company and exercised its contractual option to purchase extended reporting endorsement or "tail" coverage. As a result, ProAssurance recognized total current year losses of $60.0 million (assumes a full limit loss) within the Specialty P&C segment for the year ended December 31, 2020. (3) Current year net losses for the year ended December 31, 2021 included $6.7 million of amortization of the negative VOBA associated with NORCAL's assumed unearned premium, which is being amortized over a period in proportion to the earn-out of the associated premium as a reduction to current accident year net losses (see Note 2). (4) Paid losses for the year ended December 31, 2021 included prior year paid losses of $136.0 million and current year paid losses of $22.3 million related to reserves acquired from NORCAL since May 5, 2021. As discussed in Note 1, estimating liability reserves is complex and requires the use of many assumptions. As time passes and ultimate losses for prior years are either known or become subject to a more precise estimation, ProAssurance increases or decreases the reserve estimates established in prior periods. The net favorable loss development recognized for the year ended December 31, 2021 primarily reflected a lower than anticipated loss emergence in the Specialty P&C segment, primarily related to the 2015 through 2020 accident years. The net favorable development recognized in the Specialty P&C segment also included $7.9 million related to the amortization of the purchase accounting fair value adjustment on NORCAL's assumed net reserve and amortization of the negative VOBA associated with NORCAL's DDR reserve which is recorded as a reduction to prior accident year net losses and loss adjustment expenses (see Note 2). ProAssurance did not recognize any development related to NORCAL's prior accident year reserves since the date of acquisition. Net favorable prior accident year reserve development recognized in the Specialty P&C segment also included a $1.0 million reduction in our IBNR reserve for COVID-19 during the third quarter of 2021. The net favorable development also reflected overall favorable trends in claim closing patterns in the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance segments. The net favorable loss development recognized in the Workers' Compensation Insurance segment is primarily related to the 2012 through 2017 accident years. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment is primarily related to accident year 2015 and accident years 2018 through 2020. Consolidated net favorable loss development recognized in 2021 was partially offset by unfavorable reserve development recognized in the Lloyd's Syndicates segment driven by certain catastrophe related losses. The net favorable loss development recognized for the year ended December 31, 2020 primarily reflected a lower than anticipated claims severity trend (i.e., the average size of a claim) in the Specialty P&C segment, primarily related to the 2014 through 2017 accident years. The net favorable development also reflected overall favorable trends in claim closing patterns in the Segregated Portfolio Cell Reinsurance and Workers' Compensation Insurance segments. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment primarily related to the 2014 through 2019 accident years and the net favorable loss development recognized in the Workers' Compensation Insurance segment primarily related to the 2014 through 2017 accident years. The net favorable loss development recognized for the year ended December 31, 2019 primarily reflected overall favorable trends in claim closing patterns in the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance segments, largely offset by net unfavorable loss development recognized in the Specialty P&C segment. The net favorable loss development recognized in the Workers' Compensation Insurance segment primarily related to the 2015 and 2016 accident years and the net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment primarily related to the 2015 through 2018 accident years. The net unfavorable loss development recognized in the Specialty P&C segment primarily related to accident years 2016 through 2018. The favorable loss development recognized in 2018 primarily reflected a lower than anticipated claims severity trend for accident years 2011 through 2015. Claims Development ProAssurance establishes its reserve and manages claims activity by coverage, product or line of business and various categories of reserves have similar characteristics. Therefore, ProAssurance has aggregated these reserve categories into several reserve groups in the following disclosures and tables that provide a more meaningful view of the amount, timing and uncertainty of cash flows arising from the liability. At the same time, these reserve groups present a disaggregated view of the major elements of the overall loss reserve liability. The reserve groups include HCPL claims-made reserve, HCPL occurrence reserve, Medical Technology Liability claims-made reserve, Workers’ Compensation Insurance reserve and Segregated Portfolio Cell Reinsurance - workers' compensation reserve. All other loss reserve categories are deemed to be less homogeneous or relatively small on a standalone basis and are included in other short-duration lines in the claims development reconciliation. The composition of the reserve groups is based on similar characteristics with respect to the risks being insured and the reporting and payout pattern of the underlying claims. In most instances the groups follow the coverage categorizations used in statutory financial reporting for U.S.-domiciled property-casualty insurance companies. HCPL claims are disaggregated into those claims covered by claims-made policies and those claims covered by occurrence policies. For claims-made policies, the insured event generally becomes a liability when the event is first reported to the insurer. For occurrence policies, the insured event becomes a liability when the event takes place, even if unknown at that time. Claims-made coverage has a short reporting pattern, with virtually all claims known shortly after the end of the policy period. Occurrence coverage claims can have an extended reporting pattern, with the time from the loss event until the filing of the claim often measured in years, at which point the claims resolution process begins. Although the resolution process and time frame is similar once a claim is reported, combining claims from claims-made and occurrence coverage types would result in distortion due to the difference in reporting lag. Medical Technology Liability reserves are grouped separately due to the nature of the risk, including the potential for mass torts and multiple claims arising out of the same product or service. The small amount of Medical Technology Liability occurrence reserves are included in other short-duration lines. Workers' compensation reserves in the Workers' Compensation Insurance and the Segregated Portfolio Cell Reinsurance segments are each grouped separately due to the difference in the type of coverage provided and the differences in the claims resolution process as compared to other liability insurance. The small amount of HCPL reserves in the Segregated Portfolio Cell Reinsurance segment are included in other short-duration lines. ProAssurance has elected to present reserve history for acquired entities in all periods shown in the tables below, including periods prior to acquisition. With the exception of the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance - workers' compensation lines of business, virtually all other acquired entities are captured within the HCPL line of business. All information prior to 2021 disclosed in the Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance, Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance and Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance tables that follow is presented as supplementary information. The “Cumulative Number of Reported Claims” in the tables that follow includes the combined number of claims for an accident year and excludes projected unreported IBNR claims. A claim is considered reported when ProAssurance becomes aware of and accepts it for coverage under the terms of the Company's insurance contracts. Healthcare Professional Liability Reserve HCPL loss costs are impacted by many factors, including but not limited to the nature of the claim, including whether or not the claim is an individual or a mass tort claim, the personal situation of the claimant or the claimant's family, the outcome of jury trials, the legislative and judicial climate where any potential litigation may occur, general economic and social conditions and, for claims involving bodily injury, the trend of healthcare costs. ProAssurance sets an initial reserve based upon the evaluation of the current loss environment including frequency, severity, the expected effect of inflation, general economic and social trends, and the legal and political environment. The initial loss ratio for HCPL business has ranged from 87% to 106% in recent years and has recently trended towards the higher end of this range due to increased reserve estimates for a large national healthcare account as well as increases in loss severity in the broader HCPL industry, including our Specialty line of business. ProAssurance has elected to present reserve history for NORCAL in all periods shown in the Healthcare Professional Liability tables below, including periods prior to acquisition. Healthcare Professional Liability Claims-Made Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 555,440 $ 528,799 $ 510,085 $ 490,981 $ 474,631 $ 468,956 $ 458,826 $ 453,625 $ 451,152 $ 448,782 $ 402 7,103 2013 — $ 527,520 $ 513,937 $ 501,580 $ 489,378 $ 480,036 $ 466,798 $ 451,182 $ 455,346 457,038 $ (1,284) 7,697 2014 — — $ 509,774 $ 494,024 $ 491,403 $ 488,185 $ 474,317 $ 468,153 $ 470,189 466,554 $ (373) 7,523 2015 — — — $ 503,412 $ 486,760 $ 492,824 $ 491,180 $ 500,336 $ 500,550 503,600 $ (4,798) 7,402 2016 — — — — $ 484,153 $ 488,349 $ 507,586 $ 555,416 $ 554,395 560,840 $ (11,854) 7,993 2017 — — — — — $ 508,072 $ 506,207 $ 577,401 $ 569,737 573,570 $ (16,923) 8,054 2018 — — — — — — $ 544,617 $ 643,864 $ 630,169 636,023 $ (53,325) 8,575 2019 — — — — — — — $ 670,958 $ 664,934 642,370 $ 4,919 8,443 2020 — — — — — — — — $ 593,994 574,274 $ 127,489 6,563 2021 — — — — — — — — — 525,363 $ 345,154 4,799 Total $ 5,388,414 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 25,864 $ 136,883 $ 257,697 $ 331,521 $ 374,537 $ 401,604 $ 424,987 $ 434,141 $ 440,872 $ 441,417 2013 — $ 30,214 $ 142,759 $ 255,605 $ 328,982 $ 376,930 $ 398,549 $ 415,012 $ 430,916 435,158 2014 — — $ 30,483 $ 125,078 $ 246,510 $ 325,782 $ 389,983 $ 416,150 $ 434,540 439,575 2015 — — — $ 26,664 $ 125,234 $ 256,791 $ 351,703 $ 410,506 $ 446,069 463,224 2016 — — — — $ 27,442 $ 137,338 $ 276,548 $ 378,828 $ 440,163 472,441 2017 — — — — — $ 32,342 $ 147,515 $ 288,695 $ 351,548 419,180 2018 — — — — — — $ 34,238 $ 159,657 $ 279,204 367,522 2019 — — — — — — — $ 37,755 $ 144,225 259,889 2020 — — — — — — — — $ 32,270 117,153 2021 — — — — — — — — — 23,494 Total 3,439,053 All outstanding liabilities before 2012, net of reinsurance 22,023 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 1,971,384 Healthcare Professional Liability Occurrence Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 62,214 $ 61,719 $ 58,234 $ 51,382 $ 45,602 $ 44,575 $ 40,676 $ 36,946 $ 37,300 $ 37,553 $ 660 597 2013 — $ 51,996 $ 54,143 $ 49,970 $ 53,905 $ 56,640 $ 50,632 $ 49,270 $ 47,550 48,116 $ 1,640 636 2014 — — $ 45,975 $ 43,606 $ 44,075 $ 40,699 $ 37,653 $ 34,428 $ 33,353 35,139 $ 1,290 540 2015 — — — $ 52,531 $ 54,890 $ 56,621 $ 57,606 $ 52,455 $ 51,276 56,468 $ (2,578) 614 2016 — — — — $ 56,089 $ 49,795 $ 53,358 $ 56,345 $ 66,886 64,122 $ (240) 684 2017 — — — — — $ 45,463 $ 42,338 $ 40,983 $ 44,449 46,865 $ 4,381 731 2018 — — — — — — $ 59,351 $ 61,880 $ 63,576 73,599 $ 7,977 692 2019 — — — — — — — $ 63,548 $ 58,555 70,926 $ 21,587 752 2020 — — — — — — — — $ 165,955 178,804 $ 140,975 992 2021 — — — — — — — — — 82,590 $ 76,228 166 Total $ 694,182 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 480 $ 3,635 $ 11,445 $ 17,797 $ 26,830 $ 30,469 $ 32,384 $ 33,144 $ 34,373 $ 34,398 2013 — $ 539 $ 4,620 $ 12,130 $ 25,131 $ 30,474 $ 37,778 $ 40,775 $ 42,455 43,254 2014 — — $ 512 $ 4,674 $ 11,192 $ 17,349 $ 22,649 $ 25,671 $ 27,753 30,407 2015 — — — $ (180) $ 2,617 $ 9,953 $ 20,627 $ 28,482 $ 36,413 41,800 2016 — — — — $ 44 $ 2,750 $ 15,433 $ 28,362 $ 40,766 48,691 2017 — — — — — $ (6,631) $ (3,385) $ 3,592 $ 11,051 19,696 2018 — — — — — — $ 444 $ 6,193 $ 15,229 26,932 2019 — — — — — — — $ 628 $ 4,575 10,399 2020 — — — — — — — — $ 397 6,194 2021 — — — — — — — — — 762 Total 262,533 All outstanding liabilities before 2012, net of reinsurance 5,202 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 436,851 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Unaudited Healthcare Professional Liability Claims-Made 5.6% 20.0% 23.7% 15.9% 11.4% 5.8% 4.0% 2.2% 1.2% 0.1% Healthcare Professional Liability Occurrence (0.8%) 6.8% 15.4% 18.9% 17.0% 12.0% 6.7% 4.4% 2.5% 0.1% Medical Technology Liability Reserve The risks insured in the Medical Technology Liability line of business are more varied, and policies are individually priced based on the risk characteristics of the policy and the account. These policies often have substantial deductibles or self-insured retentions, and the insured risks range from startup operations to large multinational entities. Premiums are established using the most recently developed actuarial estimates of losses expected to be incurred based on factors which include: results from prior analysis of similar business, industry indications, observed trends and judgment. Claims in this line of business primarily involve bodily injury to individuals and are affected by factors similar to those of the HCPL line of business. For the Medical Technology Liability line of business, ProAssurance also establishes an initial reserve using a loss ratio approach, including a provision in consideration of historical loss volatility that this line of business has exhibited. Medical Technology Liability Claims-Made Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 11,162 $ 9,989 $ 8,906 $ 7,441 $ 5,824 $ 4,797 $ 5,051 $ 3,889 $ 3,868 $ 3,864 $ 48 223 2013 — $ 9,807 $ 9,955 $ 9,536 $ 7,226 $ 4,697 $ 3,566 $ 3,504 $ 3,305 3,199 $ 96 218 2014 — — $ 9,989 $ 10,306 $ 9,012 $ 8,984 $ 7,679 $ 6,194 $ 5,888 5,636 $ 406 272 2015 — — — $ 9,376 $ 8,757 $ 7,193 $ 5,929 $ 5,081 $ 4,664 4,192 $ 771 156 2016 — — — — $ 9,200 $ 8,467 $ 7,413 $ 6,422 $ 6,241 4,491 $ 35 182 2017 — — — — — $ 11,049 $ 10,143 $ 8,306 $ 4,919 3,381 $ 505 100 2018 — — — — — — $ 10,141 $ 8,108 $ 7,506 4,961 $ 1,847 218 2019 — — — — — — — $ 10,072 $ 8,324 9,588 $ 4,660 359 2020 — — — — — — — — $ 11,082 10,671 $ 9,279 177 2021 — — — — — — — — — 13,914 $ 13,787 141 Total $ 63,897 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 568 $ 1,520 $ 2,805 $ 3,247 $ 3,366 $ 3,676 $ 3,800 $ 3,817 $ 3,817 $ 3,816 2013 — $ 102 $ 1,029 $ 1,967 $ 2,599 $ 3,092 $ 3,102 $ 3,102 $ 3,102 3,101 2014 — — $ 388 $ 1,527 $ 2,564 $ 3,046 $ 3,724 $ 3,776 $ 4,074 4,076 2015 — — — $ 25 $ 440 $ 1,625 $ 2,097 $ 2,567 $ 2,911 2,987 2016 — — — — $ 53 $ 1,690 $ 2,365 $ 2,959 $ 4,295 4,342 2017 — — — — — $ 56 $ 1,681 $ 2,017 $ 2,360 2,867 2018 — — — — — — $ 6 $ 191 $ 1,850 2,651 2019 — — — — — — — $ 584 $ 2,552 3,902 2020 — — — — — — — — $ 40 526 2021 — — — — — — — — — 4 Total 28,272 All outstanding liabilities before 2012, net of reinsurance 99 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 35,724 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Unaudited Medical Technology Liability 3.5 % 21.9 % 22.7 % 12.9 % 14.4 % 3.7 % 2.6 % 0.2 % — % — % Workers' Compensation Insurance Reserve Many factors affect the ultimate losses incurred for the workers' compensation coverages in the Workers' Compensation Insurance segment including, but not limited to, the type and severity of the injury, the age and occupation of the injured worker, the estimated length of disability, medical treatment and related costs, and the jurisdiction and workers' compensation laws of the injury occurrence. ProAssurance uses various actuarial methodologies in developing the workers’ compensation reserve combined with a review of the exposure base generally based upon payroll of the insured. For the current accident year, given the lack of seasoned information, the different actuarial methodologies produce results with considerable variability; therefore, more emphasis is placed on supplementing results from the actuarial methodologies with trends in exposure base, medical expense inflation, general inflation, severity, and claim counts, among other things, to select an expected loss ratio. Workers' Compensation Insurance Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 80,285 $ 76,551 $ 75,848 $ 76,357 $ 75,836 $ 75,576 $ 75,076 $ 75,076 $ 75,076 $ 74,776 $ 236 16,205 2013 — $ 86,973 $ 85,935 $ 86,928 $ 88,010 $ 87,260 $ 87,260 $ 89,760 $ 89,560 89,010 $ 409 16,429 2014 — — $ 93,019 $ 93,529 $ 93,029 $ 93,029 $ 93,029 $ 93,029 $ 91,329 90,579 $ 782 16,210 2015 — — — $ 100,101 $ 100,454 $ 98,454 $ 97,654 $ 96,354 $ 93,054 92,072 $ 1,140 16,550 2016 — — — — $ 101,348 $ 97,348 $ 92,148 $ 84,799 $ 82,799 81,599 $ 1,182 15,978 2017 — — — — — $ 99,874 $ 99,874 $ 99,874 $ 97,874 95,674 $ 2,897 16,084 2018 — — — — — — $ 118,095 $ 118,095 $ 120,095 120,095 $ 327 18,013 2019 — — — — — — — $ 119,752 $ 119,752 115,352 $ 4,251 17,528 2020 — — — — — — — — $ 106,145 102,475 $ 5,438 14,512 2021 — — — — — — — — — 105,722 $ 30,379 14,982 Total $ 967,354 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 27,448 $ 56,122 $ 65,908 $ 70,558 $ 72,766 $ 73,662 $ 73,676 $ 73,768 $ 73,851 $ 73,976 2013 — $ 30,554 $ 63,825 $ 76,813 $ 82,369 $ 85,689 $ 86,783 $ 87,466 $ 87,772 88,033 2014 |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Reinsurance | Reinsurance ProAssurance purchases reinsurance from third-party reinsurers and insurance enterprises in order to reduce its net exposure to losses, to provide capacity to write larger limits of liability, to provide reimbursement for losses incurred under the higher limit coverages the Company offers and as a mechanism for providing custom insurance solutions. ProAssurance also uses reinsurance arrangements as a mechanism for sharing risk with insureds or their affiliates. The effects of reinsurance for the years ended December 31, 2021, 2020 and 2019 were as follows: Year Ended December 31 (In thousands) 2021 2020 2019 Direct $ 912,387 $ 814,298 $ 919,799 Assumed 47,637 40,124 47,691 Ceded (77,303) (106,721) (124,765) Net premiums written $ 882,721 $ 747,701 $ 842,725 Direct $ 1,020,107 $ 862,742 $ 926,035 Assumed 45,559 43,555 45,668 Ceded (93,998) (113,582) (124,171) Net premiums earned $ 971,668 $ 792,715 $ 847,532 Losses and loss adjustment expenses $ 798,893 $ 741,719 $ 871,780 Reinsurance recoveries (46,644) (80,272) (117,865) Net losses and loss adjustment expenses $ 752,249 $ 661,447 $ 753,915 The receivable from reinsurers on unpaid losses and LAE represents management’s estimated amount of future loss payments that will be recoverable under ProAssurance reinsurance agreements. Certain of the Company's reinsurance agreements base the amount of premium that is due to the reinsurer in part on losses reimbursed or to be reimbursed under the agreement, and terms may also include minimum and maximum amounts of ceded premium. Ceded premium amounts are estimated based on management’s expectation of ultimate losses and the portion of those losses that are allocable to reinsurers according to the terms of the agreements, including any minimums or maximums. Given the uncertainty of the ultimate amounts of losses, management’s estimates of losses and related amounts recoverable may vary significantly from the eventual outcome. Due to changes in management’s estimates of amounts due to reinsurers related to prior accident year loss recoveries, ProAssurance decreased premiums ceded in its Specialty P&C segment by $3.9 million during the year ended December 31, 2021 and increased premiums ceded by $0.7 million and $2.8 million during the years ended December 31,2020 and 2019, respectively. Reinsurance contracts do not relieve ProAssurance from its obligations to policyholders, and ProAssurance remains liable to its policyholders whether or not reinsurers honor their contractual obligations. ProAssurance continually monitors its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. At December 31, 2021, the net total amounts due from reinsurers was $468.3 million (receivables related to paid and unpaid losses and LAE and prepaid reinsurance premiums, less reinsurance premiums payable). No single reinsurer had an individual balance which exceeded $51.7 million. At December 31, 2021 reinsurance recoverables totaling approximately $97.9 million were collateralized by letters of credit or funds withheld. Expected credit losses associated with the Company's reinsurance receivables (related to both paid and unpaid losses) were nominal in amount as of December 31, 2021 and 2020. ProAssurance had no allowance for expected credit losses related to our reinsurance receivables at December 31, 2019. During the years ended December 31, 2021, 2020 or 2019, no reinsurance balances were written off for credit reasons. For further information on our allowance for expected credit losses related to our receivables from reinsurers see Note 1. During the fourth quarter of 2020, ProAssurance commuted a quota share reinsurance agreement with one of its reinsurers which resulted in a net cash receipt of approximately $6.8 million and reduced its receivable from reinsurers on unpaid losses and LAE by approximately $7.0 million. During the fourth quarter of 2018, ProAssurance commuted the 2017 calendar year quota share reinsurance arrangement, between the Specialty P&C segment and Syndicate 1729. Due to the quarter lag, the effect of the 2017 commutation was reported in both the Specialty P&C and Lloyd's Syndicates segments results during the first quarter of 2019, which resulted in a net cash receipt of approximately $3.1 million. The commutation reduced the receivable from reinsurers on unpaid losses and LAE, combined, by approximately $3.8 million during the year ended December 31, 2019. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of ProAssurance’s deferred tax assets and liabilities were as follows: December 31 (In thousands) 2021 2020 Deferred tax assets Unpaid loss discount $ 51,562 $ 36,452 Unearned premium adjustment 22,846 14,835 Compensation related 18,575 10,935 Basis differentials-investments — 2,595 Intangibles 13,915 522 Operating lease liabilities 4,290 4,224 Tax credit carryforward 48,701 36,155 Net operating loss carryforward 18,596 9,244 Other 909 1,700 Total gross deferred tax assets 179,394 116,662 Valuation allowance (8,945) (8,581) Total deferred tax assets, net of valuation allowance 170,449 108,081 Deferred tax liabilities Deferred policy acquisition costs (12,284) (8,929) Unpaid loss discount-transition (7,276) (6,297) Unrealized gains on investments, net (4,100) (19,351) Fixed assets (4,013) (4,441) Operating lease ROU assets (4,030) (4,015) Basis differentials-investments (11,277) — Basis differentials-foreign operations (828) (790) Intangibles (9,028) (7,153) Total deferred tax liabilities (52,836) (50,976) Net deferred tax assets (liabilities) $ 117,613 $ 57,105 As of December 31, 2021, ProAssurance had U.S. federal, U.S. state and U.K. income tax NOL carryforwards of approximately $43.6 million, $74.2 million and $26.6 million, respectively. The U.K. NOL carryforwards do not expire while the U.S. federal and state NOL carryforwards will begin to expire in 2035 and 2031, respectively. As a result of the NORCAL acquisition, the Company has U.S. federal NOL carryforwards which as of December 31, 2021 were approximately $43.0 million. These NOL carryforwards are subject to limitation by Internal Revenue Code Section 382 and will begin to expire in 2035. See Note 2 for more information on the NORCAL acquisition. ProAssurance had $48.7 million o f available tax credit carryforwards generated from the Company's investments in tax credit partnerships, of which $46.7 million may be carried forward until they begin to expire in December 31, 2039. Approximately $2.0 million of the tax credits earned in the current year were utilized durin g 2021. The remaining tax credits have been deferred and carried forward due to the utilization of NOLs available to ProAssurance following its acquisition of NORCAL. The Company's total valuation allowance increased by $0.4 million and $3.1 million for the years ended December 31, 2021 and 2020, respectively. In 2021, management evaluated the realizability of the deferred tax assets of ProAssurance American Mutual, a Risk Retention Group, and concluded that it was more likely than not that the net deferred tax assets will not be realized; therefore a nominal valuation allowance was recorded in 2021. ProAssurance American Mutual, a Risk Retention Group, is a taxpayer separate from the consolidated group and this entity has experienced cumulative losses in recent years. In 2021 and 2020, management evaluated the realizability of the deferred tax asset related to the U.K. NOL carryforwards and concluded that it was more likely than not that the deferred tax asset will not be realized; therefore, a valuation allowance was recorded against the full value of the deferred tax asset related to the U.K. NOL carryforwards in both 2021 and 2020 of $5.0 million and $6.2 million, respectively. The decrease in the valuation allowance related to the U.K. NOL carryforward in 2021 as compared to 2020 was primarily due to current year activity. In 2021 and 2020, management evaluated the realizability of the deferred tax asset related to the U.S. state NOL carryforwards and concluded that it was more likely than not that a portion of the deferred tax asset will not be realized; therefore, a valuation allowance was recorded against a portion of the deferred tax asset related to the U.S. state NOL carryforwards in 2021 and 2020 of $3.2 million and $1.9 million, respectively. The increase in the valuation allowance related to the U.S. state NOL carryforwards in 2021 as compared to 2020 was primarily due to current year activity. Deferred tax assets and liabilities include SPCs the Company participates in at Inova Re, net of a valuation allowance of $0.6 million and $0.5 million at December 31, 2021 and 2020, respectively. Due to the limited operations of these SPCs as of December 31, 2021 and 2020, management concluded that a valuation allowance was required against the DTAs of certain SPCs. The nominal increase in the valuation allowance related to the SPCs at Inova Re is due to current year activity. As a result of ProAssurance's acquisition of NORCAL, the Company recorded $46.8 million of net deferred tax assets at the acquisition date reflecting the remeasurement of NORCAL's historical net deferred tax assets. The Company evaluated the realizability of the deferred tax assets acquired from NORCAL during the Company's accounting for the acquisition and management concluded that it was more likely than not that the acquired deferred tax assets would be realized. Management’s assessment of the need for the aforementioned valuation allowances at December 31, 2021 included an analysis of the available sources of income, including projections of income for the consolidated group following the NORCAL acquisition. ProAssurance files income tax returns in various states, the U.S. federal jurisdiction and the U.K. ProAssurance had a receivable for U.S. federal and U.K. income taxes of $7.9 million at December 31, 2021 and $18.9 million at December 31, 2020, both carried as a part of other assets. The statute of limitations is now closed for all tax years prior to 2018. A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2021, 2020 and 2019, were as follows: (In thousands) 2021 2020 2019 Balance at January 1 $ 5,199 $ 5,070 $ 3,601 Increases for tax positions taken during the current year — — 1,749 Decreases for tax positions taken during the current year (1,630) (4,853) — Increases for tax positions taken during prior years — 5,342 — Decreases relating to a lapse of the applicable statute of limitations (549) (360) (280) Balance at December 31 $ 3,020 $ 5,199 $ 5,070 At December 31, 2021 and 2020, approximately $0.3 million and $0.8 million, respectively, of ProAssurance's uncertain tax positions, if recognized, would affect the effective tax rate. As with any uncertain tax position, there is a possibility that the ultimate benefit realized could differ from the estimate management has established. Management believes that it is reasonably possible that a portion of unrecognized tax benefits at December 31, 2021 may change during the next twelve months. However, an estimate of the change cannot be made at this time. ProAssurance recognizes interest and/or penalties related to income tax matters as a component of income tax expense. Interest and penalties recognized in the Consolidated Statements of Income and Comprehensive Income were nominal for each of the years ended December 31, 2021, 2020 and 2019. The accrued liability for interest was approximately $0.4 million and $0.5 million at December 31, 2021 and 2020, respectively. Income tax expense (benefit) for each of the years ended December 31, 2021, 2020 and 2019 consisted of the following: (In thousands) 2021 2020 2019 Provision for income taxes: Current expense (benefit) Federal and foreign $ 885 $ (19,885) $ (2,147) State 279 (296) 982 Total current expense (benefit) 1,164 (20,181) (1,165) Deferred expense (benefit) Federal and foreign 1,290 (20,476) (27,404) State 29 (672) (1,239) Total deferred expense (benefit) 1,319 (21,148) (28,643) Total income tax expense (benefit) $ 2,483 $ (41,329) $ (29,808) A reconciliation of “expected” federal income tax expense (benefit) to actual income tax expense (benefit) for each of the years ended December 31, 2021, 2020 and 2019 were as follows: (In thousands) 2021 2020 2019 Computed “expected” tax expense (benefit) $ 30,787 $ (45,582) $ (6,049) Tax-exempt income (1) (1,298) (976) (1,528) Tax credits (13,160) (17,876) (21,933) Non-U.S. operating results (1,322) (1,307) (1,447) Tax deficiency (excess tax benefit) on share-based compensation 286 457 99 Tax rate differential on loss carryback — (7,758) (3,400) Goodwill impairment (2) — 31,413 — Non-taxable gain on bargain purchase (3) (15,626) — — Provision-to-return and other differences 3,574 1,217 3,595 Change in uncertain tax positions (1,909) (1,674) 1,956 State income taxes 460 (561) (376) Benefit from amended returns — — (550) Other 691 1,318 (175) Total income tax expense (benefit) $ 2,483 $ (41,329) $ (29,808) (1) Includes tax-exempt interest, dividends received deduction and change in cash surrender value of BOLI. (2) Represents the tax impact of the impairment of non-deductible goodwill in relation to the Specialty P&C reporting unit during the third quarter of 2020 (see further discussion on the impairment charge in Note 8). (3) Represents the tax impact of the non-taxable gain on bargain purchase as a result of the Company's acquisition of NORCAL on May 5, 2021. See further discussion on the gain on bargain purchase in Note 2. The Company's pre-tax income in 2021 included a gain on bargain purchase of $74.4 million as a result of the Company's acquisition of NORCAL, all of which was non-taxable. See further discussion on the gain on bargain purchase in Note 2. The Company's pre-tax loss in 2020 included a $161.1 million goodwill impairment recognized in relation to the Specialty P&C reporting unit during the third quarter of 2020. Of the $161.1 million goodwill impairment, $149.6 million was non-deductible for which no tax benefit was recognized while the remaining $11.5 million was deductible for which a 21% tax benefit was recognized on the related tax amortization. See further discussion on this goodwill impairment in Note 8. The tax rate differential on loss carryback for the year ended December 31, 2020 represents the additional tax rate differential of 14% on the carryback of the 2020 and 2019 NOLs to the 2015 and 2014 tax years, respectively, as a result of changes made by the CARES Act to the NOL provisions of the tax law (see further discussion in this section under the heading "Coronavirus Aid, Relief and Economic Security Act"). Coronavirus Aid, Relief and Economic Security Act In response to COVID-19, the CARES Act was signed into law on March 27, 2020 and contains several provisions for corporations and eased certain deduction limitations originally imposed by the TCJA. The CARES Act, among other things, includes temporary changes regarding the prior and future utilization of NOLs, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes and the creation of certain refundable employee retention credits. As a result of the CARES Act, ProAssurance was permitted to carryback NOLs generated in tax years 2019 and 2020 for up to five years. ProAssurance generated an NOL of approximately $33.3 million from the 2020 tax year that was carried back to the 2015 tax year which resulted in a claim for a refund of approximately $11.7 million. Additionally, ProAssurance had an NOL of approximately $25.6 million from the 2019 tax year that was carried back to the 2014 tax year and generated a tax refund of approximately $9.0 million which the Company received in February 2021. ProAssurance has evaluated the other provisions of the CARES Act and has concluded that they will not have a material impact on the Company's financial position or results of operations. American Rescue Plan Act of 2021 In response to economic concerns associated with COVID-19, the American Rescue Plan Act of 2021 was signed into law on March 11, 2021 and includes an expansion of the number of employees covered by the limitation on the deductibility of compensation in excess of $1 million. This provision is effective for tax years beginning after December 31, 2026. The Company has evaluated this provision as well as the other provisions of the American Rescue Plan Act of 2021 and concluded that they will not have a material impact on ProAssurance's financial position or results of operations as of December 31, 2021. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Goodwill is recognized in conjunction with business acquisitions as the excess of the purchase consideration for the business acquisition over the fair value of identifiable assets acquired and liabilities assumed. The fair value of identifiable assets acquired and liabilities assumed, and thus goodwill, is subject to redetermination within a measurement period of up to one year following completion of a business acquisition. Goodwill is tested for impairment annually or more frequently if circumstances indicate an impairment may have occurred. The date of the Company's annual goodwill impairment test is October 1. Impairment of goodwill is tested at the reporting unit level, which is consistent with the Company's reportable segments identified in Note 18. Of the Company's five reporting units, two have net goodwill: Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance. Interim Impairment Assessments During the third quarter of 2020, management performed interim impairment assessments of the goodwill in our Specialty P&C, Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance reporting units due to the significant market volatility impacting our actual and projected results along with a decline in our stock price. The goodwill analysis indicated an impairment of the goodwill associated with the Company's Specialty P&C reporting unit and accordingly it recorded a $161.1 million charge to goodwill. Annual Impairment Assessment Subsequent to performing the interim impairment assessments, the Company performed its annual goodwill impairment assessment as of October 1, 2020. As of the goodwill impairment test performed on October 1, 2020, the Company elected to perform a qualitative goodwill impairment test for its Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance reporting units. These reporting units have historically had an excess of fair value over book value and based on current operations are expected to continue to do so; therefore, the Company's annual impairment test for these reporting units was performed qualitatively. In applying the qualitative approach, management considered macroeconomic factors, industry and market conditions, cost factors that could have a negative impact on the reporting units, actual financial performance of the reporting units versus expectations and management's future business expectations. As a result of the qualitative assessments, management concluded that it was not more likely than not that the fair value of each of the Company's two reporting units that have net goodwill was less than the carrying value of each reporting unit as of the testing date; therefore, no further impairment testing was required. During 2021, ProAssurance experienced an increase in accident year reported losses, including increased severity-related claim activity in the Company's Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance segments. ProAssurance primarily attributes this increase in reported losses and severity-related claim activity to workers being out of “work shape” as they returned to employment in 2021, as well as the lack of training, alternative work arrangements and employee fatigue due to the labor shortage. As a result, ProAssurance increased their 2021 current accident year loss ratio in the Workers' Compensation Insurance reporting unit during the third quarter of 2021. Due to the increase in the current accident year loss ratio, management decided to bypass the optional qualitative impairment test and proceed directly to the quantitative impairment test for both the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance reporting units for the most recent goodwill impairment test performed October 1, 2021. In applying the quantitative approach, management estimated the fair value of the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance reporting units using both an income approach and market approach using the aforementioned valuation methodologies and process for developing assumptions. To corroborate the reporting units’ valuation, the Company performed a reconciliation of the estimate of the aggregate fair value of the reporting units to ProAssurance's market capitalization, including consideration of a control premium. As a result of the quantitative assessments, management concluded that the fair value of each of the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance reporting units exceeded the carrying value as of the testing date; therefore, goodwill was not impaired and no further goodwill impairment testing was required. No goodwill impairment was recorded during the years ended December 31, 2021 or 2019. See Note 1 for further information on how the Company tests goodwill for impairment. The table below presents the carrying amount of goodwill and accumulated impairment losses by reporting unit at December 31, 2021 and 2020: Reporting Unit (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Total Goodwill, gross as of January 1, 2020 $ 161,115 $ 44,110 $ 5,500 $ 210,725 Accumulated impairment losses* (161,115) — — (161,115) Goodwill, net as of December 31, 2020 $ — $ 44,110 $ 5,500 $ 49,610 Accumulated impairment losses — — — — Goodwill, net as of December 31, 2021 $ — $ 44,110 $ 5,500 $ 49,610 |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs Policy acquisition costs that are incremental and directly related to the successful production of new and renewal insurance contracts, most significantly agent commissions, premium taxes, and underwriting salaries and benefits, are capitalized as policy acquisition costs and amortized to expense, net of ceding commissions earned, as the related premium revenues are earned. Amortization of DPAC was $110.6 million for each of the years ended December 31, 2021 and 2020 and $115.3 million for the year ended December 31, 2019. ProAssurance evaluates the recoverability of DPAC typically at the segment level each reporting period, or in a manner that is consistent with the way the Company manages its business. Any amounts estimated to be unrecoverable are charged to expense in the current period as a component of DPAC amortization in the Consolidated Statements of Income and Comprehensive Income. |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Reserve for Losses and Loss Adjustment Expenses | Retroactive Insurance ContractsProAssurance offers custom alternative risk solutions which include assumed reinsurance. In the first quarter of 2021, ProAssurance entered into an assumed reinsurance arrangement with a regional hospital group. As the contract included both prospective coverage and retroactive coverage, ProAssurance bifurcated the provisions of the contract and accounted for each component separately. In the first quarter of 2021, ProAssurance recognized total net premiums written of $4.5 million, comprised of $2.2 million of prospective coverage and $2.3 million of retroactive coverage, total net premiums earned of $3.0 million, comprised of $0.7 million of prospective coverage and $2.3 million of retroactive coverage and total net losses and loss adjustment expenses of $2.9 million in the Consolidated Statements of Income and Comprehensive Income. See Note 1 for additional information regarding ProAssurance's accounting policy for retroactive insurance contracts.Reserve for Losses and Loss Adjustment Expenses The reserve for losses is established based on estimates of individual claims and actuarially determined estimates of future losses based on ProAssurance’s past loss experience, available industry data and projections as to future claims frequency, severity, inflationary trends and settlement patterns. Estimating the reserve, particularly the reserve appropriate for liability exposures, is a complex process. For a high proportion of the risks insured or reinsured by ProAssurance, claims may be resolved over an extended period of time, often five years or more, and may be subject to litigation. Estimating losses requires ProAssurance to make and revise judgments and assessments regarding multiple uncertainties over an extended period of time. As a result, the reserve estimate may vary considerably from the eventual outcome. The assumptions used in establishing ProAssurance’s reserve are regularly reviewed and updated by management as new data becomes available. Changes to estimates of previously established reserves are included in earnings in the period in which the estimate is changed. ProAssurance believes that the methods it uses to establish reserves are reasonable and appropriate. Each year, ProAssurance uses internal actuaries to review the reserve for losses of each insurance subsidiary. ProAssurance also engages consulting actuaries to review ProAssurance claims data and provide observations regarding cost trends, rate adequacy and ultimate loss costs. The statutory filings of each insurance company with the insurance regulators must be accompanied by a consulting actuary's certification as to their respective reserves. ProAssurance considers the views of the actuaries as well as other factors, such as premium rates, historical paid and incurred loss development trends and an evaluation of the current loss environment including frequency, severity, expected effect of inflation, general economic and social trends, and the legal and political environment in establishing the amount of its reserve for losses. The Company expects there will be impacts to these factors as well as to the timing of loss emergence and ultimate loss ratios for certain coverages it underwrites as a result of COVID-19 and the related economic shutdown; however, the extent to which COVID-19 impacts these factors is highly uncertain and cannot be predicted (see "Item 1A, Risk Factors" included in this report for additional information). As a result of COVID-19, the industry is experiencing new conditions, including the postponement of court cases, changes in settlement trends and a significant reduction in economic activity and insured exposure in some classes. ProAssurance's booked reserves as of December 31, 2021 include consideration of these factors, but the duration and degree to which these issues persist, along with potential legislative, regulatory or judicial actions, could result in significant changes to the Company's reserve estimates in future periods. ProAssurance partitions its reserve by accident year, which is the year in which the claim becomes its liability. For claims-made policies, the insured event generally becomes a liability when the event is first reported to the Company. For occurrence policies, the insured event becomes a liability when the event takes place. For retroactive coverages, the insured event becomes a liability at inception of the underlying contract. As claims are incurred (reported) and claim payments are made, they are aggregated by accident year for analysis purposes. ProAssurance also partitions its reserve by reserve type: case reserves and IBNR reserves. Case reserves are established by the claims department based upon the particular circumstances of each reported claim and represent ProAssurance’s estimate of the future loss costs (often referred to as expected losses) that will be paid on reported claims. Case reserves are decremented as claim payments are made and are periodically adjusted upward or downward as estimates regarding the amount of future losses are revised; a reported loss for an individual claim equates to the case reserve at any point in time plus the claim payments that have been made to date. IBNR reserves represent an estimate, in the aggregate, of future development on losses that have been reported to ProAssurance plus an estimate of losses that have been incurred but not reported. Acquired Reserve The acquisition of NORCAL increased ProAssurance's net reserves by $1.1 billion which represented the fair value of NORCAL's reserve, net of the fair value of related reinsurance recoverables, at the time of acquisition including a fair value adjustment on the reserve as well as negative VOBA recorded on NORCAL's unearned premium and DDR reserve. The reserve fair value adjustment will be amortized utilizing loss payment patterns and the negative VOBAs will be amortized over a period in proportion to the earn-out of the premium or in-line with the approximate consumption of losses. Such amortization is recorded as a reduction to net losses and loss adjustment expenses. See Note 2 for more information. Development of Prior Accident Years In addition to setting the initial reserve for the current accident year, each period ProAssurance reassesses the amount of reserve required for prior accident years. The foundation of ProAssurance’s reserve re-estimation process is an actuarial analysis that is performed by both the internal and consulting actuaries. This detailed analysis projects ultimate losses based on partitions which include line of business, geography, coverage layer and accident year. The procedure uses the most representative data for each partition, capturing its unique patterns of development and trends. ProAssurance believes that the use of consulting actuaries provides an independent view of the loss data as well as a broader perspective on industry loss trends. Reserving Methodologies For the HCPL, Medical Technology Liability and Workers’ Compensation lines of business, the analysis performed by the consulting actuaries analyzes each partition of the business in a variety of ways and uses multiple actuarial methodologies in performing these analyses, including: Bornhuetter-Ferguson (Paid and Reported) Method, Paid Development Method, Reported (Incurred) Development Method, Average Paid Value Method and Average Reported Value Method. Generally, methods such as the Bornhuetter-Ferguson Method are used on more recent accident years where there is less data available on which to base the analysis. As time progresses and an increased amount of data is available for a given accident year, management gives more confidence to the development and average methods, as these methods typically rely more heavily on ProAssurance's own historical data. These methods emphasize different aspects of loss reserve estimation and provide a variety of perspectives for ProAssurance's decisions. For the Workers’ Compensation line of business in both the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance segments, ProAssurance utilizes the Reported (Incurred) Development Method, Paid Loss Development Method and Bornhuetter-Ferguson Method, to develop the reserve for each accident year. The actuarial review includes the stratification of claims data (lost time claims and medical only claims) using different variations that allow for identification of trends that may not be readily identifiable if the data was evaluated only in the aggregate. Reported and paid loss development factors are key assumptions in the reserve estimation process and are based on ProAssurance’s historical reported and paid loss development patterns. As accident years mature, the various actuarial methodologies produce more consistent loss estimates. For the Lloyd’s Syndicates segment business, losses are initially estimated using the loss assumptions by risk category incorporated into the business plan submitted to Lloyd’s with consideration given to loss experience incurred to date. These assumptions were influenced by loss results reflected in Lloyd’s historical data for similar risks. As losses are reported and resolved and loss experience becomes more credible from a statistical perspective, actual loss experience is incorporated into the estimates. Certain of the methodologies utilized to estimate the ultimate losses for each partition of the reserve consider the actual amounts paid. Paid data is particularly influential when a large portion of known claims have been closed, as is the case for older accident years. In selecting a point estimate for each partition, management considers the extent to which trends are emerging consistently for all partitions and known industry trends. Thus, actual, rather than estimated severity trends are given more consideration. If actual severity trends are lower than those estimated at the time that reserves were previously established, the recognition of favorable development is indicated. This is particularly true for older accident years where actuarial methodologies give more weight to actual loss costs (severity). The various actuarial methods discussed above are applied in a consistent manner from period to period. In addition, ProAssurance performs statistical reviews of claims data such as claim counts, average settlement costs and severity trends when establishing the reserve. Selected point estimates of ultimate losses are utilized to develop estimates of ultimate losses recoverable from reinsurers, based on the terms and conditions of ProAssurance’s reinsurance agreements. An overall estimate of the amount receivable from reinsurers is determined by combining the individual estimates. ProAssurance’s net reserve estimate is the gross reserve point estimate less the estimated reinsurance recovery. Activity in the reserve for losses and loss adjustment expenses is summarized as follows: (In thousands) 2021 2020 2019 Balance, beginning of year $ 2,417,179 $ 2,346,526 $ 2,119,847 Less reinsurance recoverables on unpaid losses and loss adjustment expenses 385,087 390,708 343,820 Net balance, beginning of year 2,032,092 1,955,818 1,776,027 Net reserves acquired from acquisitions 1,089,103 — — Net losses: Current year (1)(2)(3) 797,732 711,846 765,698 Favorable development of reserves established in prior years, net (45,483) (50,399) (11,783) Total 752,249 661,447 753,915 Paid related to: Current year (4) (109,925) (83,204) (115,133) Prior years (4) (635,320) (501,969) (458,991) Total paid (745,245) (585,173) (574,124) Net balance, end of year 3,128,199 2,032,092 1,955,818 Plus reinsurance recoverables on unpaid losses and loss adjustment expenses 451,741 385,087 390,708 Balance, end of year $ 3,579,940 $ 2,417,179 $ 2,346,526 (1) Current year net losses for the year ended December 31, 2019 included incurred losses of $2.1 million related to a loss portfolio transfer entered into during 2019 in the Specialty P&C segment. In addition, current year net losses in 2019 included a PDR of $9.2 million associated with the unearned premium of a large national healthcare account's claims-made policy in the Specialty P&C segment. Current year net losses for the year ended December 31, 2020 included the amortization of the aforementioned $9.2 million PDR which offsets the impact of the losses incurred associated with the premium earned related to the large national healthcare account's claims-made policy. (2) During 2020, the aforementioned large national healthcare account did not renew on terms offered by the Company and exercised its contractual option to purchase extended reporting endorsement or "tail" coverage. As a result, ProAssurance recognized total current year losses of $60.0 million (assumes a full limit loss) within the Specialty P&C segment for the year ended December 31, 2020. (3) Current year net losses for the year ended December 31, 2021 included $6.7 million of amortization of the negative VOBA associated with NORCAL's assumed unearned premium, which is being amortized over a period in proportion to the earn-out of the associated premium as a reduction to current accident year net losses (see Note 2). (4) Paid losses for the year ended December 31, 2021 included prior year paid losses of $136.0 million and current year paid losses of $22.3 million related to reserves acquired from NORCAL since May 5, 2021. As discussed in Note 1, estimating liability reserves is complex and requires the use of many assumptions. As time passes and ultimate losses for prior years are either known or become subject to a more precise estimation, ProAssurance increases or decreases the reserve estimates established in prior periods. The net favorable loss development recognized for the year ended December 31, 2021 primarily reflected a lower than anticipated loss emergence in the Specialty P&C segment, primarily related to the 2015 through 2020 accident years. The net favorable development recognized in the Specialty P&C segment also included $7.9 million related to the amortization of the purchase accounting fair value adjustment on NORCAL's assumed net reserve and amortization of the negative VOBA associated with NORCAL's DDR reserve which is recorded as a reduction to prior accident year net losses and loss adjustment expenses (see Note 2). ProAssurance did not recognize any development related to NORCAL's prior accident year reserves since the date of acquisition. Net favorable prior accident year reserve development recognized in the Specialty P&C segment also included a $1.0 million reduction in our IBNR reserve for COVID-19 during the third quarter of 2021. The net favorable development also reflected overall favorable trends in claim closing patterns in the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance segments. The net favorable loss development recognized in the Workers' Compensation Insurance segment is primarily related to the 2012 through 2017 accident years. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment is primarily related to accident year 2015 and accident years 2018 through 2020. Consolidated net favorable loss development recognized in 2021 was partially offset by unfavorable reserve development recognized in the Lloyd's Syndicates segment driven by certain catastrophe related losses. The net favorable loss development recognized for the year ended December 31, 2020 primarily reflected a lower than anticipated claims severity trend (i.e., the average size of a claim) in the Specialty P&C segment, primarily related to the 2014 through 2017 accident years. The net favorable development also reflected overall favorable trends in claim closing patterns in the Segregated Portfolio Cell Reinsurance and Workers' Compensation Insurance segments. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment primarily related to the 2014 through 2019 accident years and the net favorable loss development recognized in the Workers' Compensation Insurance segment primarily related to the 2014 through 2017 accident years. The net favorable loss development recognized for the year ended December 31, 2019 primarily reflected overall favorable trends in claim closing patterns in the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance segments, largely offset by net unfavorable loss development recognized in the Specialty P&C segment. The net favorable loss development recognized in the Workers' Compensation Insurance segment primarily related to the 2015 and 2016 accident years and the net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment primarily related to the 2015 through 2018 accident years. The net unfavorable loss development recognized in the Specialty P&C segment primarily related to accident years 2016 through 2018. The favorable loss development recognized in 2018 primarily reflected a lower than anticipated claims severity trend for accident years 2011 through 2015. Claims Development ProAssurance establishes its reserve and manages claims activity by coverage, product or line of business and various categories of reserves have similar characteristics. Therefore, ProAssurance has aggregated these reserve categories into several reserve groups in the following disclosures and tables that provide a more meaningful view of the amount, timing and uncertainty of cash flows arising from the liability. At the same time, these reserve groups present a disaggregated view of the major elements of the overall loss reserve liability. The reserve groups include HCPL claims-made reserve, HCPL occurrence reserve, Medical Technology Liability claims-made reserve, Workers’ Compensation Insurance reserve and Segregated Portfolio Cell Reinsurance - workers' compensation reserve. All other loss reserve categories are deemed to be less homogeneous or relatively small on a standalone basis and are included in other short-duration lines in the claims development reconciliation. The composition of the reserve groups is based on similar characteristics with respect to the risks being insured and the reporting and payout pattern of the underlying claims. In most instances the groups follow the coverage categorizations used in statutory financial reporting for U.S.-domiciled property-casualty insurance companies. HCPL claims are disaggregated into those claims covered by claims-made policies and those claims covered by occurrence policies. For claims-made policies, the insured event generally becomes a liability when the event is first reported to the insurer. For occurrence policies, the insured event becomes a liability when the event takes place, even if unknown at that time. Claims-made coverage has a short reporting pattern, with virtually all claims known shortly after the end of the policy period. Occurrence coverage claims can have an extended reporting pattern, with the time from the loss event until the filing of the claim often measured in years, at which point the claims resolution process begins. Although the resolution process and time frame is similar once a claim is reported, combining claims from claims-made and occurrence coverage types would result in distortion due to the difference in reporting lag. Medical Technology Liability reserves are grouped separately due to the nature of the risk, including the potential for mass torts and multiple claims arising out of the same product or service. The small amount of Medical Technology Liability occurrence reserves are included in other short-duration lines. Workers' compensation reserves in the Workers' Compensation Insurance and the Segregated Portfolio Cell Reinsurance segments are each grouped separately due to the difference in the type of coverage provided and the differences in the claims resolution process as compared to other liability insurance. The small amount of HCPL reserves in the Segregated Portfolio Cell Reinsurance segment are included in other short-duration lines. ProAssurance has elected to present reserve history for acquired entities in all periods shown in the tables below, including periods prior to acquisition. With the exception of the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance - workers' compensation lines of business, virtually all other acquired entities are captured within the HCPL line of business. All information prior to 2021 disclosed in the Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance, Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance and Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance tables that follow is presented as supplementary information. The “Cumulative Number of Reported Claims” in the tables that follow includes the combined number of claims for an accident year and excludes projected unreported IBNR claims. A claim is considered reported when ProAssurance becomes aware of and accepts it for coverage under the terms of the Company's insurance contracts. Healthcare Professional Liability Reserve HCPL loss costs are impacted by many factors, including but not limited to the nature of the claim, including whether or not the claim is an individual or a mass tort claim, the personal situation of the claimant or the claimant's family, the outcome of jury trials, the legislative and judicial climate where any potential litigation may occur, general economic and social conditions and, for claims involving bodily injury, the trend of healthcare costs. ProAssurance sets an initial reserve based upon the evaluation of the current loss environment including frequency, severity, the expected effect of inflation, general economic and social trends, and the legal and political environment. The initial loss ratio for HCPL business has ranged from 87% to 106% in recent years and has recently trended towards the higher end of this range due to increased reserve estimates for a large national healthcare account as well as increases in loss severity in the broader HCPL industry, including our Specialty line of business. ProAssurance has elected to present reserve history for NORCAL in all periods shown in the Healthcare Professional Liability tables below, including periods prior to acquisition. Healthcare Professional Liability Claims-Made Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 555,440 $ 528,799 $ 510,085 $ 490,981 $ 474,631 $ 468,956 $ 458,826 $ 453,625 $ 451,152 $ 448,782 $ 402 7,103 2013 — $ 527,520 $ 513,937 $ 501,580 $ 489,378 $ 480,036 $ 466,798 $ 451,182 $ 455,346 457,038 $ (1,284) 7,697 2014 — — $ 509,774 $ 494,024 $ 491,403 $ 488,185 $ 474,317 $ 468,153 $ 470,189 466,554 $ (373) 7,523 2015 — — — $ 503,412 $ 486,760 $ 492,824 $ 491,180 $ 500,336 $ 500,550 503,600 $ (4,798) 7,402 2016 — — — — $ 484,153 $ 488,349 $ 507,586 $ 555,416 $ 554,395 560,840 $ (11,854) 7,993 2017 — — — — — $ 508,072 $ 506,207 $ 577,401 $ 569,737 573,570 $ (16,923) 8,054 2018 — — — — — — $ 544,617 $ 643,864 $ 630,169 636,023 $ (53,325) 8,575 2019 — — — — — — — $ 670,958 $ 664,934 642,370 $ 4,919 8,443 2020 — — — — — — — — $ 593,994 574,274 $ 127,489 6,563 2021 — — — — — — — — — 525,363 $ 345,154 4,799 Total $ 5,388,414 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 25,864 $ 136,883 $ 257,697 $ 331,521 $ 374,537 $ 401,604 $ 424,987 $ 434,141 $ 440,872 $ 441,417 2013 — $ 30,214 $ 142,759 $ 255,605 $ 328,982 $ 376,930 $ 398,549 $ 415,012 $ 430,916 435,158 2014 — — $ 30,483 $ 125,078 $ 246,510 $ 325,782 $ 389,983 $ 416,150 $ 434,540 439,575 2015 — — — $ 26,664 $ 125,234 $ 256,791 $ 351,703 $ 410,506 $ 446,069 463,224 2016 — — — — $ 27,442 $ 137,338 $ 276,548 $ 378,828 $ 440,163 472,441 2017 — — — — — $ 32,342 $ 147,515 $ 288,695 $ 351,548 419,180 2018 — — — — — — $ 34,238 $ 159,657 $ 279,204 367,522 2019 — — — — — — — $ 37,755 $ 144,225 259,889 2020 — — — — — — — — $ 32,270 117,153 2021 — — — — — — — — — 23,494 Total 3,439,053 All outstanding liabilities before 2012, net of reinsurance 22,023 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 1,971,384 Healthcare Professional Liability Occurrence Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 62,214 $ 61,719 $ 58,234 $ 51,382 $ 45,602 $ 44,575 $ 40,676 $ 36,946 $ 37,300 $ 37,553 $ 660 597 2013 — $ 51,996 $ 54,143 $ 49,970 $ 53,905 $ 56,640 $ 50,632 $ 49,270 $ 47,550 48,116 $ 1,640 636 2014 — — $ 45,975 $ 43,606 $ 44,075 $ 40,699 $ 37,653 $ 34,428 $ 33,353 35,139 $ 1,290 540 2015 — — — $ 52,531 $ 54,890 $ 56,621 $ 57,606 $ 52,455 $ 51,276 56,468 $ (2,578) 614 2016 — — — — $ 56,089 $ 49,795 $ 53,358 $ 56,345 $ 66,886 64,122 $ (240) 684 2017 — — — — — $ 45,463 $ 42,338 $ 40,983 $ 44,449 46,865 $ 4,381 731 2018 — — — — — — $ 59,351 $ 61,880 $ 63,576 73,599 $ 7,977 692 2019 — — — — — — — $ 63,548 $ 58,555 70,926 $ 21,587 752 2020 — — — — — — — — $ 165,955 178,804 $ 140,975 992 2021 — — — — — — — — — 82,590 $ 76,228 166 Total $ 694,182 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 480 $ 3,635 $ 11,445 $ 17,797 $ 26,830 $ 30,469 $ 32,384 $ 33,144 $ 34,373 $ 34,398 2013 — $ 539 $ 4,620 $ 12,130 $ 25,131 $ 30,474 $ 37,778 $ 40,775 $ 42,455 43,254 2014 — — $ 512 $ 4,674 $ 11,192 $ 17,349 $ 22,649 $ 25,671 $ 27,753 30,407 2015 — — — $ (180) $ 2,617 $ 9,953 $ 20,627 $ 28,482 $ 36,413 41,800 2016 — — — — $ 44 $ 2,750 $ 15,433 $ 28,362 $ 40,766 48,691 2017 — — — — — $ (6,631) $ (3,385) $ 3,592 $ 11,051 19,696 2018 — — — — — — $ 444 $ 6,193 $ 15,229 26,932 2019 — — — — — — — $ 628 $ 4,575 10,399 2020 — — — — — — — — $ 397 6,194 2021 — — — — — — — — — 762 Total 262,533 All outstanding liabilities before 2012, net of reinsurance 5,202 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 436,851 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Unaudited Healthcare Professional Liability Claims-Made 5.6% 20.0% 23.7% 15.9% 11.4% 5.8% 4.0% 2.2% 1.2% 0.1% Healthcare Professional Liability Occurrence (0.8%) 6.8% 15.4% 18.9% 17.0% 12.0% 6.7% 4.4% 2.5% 0.1% Medical Technology Liability Reserve The risks insured in the Medical Technology Liability line of business are more varied, and policies are individually priced based on the risk characteristics of the policy and the account. These policies often have substantial deductibles or self-insured retentions, and the insured risks range from startup operations to large multinational entities. Premiums are established using the most recently developed actuarial estimates of losses expected to be incurred based on factors which include: results from prior analysis of similar business, industry indications, observed trends and judgment. Claims in this line of business primarily involve bodily injury to individuals and are affected by factors similar to those of the HCPL line of business. For the Medical Technology Liability line of business, ProAssurance also establishes an initial reserve using a loss ratio approach, including a provision in consideration of historical loss volatility that this line of business has exhibited. Medical Technology Liability Claims-Made Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 11,162 $ 9,989 $ 8,906 $ 7,441 $ 5,824 $ 4,797 $ 5,051 $ 3,889 $ 3,868 $ 3,864 $ 48 223 2013 — $ 9,807 $ 9,955 $ 9,536 $ 7,226 $ 4,697 $ 3,566 $ 3,504 $ 3,305 3,199 $ 96 218 2014 — — $ 9,989 $ 10,306 $ 9,012 $ 8,984 $ 7,679 $ 6,194 $ 5,888 5,636 $ 406 272 2015 — — — $ 9,376 $ 8,757 $ 7,193 $ 5,929 $ 5,081 $ 4,664 4,192 $ 771 156 2016 — — — — $ 9,200 $ 8,467 $ 7,413 $ 6,422 $ 6,241 4,491 $ 35 182 2017 — — — — — $ 11,049 $ 10,143 $ 8,306 $ 4,919 3,381 $ 505 100 2018 — — — — — — $ 10,141 $ 8,108 $ 7,506 4,961 $ 1,847 218 2019 — — — — — — — $ 10,072 $ 8,324 9,588 $ 4,660 359 2020 — — — — — — — — $ 11,082 10,671 $ 9,279 177 2021 — — — — — — — — — 13,914 $ 13,787 141 Total $ 63,897 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 568 $ 1,520 $ 2,805 $ 3,247 $ 3,366 $ 3,676 $ 3,800 $ 3,817 $ 3,817 $ 3,816 2013 — $ 102 $ 1,029 $ 1,967 $ 2,599 $ 3,092 $ 3,102 $ 3,102 $ 3,102 3,101 2014 — — $ 388 $ 1,527 $ 2,564 $ 3,046 $ 3,724 $ 3,776 $ 4,074 4,076 2015 — — — $ 25 $ 440 $ 1,625 $ 2,097 $ 2,567 $ 2,911 2,987 2016 — — — — $ 53 $ 1,690 $ 2,365 $ 2,959 $ 4,295 4,342 2017 — — — — — $ 56 $ 1,681 $ 2,017 $ 2,360 2,867 2018 — — — — — — $ 6 $ 191 $ 1,850 2,651 2019 — — — — — — — $ 584 $ 2,552 3,902 2020 — — — — — — — — $ 40 526 2021 — — — — — — — — — 4 Total 28,272 All outstanding liabilities before 2012, net of reinsurance 99 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 35,724 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Unaudited Medical Technology Liability 3.5 % 21.9 % 22.7 % 12.9 % 14.4 % 3.7 % 2.6 % 0.2 % — % — % Workers' Compensation Insurance Reserve Many factors affect the ultimate losses incurred for the workers' compensation coverages in the Workers' Compensation Insurance segment including, but not limited to, the type and severity of the injury, the age and occupation of the injured worker, the estimated length of disability, medical treatment and related costs, and the jurisdiction and workers' compensation laws of the injury occurrence. ProAssurance uses various actuarial methodologies in developing the workers’ compensation reserve combined with a review of the exposure base generally based upon payroll of the insured. For the current accident year, given the lack of seasoned information, the different actuarial methodologies produce results with considerable variability; therefore, more emphasis is placed on supplementing results from the actuarial methodologies with trends in exposure base, medical expense inflation, general inflation, severity, and claim counts, among other things, to select an expected loss ratio. Workers' Compensation Insurance Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 80,285 $ 76,551 $ 75,848 $ 76,357 $ 75,836 $ 75,576 $ 75,076 $ 75,076 $ 75,076 $ 74,776 $ 236 16,205 2013 — $ 86,973 $ 85,935 $ 86,928 $ 88,010 $ 87,260 $ 87,260 $ 89,760 $ 89,560 89,010 $ 409 16,429 2014 — — $ 93,019 $ 93,529 $ 93,029 $ 93,029 $ 93,029 $ 93,029 $ 91,329 90,579 $ 782 16,210 2015 — — — $ 100,101 $ 100,454 $ 98,454 $ 97,654 $ 96,354 $ 93,054 92,072 $ 1,140 16,550 2016 — — — — $ 101,348 $ 97,348 $ 92,148 $ 84,799 $ 82,799 81,599 $ 1,182 15,978 2017 — — — — — $ 99,874 $ 99,874 $ 99,874 $ 97,874 95,674 $ 2,897 16,084 2018 — — — — — — $ 118,095 $ 118,095 $ 120,095 120,095 $ 327 18,013 2019 — — — — — — — $ 119,752 $ 119,752 115,352 $ 4,251 17,528 2020 — — — — — — — — $ 106,145 102,475 $ 5,438 14,512 2021 — — — — — — — — — 105,722 $ 30,379 14,982 Total $ 967,354 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 27,448 $ 56,122 $ 65,908 $ 70,558 $ 72,766 $ 73,662 $ 73,676 $ 73,768 $ 73,851 $ 73,976 2013 — $ 30,554 $ 63,825 $ 76,813 $ 82,369 $ 85,689 $ 86,783 $ 87,466 $ 87,772 88,033 2014 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies ProAssurance is involved in various legal actions related to insurance policies and claims handling including, but not limited to, claims asserted by policyholders. These types of legal actions arise in the Company's ordinary course of business and, in accordance with GAAP for insurance entities, are considered as a part of the Company's loss reserving process, which is described in detail under the heading "Losses and Loss Adjustment Expenses" in the Accounting Policies section in Note 1. ProAssurance also has other direct actions against the Company unrelated to its claims activity which are evaluated and accounted for as a part of other liabilities. For these corporate legal actions, the Company evaluates each case separately and establishes what it believes is an appropriate reserve based on GAAP guidance related to contingent liabilities. As of December 31, 2021 there were no material reserves established for corporate legal actions. As a member of Lloyd's, ProAssurance has obligations to Syndicate 1729 including a Syndicate Credit Agreement and FAL requirements. The Syndicate Credit Agreement is an unconditional revolving credit agreement to the Premium Trust Fund of Syndicate 1729 for the purpose of providing working capital. At December 31, 2021, the maximum permitted borrowings under the Syndicate Credit Agreement were approximately £30.0 million (approximately $40.6 million at December 31, 2021). Effective July 1, 2022, maximum permitted borrowings will be reduced to £15.0 million (approximately $20.3 million at December 31, 2021) from £30.0 million under an amended Syndicate Credit Agreement executed in January 2022. The amended Syndicate Credit Agreement has a maturity date of June 30, 2023 and contains an annual auto-renewal feature which allows for ProAssurance to elect to non-renew if notice is given at least 30 days prior to the next auto-renewal date, which is one year prior to the maturity date. Under the Syndicate Credit Agreement, advances bear interest at 3.8% annually and may be repaid at any time but are repayable upon demand after June 30, 2023, subject to extension through the auto-renewal feature. As of December 31, 2021, there were no outstanding borrowings under the Syndicate Credit Agreement. ProAssurance provides FAL to support underwriting by Syndicate 1729 which is comprised of investment securities and cash and cash equivalents deposited with Lloyd's with a total fair value of approximately $37.8 million at December 31, 2021 (see Note 4). During the second and fourth quarters of 2021, ProAssurance received a return of approximately $24.5 million and $8.0 million, respectively, of cash from its FAL balances given the reduction in the Company's participation in the results of Syndicate 1729, to 5% from 29%, and Syndicate 6131, to 50% from 100%, for the 2021 underwriting year. Further, during the fourth quarter of 2021, ProAssurance received a return of approximately $26.6 million of cash from its FAL balances given Syndicate 6131 ceased underwriting on a quota share basis with Syndicate 1729 as Syndicate 6131's business is retained within Syndicate 1729 beginning with the 2022 underwriting year (see Note 18 for additional information). ProAssurance has entered into financial instrument transactions that may present off-balance sheet credit risk or market risk. These transactions include a short-term loan commitment and commitments to provide funding to non-public investment entities. Under the short-term loan commitment, ProAssurance has agreed to advance funds on a 30 day basis to a counterparty provided there is no violation of any condition established in the contract. As of December 31, 2021, ProAssurance had total funding commitments related to non-public investment entities as well as the short-term loan commitment of approximately $244.0 million which included the amount at risk if the full short-term loan is extended and the counterparties default. However, the credit risk associated with the short-term loan commitment is minimal as the counterparties to the contract are highly rated commercial institutions and to-date have been performing in accordance with their contractual obligations. Of these total funding commitments, $0.6 million is related to qualified affordable housing project tax credit investments and is expected to be paid as follows: $0.4 million in 2022, $0.1 million in 2023 and 2024 combined and $0.1 million in 2025 and 2026 combined. ProAssurance’s expected credit losses associated with this short-term loan commitment were nominal in amount as of December 31, 2021. ProAssurance has previously entered into a services agreement with a company to provide data analytics services for certain product lines within the Company's HCPL book of business. In November 2021, ProAssurance executed an amendment to this services agreement which extended the Company's commitment an additional three years for an annual fee of approximately $3.5 million. In addition, the amended services agreement contains an annual one-year auto-extension feature unless either party elects to non-renew the services agreement by providing notice at least six-months prior to the end of the contract. ProAssurance incurred operating expenses associated with this services agreement of $2.6 million, $4.3 million and $4.9 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, the remaining commitment under this agreement was estimated to be approximately $9.9 million. The purchase consideration in the NORCAL acquisition included contingent consideration. NORCAL policyholders who elected to receive NORCAL stock and tender it to ProAssurance are eligible for a share of contingent consideration in an amount of up to approximately $84 million depending upon the after-tax development of NORCAL's ultimate net losses between December 31, 2020 and December 31, 2023. The estimated fair value of this contingent consideration was $24 million as of December 31, 2021, which did not change from the acquisition date of May 5, 2021, and was derived utilizing a stochastic model. This estimate does not guarantee that contingent consideration will ultimately be paid. Depending on NORCAL's actual ultimate net loss development between December 31, 2020 and December 31, 2023, the actual amount due to eligible policyholders may be greater than or less than the $24 million current fair value estimate. See further discussion around the contingent consideration in Note 2 and Note 3. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | Leases ProAssurance is involved in a number of operating leases that are primarily for office facilities. Office facility leases have remaining lease terms ranging from one year to ten years; some of which include options to extend the leases for up to fifteen years, and some of which include an option to terminate the lease within one year. ProAssurance subleases certain office facilities to third parties and classifies these leases as operating leases. As a result of ProAssurance's acquisition of NORCAL on May 5, 2021, the Company recorded $4.4 million of additional operating lease ROU assets and $5.3 million of additional operating lease liabilities during the second quarter of 2021. See Note 2 for more information. The following table provides a summary of the components of net lease expense as well as the reporting location in the Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2021, 2020 and 2019. (In thousands) Location in the Consolidated Statements of Income and Comprehensive Income Year Ended December 31 2021 2020 2019 Operating lease expense (1) Operating expense $ 5,047 $ 4,355 $ 4,485 Sublease income (2) Other income (263) (143) (152) Net lease expense $ 4,784 $ 4,212 $ 4,333 (1) Includes short-term lease costs and variable lease costs, if applicable. For the years ended December 31, 2021, 2020 and 2019, no short-term lease costs were recognized and variable lease costs were nominal in amount. (2) Sublease income excludes rental income from owned properties of $2.5 million during each of the years ended December 31, 2021, 2020 and 2019 which is included in other income. See “Item 2. Properties” for a listing of currently owned properties. The following table provides supplemental lease information for operating leases on the Consolidated Balance Sheet as of December 31, 2021 and December 31, 2020. Year Ended December 31 ($ in thousands) 2021 2020 Operating lease ROU assets $ 19,595 $ 19,013 Operating lease liabilities $ 20,844 $ 20,116 Weighted-average remaining lease term 7.05 years 8.31 years Weighted-average discount rate 2.84 % 2.97 % The following table provides supplemental lease information for the Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019. Year Ended December 31 (In thousands) 2021 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,775 $ 4,221 $ 4,767 The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of December 31, 2021. (In thousands) 2022 $ 5,396 2023 3,958 2024 2,525 2025 2,019 2026 1,748 Thereafter 7,378 Total future minimum lease payments 23,024 Less: Imputed interest 2,180 Total operating lease liabilities $ 20,844 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt ProAssurance’s outstanding debt consisted of the following: ($ in thousands) December 31, December 31, Senior Notes due 2023, unsecured, interest at 5.3% annually $ 250,000 $ 250,000 Contribution Certificates due 2031, interest at 3.0% (effective interest rate at 4.35%) paid annually beginning April 2022 175,900 — Mortgage Loans, outstanding borrowings were secured by first priority liens on two office buildings, and bore an interest rate of three-month LIBOR plus 1.325% (1.58% at December 31, 2020) determined quarterly — 36,113 Total principal 425,900 286,113 Less unamortized debt issuance costs 914 1,400 Debt less unamortized debt issuance costs $ 424,986 $ 284,713 Senior Notes due 2023 (the Senior Notes) The Senior Notes are the unsecured obligations of ProAssurance Corporation, due in full in November 2023, unless redeemed sooner, with interest payable semiannually. Redemptions may be made prior to maturity, in whole or part, at the greater of par or the sum of the present values of the outstanding principal and remaining interest payments calculated at 0.4% above the then current rate for U.S. Treasury Notes with a term comparable to the remaining term of the Senior Notes. There are no financial covenants associated with the Senior Notes. Contribution Certificates On May 5, 2021, NORCAL Insurance Company, successor to NORCAL Mutual Insurance Company, issued Contribution Certificates, which are due in 2031, to certain NORCAL policyholders in the conversion. The Contribution Certificates have a principal amount of $191 million and were recorded at their fair value of $175 million at the date of the NORCAL acquisition. The difference of $16 million between the recorded acquisition date fair value and the principal balance of the Contribution Certificates will be accreted utilizing the effective interest method over the term of the certificates of ten years as an increase to interest expense. In addition, interest payments are subject to deferral if ProAssurance does not receive permission from the California Department of Insurance prior to payment. There are no financial covenants associated with the Contribution Certificates. See Note 2 for additional information on the Contribution Certificates assumed in the NORCAL acquisition. Mortgage Loans During 2017, two of ProAssurance's subsidiaries, ProAssurance Indemnity Company, Inc. and ProAssurance Insurance Company of America, each entered into ten-year mortgage loans ("Mortgage Loans") with principal amounts of $17.9 million and $22.6 million, respectively, with one lender in connection with the recapitalization of two office buildings. In June 2021, ProAssurance repaid the balance outstanding on the ProAssurance Indemnity Company, Inc. Mortgage Loan of $15.6 million. In July 2021, ProAssurance repaid the balance outstanding on the ProAssurance Insurance Company of America Mortgage Loan of $19.7 million. Interest expense on the Mortgage Loans during the year ended December 31, 2021 included the write-off of the unamortized debt issuance costs, which were nominal in amount. Revolving Credit Agreement ProAssurance has a Revolving Credit Agreement with seven participating lenders. The Revolving Credit Agreement, which expires November 2024, may be used for general corporate purposes, including, but not limited to, short-term working capital, share repurchases as authorized by the Board and support for other activities. ProAssurance's Revolving Credit Agreement permits borrowings up to $250 million, and has available a $50 million accordion feature which, if successfully subscribed, would expand the permitted borrowings to a maximum of $300 million. In August 2021, ProAssurance repaid the balance outstanding on the Revolving Credit Agreement of $15 million. As of December 31, 2021 and 2020, there were no outstanding borrowings on the Revolving Credit Agreement. The Revolving Credit Agreement permits ProAssurance to borrow, repay and reborrow from the lenders during the term of the Revolving Credit Agreement. All borrowings are required to be repaid prior to the expiration date of the Revolving Credit Agreement. ProAssurance is required to pay a commitment fee, ranging from 0.15% to 0.30% based on ProAssurance’s credit ratings, on the average unused portion of the credit line during the term of the Revolving Credit Agreement. Borrowings under the Revolving Credit Agreement may be secured or unsecured and accrue interest at a selected base rate, adjusted by a margin, which can vary from 0% to 1.88%, based on ProAssurance’s credit ratings and whether the borrowing is secured or unsecured. The base rate selected may either be the current one-, three- or six-month LIBOR, with the LIBOR term selected fixing the interest period for which the rate is effective. If no selection is made, the base rate defaults to the highest of (1) the Prime rate, (2) the Federal Funds rate plus 0.5% or (3) the one-month LIBOR plus 1.0%, determined daily. Rates are reset each successive interest period until the borrowing is repaid. The Revolving Credit Agreement contains customary representations, covenants and events constituting default, and remedies for default. Additionally, the Revolving Credit Agreement carries the following financial covenants: (1) In April 2021, ProAssurance amended and restated its Revolving Credit Agreement to allow for additional indebtedness of a subsidiary in preparation of the close of the NORCAL acquisition. This amendment to the Revolving Credit Agreement is included as Exhibit 10.8(g) of this report. ProAssurance is not permitted to have a leverage ratio of consolidated funded indebtedness (principally, obligations for borrowed money, obligations evidenced by instruments such as notes or acceptances, standby and commercial letters of credit, and contingent obligations) to consolidated total capitalization (principally, total non-trade liabilities on a consolidated basis plus consolidated shareholders’ equity, exclusive of AOCI) greater than 0.35 to 1.0, determined at the end of each fiscal quarter. (2) ProAssurance is required to maintain a minimum net worth, excluding AOCI, of at least $1.0 billion. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity At December 31, 2021 and 2020, ProAssurance had 100 million shares of authorized common stock and 50 million shares of authorized preferred stock. The Board has the authority to determine provisions for the issuance of preferred shares, including the number of shares to be issued, the designations, powers, preferences and rights, and the qualifications, limitations or restrictions of such shares. The following is a summary of changes in common shares issued and outstanding during the years ended December 31, 2021, 2020 and 2019: (In thousands) 2021 2020 2019 Issued and outstanding shares - January 1 53,893 53,792 53,637 Shares issued due to vesting of share-based compensation awards 46 54 132 Other shares issued for compensation and shares reissued to stock purchase plan * 45 47 23 Issued and outstanding shares - December 31 53,984 53,893 53,792 * Shares issued were valued at fair value (the market price of a ProAssurance common share on the date of issue). As of December 31, 2021, approximately 1.3 million of ProAssurance's authorized common shares were reserved by the Board for award or issuance under the incentive compensation plans described in Note 15 and an additional 0.7 million of authorized common shares were reserved for the issuance of currently outstanding restricted share and performance share unit awards. ProAssurance declared cash dividends during 2021, 2020 and 2019 as follows: Cash Dividends Declared, per Share 2021 2020 2019 First Quarter $ 0.05 $ 0.31 $ 0.31 Second Quarter $ 0.05 $ 0.05 $ 0.31 Third Quarter $ 0.05 $ 0.05 $ 0.31 Fourth Quarter $ 0.05 $ 0.05 $ 0.31 Quarterly dividends were paid in the month following the quarter in which they were declared. Dividends declared during 2021, 2020 and 2019 totaled $10.8 million, $24.8 million and $66.7 million, respectively. ProAssurance's ability to pay dividends to its shareholders is limited by its holding company structure, to the extent of the net assets held by its insurance subsidiaries, as discussed in Note 20. Otherwise, there are no other regulatory restrictions on ProAssurance's retained earnings or net income that materially impact its ability to pay dividends. Based on shareholders' equity at December 31, 2021, total equity of $404.7 million was free of debt covenant restrictions regarding the payment of dividends. However, any decision to pay future cash dividends is subject to the Board’s final determination after a comprehensive review of financial performance, future expectations and other factors deemed relevant by the Board. As of December 31, 2021, Board authorizations for the repurchase of common shares or the retirement of outstanding debt of $109.6 million remained available for use. The timing and quantity of purchases depends upon market conditions and changes in ProAssurance's capital requirements and is subject to limitations that may be imposed on such purchases by applicable securities laws and regulations as well as the rules of the NYSE. Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) The following tables provide a detailed breakout of the components of AOCI and the amounts reclassified from AOCI to net income (loss). The tax effects of all amounts in the tables below, except for an immaterial amount of unrealized gains and losses on available-for-sale securities held at the Company's U.K. subsidiary, were computed using the enacted U.S. federal corporate tax rate of 21%. OCI included a deferred tax benefit of $15.0 million for the year ended December 31, 2021 and a deferred tax expense of $9.6 million and $14.2 million for the years ended December 31, 2020 and 2019, respectively. The changes in the balance of each component of AOCI for the years ended December 31, 2021, 2020 and 2019 were as follows: (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities (1)(2) Accumulated Other Comprehensive Income (Loss) Balance, December 31, 2020 $ 75,388 $ (57) $ (104) $ 75,227 OCI, before reclassifications, net of tax (50,242) — 1,406 (48,836) Amounts reclassified from AOCI, net of tax (10,217) 57 53 (10,107) Net OCI, current period (60,459) 57 1,459 (58,943) Balance, December 31, 2021 $ 14,929 $ — $ 1,355 $ 16,284 (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities (1) Accumulated Other Comprehensive Income (Loss) Balance, December 31, 2019 $ 37,333 $ (300) $ (78) $ 36,955 OCI, before reclassifications, net of tax 46,383 (187) (26) 46,170 Amounts reclassified from AOCI, net of tax (8,328) 430 — (7,898) Net OCI, current period 38,055 243 (26) 38,272 Balance, December 31, 2020 $ 75,388 $ (57) $ (104) $ 75,227 (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities (1) Accumulated Other Comprehensive Income (Loss) Balance December 31, 2018 $ (16,733) $ (121) $ (57) $ (16,911) OCI, before reclassifications, net of tax 56,041 (179) (21) 55,841 Amounts reclassified from AOCI, net of tax (1,975) — — (1,975) Net OCI, current period 54,066 (179) (21) 53,866 Balance, December 31, 2019 $ 37,333 $ (300) $ (78) $ 36,955 (1) The Company terminated Eastern's defined benefit plan, effective September 30, 2021, resulting in a settlement of the liabilities under the plan and the net loss previously reflected in AOCI being recognized in earnings for the year ended December 31, 2021. For the years ended December 31, 2020 and 2019, the unrecognized change in defined benefit plan liabilities represents the reestimation of the defined benefit plan liability assumed in the Eastern acquisition. The defined benefit plan was frozen as to the earnings of additional benefits and the benefit plan liability was reestimated annually. (2) As a result of the NORCAL acquisition, the Company sponsors another frozen defined benefit plan and recorded a net actuarial gain of $1.2 million, net of tax, in AOCI for the year ended December 31, 2021 (see Note 19). |
Share-Based Payments
Share-Based Payments | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Payments | Share-Based Payments Share-based compensation costs are primarily classified as a component of operating expense. During 2021, 2020 and 2019, ProAssurance provided share-based compensation to employees utilizing two types of awards: restricted share units and performance share units. During 2019, ProAssurance also provided share-based compensation to employees utilizing purchase match units. The restricted share and performance share awards were made under either the ProAssurance Corporation Amended and Restated 2014 Equity Incentive Plan or the ProAssurance Corporation 2008 Equity Incentive Plan. The Compensation Committee of the Board is responsible for the administration of both plans. The following table provides a summary of compensation expense and the total related tax benefit recognized during each period as well as estimated compensation cost that will be charged to expense in future periods. Share-Based Unrecognized Compensation Cost Year Ended December 31 December 31, 2021 ($ in millions, except remaining recognition period) 2021 2020 2019 Amount Weighted Average Remaining Total share-based compensation expense $ 4.4 $ 3.8 $ 3.5 $ 5.3 1.9 Tax benefit recognized $ 0.9 $ 0.8 $ 0.7 The majority of awards are equity classified awards and are charged to expense as an increase to additional paid-in capital over the service period (generally the vesting period) associated with the award. However, a nominal amount of awards are liability classified awards and are recorded as a liability as they are structured to be settled in cash. As of December 31, 2021, the majority of share-based compensation expense related to restricted share units. Restricted share and performance share units vest in their entirety generally at the end of a three-year period, except for certain restricted share units granted in 2019 which will vest at the end of a five-year period, following the grant date based on a continuous service requirement and, for performance share units, achievement of a performance objective. Partial vesting is permitted for retirees. All non-vested purchase match units at December 31, 2018 were fully vested in the fourth quarter of 2019; previously, units vested over a three-year period based on a service requirement with partial vesting permitted for all participants. For the restricted share and purchase match units, a single share of ProAssurance common stock is issued per vested unit. For performance share units, the number of shares of ProAssurance common stock issued per vested unit varies based on performance goals achieved. For equity classified awards, units sufficient to satisfy required tax withholdings are paid in cash rather than in shares of ProAssurance common stock. Liability classified awards, which are nominal in amount, are settled in cash at the end of the vesting period. Restricted Share Units Activity for restricted share units during 2021, 2020 and 2019 is summarized below. Grant date fair values are based on the market value of a share of ProAssurance common stock on the date of grant less the estimated net present value of expected dividends during the vesting period. 2021 2020 2019 Units Weighted Units Weighted Units Weighted Beginning non-vested balance 339,804 $ 36.09 320,625 $ 43.99 267,323 $ 49.16 Granted 131,521 $ 24.16 111,758 $ 29.18 164,196 $ 36.96 Forfeited (11,131) $ 35.49 (9,054) $ 40.13 (3,832) $ 45.09 Vested and released (73,012) $ 44.45 (83,525) $ 56.74 (107,062) $ 46.06 Ending non-vested balance 387,182 $ 30.78 339,804 $ 36.09 320,625 $ 43.99 The aggregate grant date fair value of restricted share units vested and released in 2021, 2020 and 2019 totaled $3.2 million, $4.7 million and $4.9 million, respectively. The aggregate intrinsic value of restricted share units vested and released in 2021, 2020 and 2019 (including units paid in cash to cover tax withholdings) totaled $1.8 million, $2.6 million and $4.6 million, respectively. Performance Share Units Performance share units vest only if minimum performance objectives are met, and the number of units earned varies from 50% to 200% of a base award depending upon the degree to which stated performance objectives are achieved. Performance share unit activity for 2021, 2020 and 2019 is summarized below. The table reflects the base number of units; actual awards that vest depend upon the extent to which performance objectives are achieved. Grant date fair values are based on the market value of a share of ProAssurance common stock on the date of grant less the estimated net present value of expected dividends during the vesting period. 2021 2020 2019 Base Units Weighted Base Units Weighted Base Units Weighted Beginning non-vested balance 90,979 $ 36.87 100,370 $ 50.10 135,202 $ 49.95 Granted 74,004 $ 24.04 38,609 $ 29.18 25,168 $ 40.18 Forfeited — $ — — $ — — $ — Expired* (27,202) $ 44.73 (48,000) $ 58.35 — $ — Vested and released — $ — — $ — (60,000) $ 45.59 Ending non-vested balance 137,781 $ 28.43 90,979 $ 36.87 100,370 $ 50.10 *Represents performance share units that did not vest as minimum performance objectives were not achieved. The aggregate grant date fair value of performance share units (base level) vested and released in 2019 totaled $2.7 million; there were no performance share units vested and released in 2021 and 2020 as minimum performance objectives were not achieved. The aggregate intrinsic value of performance share units (base level) vested and released in 2019 (including units paid in cash to cover tax withholdings) totaled $2.6 million. The weighted average level at which the vested units were issued was 95% during 2019, based on performance levels achieved. Purchase Match Units The ProAssurance Corporation 2011 Employee Stock Ownership Plan provided a purchase match unit for each share of ProAssurance common stock purchased with contributions by eligible plan participants, with participant contributions subject to a $5,000 annual limit per participant. During 2017, the ProAssurance Corporation 2011 Employee Stock Ownership Plan was discontinued and the existing non-vested purchase match units were fully vested in the fourth quarter of 2019. Purchase match unit activity during 2019 is summarized below. Grant date fair values are based on the market value of a ProAssurance common share on the date of grant less the estimated net present value of expected dividends during the vesting period. 2021 2020 2019 Units Weighted Units Weighted Units Weighted Beginning non-vested balance — $ — — $ — 44,682 $ 51.05 Granted — $ — — $ — — $ — Forfeited — $ — — $ — (1,400) $ 51.47 Vested and released — $ — — $ — (43,282) $ 51.03 Ending non-vested balance — $ — — $ — — $ — |
Variable Interest Entities
Variable Interest Entities | 12 Months Ended |
Dec. 31, 2021 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | Variable Interest Entities ProAssurance holds passive interests in a number of entities that are considered to be VIEs under GAAP guidance. ProAssurance's VIE interests principally consist of interests in LPs/LLCs formed for the purpose of achieving diversified equity and debt returns. ProAssurance's VIE interests, carried as a part of investment in unconsolidated subsidiaries, totaled $303.7 million at December 31, 2021 and $282.2 million at December 31, 2020. ProAssurance does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the primary beneficiary. Investments in entities where ProAssurance holds a greater than minor interest but does not hold a controlling interest are accounted for using the equity method. Therefore, ProAssurance has not consolidated these VIEs. ProAssurance’s involvement with each of these VIEs is limited to its direct ownership interest in the VIE. Except for the funding commitments disclosed in Note 11, ProAssurance has no arrangements with any of these VIEs to provide other financial support to or on behalf of the VIE. At December 31, 2021, ProAssurance’s maximum loss exposure relative to these investments was limited to the carrying value of ProAssurance’s investment in the VIE. As a result of the Company's acquisition of NORCAL (see Note 2), ProAssurance is the primary beneficiary of PPM RRG. While there is no direct ownership of PPM RRG by ProAssurance, it manages the business operations of PPM RRG through its management services agreement and has effective control of the PPM RRG's Board of Directors through an irrevocable voting proxy. The management services agreement allows ProAssurance to provide management and oversight services to the RRG, which includes the ability to make business decisions impacting the operations of PPM RRG. PPM RRG has a $5 million surplus note to NORCAL which is its only source of capital. ProAssurance has consolidated the account balances and transactions of PPM RRG beginning on the NORCAL acquisition date of May 5, 2021. At December 31, 2021, approximately $140 million of ProAssurance's assets and approximately $140 million of its liabilities included on the Consolidated Balance Sheets were related to PPM RRG. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Diluted weighted average shares is calculated as basic weighted average shares plus the effect, calculated using the treasury stock method, of assuming that restricted share units, performance share units and purchase match units have vested. The following table provides a reconciliation between the Company's basic weighted average number of common shares outstanding to its diluted weighted average number of common shares outstanding: (In thousands, except per share data) Year Ended December 31 2021 2020 2019 Weighted average number of common shares outstanding, basic 53,962 53,863 53,740 Dilutive effect of securities: Restricted Share Units 92 42 75 Performance Share Units 4 1 10 Purchase Match Units — — 16 Weighted average number of common shares outstanding, diluted 54,058 53,906 53,841 Effect of dilutive shares on earnings (loss) per share $ — $ — $ — The diluted weighted average number of common shares outstanding for the years ended December 31, 2021 and 2020 excludes approximately 28,000 and 114,000, respectively, of common share equivalents issuable under the Company's stock compensation plans, as their effect would have been antidilutive. There were no antidilutive common share equivalents for the year ended December 31, 2019. Dilutive common share equivalents are reflected in the earnings (loss) per share calculation while antidilutive common share equivalents are not reflected in the earnings (loss) per share calculation. For the year ended December 31, 2020, all incremental common share equivalents were not included in the computation of diluted earnings (loss) per share because to do so would have been antidilutive. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information ProAssurance's segments are based on the Company's internal management reporting structure for which financial results are regularly evaluated by the Company's CODM to determine resource allocation and assess operating performance. The Company operates in five segments that are organized around the nature of the products and services provided: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, Lloyd's Syndicates and Corporate. The Company continually assesses its internal management reporting structure and information evaluated by its CODM to determine whether any changes have occurred that would impact its segment reporting structure. During the second quarter of 2021, the Company reevaluated its segment reporting structure due to the acquisition of NORCAL (see Note 2) and concluded no changes in the Company's segments were required as a result of the acquisition as there was no change to the Company's internal management reporting structure. As NORCAL is an underwriter of healthcare professional liability insurance, NORCAL's underwriting results, since the date of acquisition, are included in the Specialty P&C segment while NORCAL's investment results, since the date of acquisition, are included in the Corporate segment. A description of each of ProAssurance's five operating and reportable segments follows. Specialty P&C includes professional liability insurance and medical technology liability insurance. Professional liability insurance is primarily comprised of medical professional liability products offered to healthcare providers and institutions. The Specialty P&C segment's professional liability insurance also includes the business acquired through the NORCAL transaction that closed on May 5, 2021, as previously discussed. The Company also offers, to a lesser extent, professional liability insurance to attorneys and their firms. Medical technology liability insurance is offered to medical technology and life sciences companies that manufacture or distribute products including entities conducting human clinical trials. In addition, the Company also offers custom alternative risk solutions including loss portfolio transfers, assumed reinsurance and captive cell programs for healthcare professional liability insureds. For the alternative market captive cell programs, the Specialty P&C segment cedes either all or a portion of the premium to certain SPCs in the Company's Segregated Portfolio Cell Reinsurance segment. Workers' Compensation Insurance includes workers' compensation insurance products which are provided primarily to employers with 1,000 or fewer employees. The segment's products include guaranteed cost policies, policyholder dividend policies, retrospectively-rated policies, deductible policies and alternative market solutions. Alternative market program premiums include program design, fronting, claims administration, risk management, SPC rental, asset management and SPC management services. Alternative market program premiums are 100% ceded to either SPCs in the Company's Segregated Portfolio Cell Reinsurance segment or, to a limited extent, to a captive insurer unaffiliated with ProAssurance. Segregated Portfolio Cell Reinsurance includes the results (underwriting profit or loss, plus investment results, net of U.S. federal income taxes) of SPCs at Inova Re and Eastern Re, the Company's Cayman Islands SPC operations. Each SPC is owned, fully or in part, by an individual company, agency, group or association, and the results of the SPCs are attributable to the participants of that cell. ProAssurance participates to a varying degree in the results of selected SPCs. SPC results attributable to external cell participants are reflected as SPC dividend expense (income) in the Segregated Portfolio Cell Reinsurance segment and in ProAssurance's Consolidated Statements of Income and Comprehensive Income. In addition, the Segregated Portfolio Cell Reinsurance segment includes the investment results of the SPCs as the investments are solely for the benefit of the cell participants, and investment results attributable to external cell participants are reflected in SPC dividend expense (income). The SPCs assume workers' compensation insurance, healthcare professional liability insurance or a combination of the two from the Company's Workers' Compensation Insurance and Specialty P&C segments. Lloyd's Syndicates includes the results from ProAssurance's participation in Lloyd's of London Syndicate 1729 and Syndicate 6131. The results of this segment are normally reported on a quarter lag, except when information is available that is material to the current period. Furthermore, investment results associated with the majority of investment assets solely allocated to Lloyd's Syndicate operations and certain U.S. paid administrative expenses are reported concurrently as that information is available on an earlier time frame. Syndicate 1729 underwrites risks over a wide range of property and casualty insurance and reinsurance lines in both the U.S. and international markets. Effective January 1, 2022, Syndicate 6131 ceased underwriting on a quota share basis with Syndicate 1729 as Syndicate 6131's business is retained within Syndicate 1729 beginning with the 2022 year of account. Prior to January 1, 2022, Syndicate 6131 was an SPA which focused on contingency and specialty property business. To support and grow the Company's core insurance operations, ProAssurance decreased its participation in the results of Syndicate 1729 for the 2021 underwriting year to 5% from 29%. Effective July 1, 2020, Syndicate 6131 entered into a six-month quota share reinsurance agreement with an unaffiliated insurer. Under this agreement, Syndicate 6131 ceded essentially half of the premium assumed from Syndicate 1729 to the unaffiliated insurer; the agreement was non-renewed on January 1, 2021 and the Company decreased its participation in the results of Syndicate 6131 to 50% from 100% for the 2021 underwriting year. Due to the quarter lag, the change in the Company's participation in the results of Syndicates 1729 and 6131 was not reflected in its results until the second quarter of 2021. Corporate includes ProAssurance's investment operations, including the investment operations of NORCAL since the date of acquisition and excludes those reported in the Company's Segregated Portfolio Cell Reinsurance and Lloyd's Syndicates segments. In addition, this segment includes corporate expenses, interest expense, U.S. income taxes and non-premium revenues generated outside of the Company's insurance entities. The accounting policies of the segments are described in Note 1. ProAssurance evaluates the performance of its Specialty P&C and Workers' Compensation Insurance segments based on before tax underwriting profit or loss. ProAssurance evaluates the performance of its Segregated Portfolio Cell Reinsurance segment based on operating profit or loss, which includes investment results of investment assets solely allocated to SPC operations, net of U.S. federal income taxes. Performance of the Lloyd's Syndicates segment is evaluated based on operating profit or loss, which includes investment results of investment assets solely allocated to Lloyd's Syndicate operations, net of U.K. income tax expense. Performance of the Corporate segment is evaluated based on the contribution made to consolidated after-tax results. ProAssurance accounts for inter-segment transactions as if the transactions were to third parties at current market prices. Assets are not allocated to segments because investments, other than the investments discussed above that are solely allocated to the Segregated Portfolio Cell Reinsurance and Lloyd's Syndicates segments, and other assets are not managed at the segment level. The tabular information that follows shows the financial results of the Company's reportable segments reconciled to results reflected in the Consolidated Statements of Income and Comprehensive Income. ProAssurance does not consider goodwill or intangible asset impairments, a gain on bargain purchase or transaction-related costs for completed business combinations, including any related tax impacts, in assessing the financial performance of its operating and reportable segments, and thus are included in the reconciliation of segment results to consolidated results. Financial results by segment were as follows: Year Ended December 31, 2021 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 695,008 $ 164,600 $ 63,688 $ 48,372 $ — $ — $ 971,668 Net investment income — — 814 1,961 67,747 — 70,522 Equity in earnings (loss) of unconsolidated subsidiaries — — — — 48,974 — 48,974 Net investment gains (losses) — — 4,080 249 19,981 — 24,310 Other income (expense) (1) 3,370 2,211 3 912 5,531 (3,091) 8,936 Net losses and loss adjustment expenses (575,164) (114,704) (32,569) (29,812) — — (752,249) Underwriting, policy acquisition and operating expenses (1) (127,709) (52,418) (21,635) (17,957) (26,641) 3,091 (243,269) SPC U.S. federal income tax expense (2) — — (1,947) — — — (1,947) SPC dividend (expense) income — — (10,050) — — — (10,050) Interest expense — — — — (19,719) — (19,719) Income tax benefit (expense) — — — — (4,651) — (4,651) Segment results $ (4,495) $ (311) $ 2,384 $ 3,725 $ 91,222 $ — $ 92,525 Reconciliation of segments to consolidated results: Gain on bargain purchase 74,408 Transaction-related costs, net (3) (22,809) Net income (loss) $ 144,124 Significant non-cash items: Gain on bargain purchase $ 74,408 Depreciation and amortization, net of accretion $ 9,915 $ 3,583 $ 1,475 $ 66 $ 22,208 $ — $ 37,247 Year Ended December 31, 2020 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 477,365 $ 171,772 $ 66,352 $ 77,226 $ — $ — $ 792,715 Net investment income — — 1,084 4,128 66,786 — 71,998 Equity in earnings (loss) of unconsolidated subsidiaries — — — — (11,921) — (11,921) Net investment gains (losses) — — 3,085 988 11,605 — 15,678 Other income (expense) (1) 3,908 2,216 205 51 2,531 (2,441) 6,470 Net losses and loss adjustment expenses (470,074) (111,552) (29,605) (50,216) — — (661,447) Underwriting, policy acquisition and operating expenses (1) (109,599) (56,449) (20,709) (30,136) (23,429) 2,441 (237,881) SPC U.S. federal income tax expense (2) — — (1,746) — — — (1,746) SPC dividend (expense) income — — (14,304) — — — (14,304) Interest expense — — — — (15,503) — (15,503) Income tax benefit (expense) — — — 29 41,300 — 41,329 Segment results $ (98,400) $ 5,987 $ 4,362 $ 2,070 $ 71,369 $ — $ (14,612) Reconciliation of segments to consolidated results: Goodwill impairment (161,115) Net income (loss) $ (175,727) Significant non-cash items: Goodwill impairment $ 161,115 Depreciation and amortization, net of accretion $ 7,747 $ 3,690 $ 676 $ (4) $ 9,266 $ — $ 21,375 Year Ended December 31, 2019 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 499,058 $ 189,240 $ 78,563 $ 80,671 $ — $ — $ 847,532 Net investment income — — 1,578 4,551 87,140 — 93,269 Equity in earnings (loss) of unconsolidated subsidiaries — — — — (10,061) — (10,061) Net investment gains (losses) — — 4,020 768 55,086 — 59,874 Other income (expense) (1) 5,796 2,399 559 (573) 3,478 (2,439) 9,220 Net losses and loss adjustment expenses (532,485) (121,649) (52,412) (47,369) — — (753,915) Underwriting, policy acquisition and operating expenses (1) (120,310) (57,520) (23,201) (34,711) (19,146) 2,439 (252,449) SPC U.S. federal income tax expense (2) — — (1,059) — — — (1,059) SPC dividend (expense) income — — (4,579) — — — (4,579) Interest expense — — — — (16,636) — (16,636) Income tax benefit (expense) — — — — 29,808 — 29,808 Segment results $ (147,941) $ 12,470 $ 3,469 $ 3,337 $ 129,669 $ — $ 1,004 Net income (loss) $ 1,004 Significant non-cash items: Depreciation and amortization, net of accretion $ 6,586 $ 3,825 $ (41) $ (7) $ 8,302 $ — $ 18,665 (1) Certain fees for services provided to the SPCs at Inova Re and Eastern Re are recorded as expenses within the Segregated Portfolio Cell Reinsurance segment and as other income within the Workers' Compensation Insurance segment. These fees are primarily SPC rental fees and are eliminated between segments in consolidation. (2) Represents the provision for U.S. federal income taxes for SPCs at Inova Re, which have elected to be taxed as a U.S. corporation under Section 953(d) of the Internal Revenue Code. U.S. federal income taxes are included in the total SPC net results and are paid by the individual SPCs. (3) Represents the transaction-related costs, after-tax, associated with the acquisition of NORCAL. Pre-tax transaction-related costs of $25.0 million were included as a component of consolidated operating expense and the associated income tax benefit of $2.2 million was included as a component of consolidated income tax benefit (expense) on the Consolidated Statements of Income and Comprehensive Income for year ended December 31, 2021. The following table provides detailed information regarding ProAssurance's gross premiums earned by product as well as a reconciliation to net premiums earned. All gross premiums earned are from external customers except as noted. ProAssurance's insured risks are primarily within the U.S. Year Ended December 31 (In thousands) 2021 2020 2019 Specialty P&C Segment Gross premiums earned: HCPL $ 616,614 $ 411,716 $ 434,867 Small business unit 105,605 104,376 109,876 Medical technology liability 38,508 34,909 33,957 Other 684 821 2,096 Ceded premiums earned (66,403) (74,457) (81,738) Segment net premiums earned 695,008 477,365 499,058 Workers' Compensation Insurance Segment Gross premiums earned: Traditional business 175,459 184,204 203,195 Alternative market business 68,206 71,280 84,214 Ceded premiums earned (79,065) (83,712) (98,169) Segment net premiums earned 164,600 171,772 189,240 Segregated Portfolio Cell Reinsurance Segment Gross premiums earned: Workers' compensation (1) 65,023 68,518 81,765 HCPL (2) 7,336 6,594 6,059 Other — — 480 Ceded premiums earned (8,671) (8,760) (9,741) Segment net premiums earned 63,688 66,352 78,563 Lloyd's Syndicates Segment Gross premiums earned: Property and casualty (3) 60,590 98,990 101,222 Ceded premiums earned (12,218) (21,764) (20,551) Segment net premiums earned 48,372 77,226 80,671 Consolidated net premiums earned $ 971,668 $ 792,715 $ 847,532 (1) Premium for all periods is assumed from the Workers' Compensation Insurance segment. (2) Premium for all periods is assumed from the Specialty P&C segment. (3) Includes a nominal amount of premium assumed from the Specialty P&C segment for the year ended December 31, 2019. |
Benefit Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Benefit Plans ProAssurance maintains the ProAssurance Savings Plan that provides a vehicle for eligible employees to build retirement income. For the year ended December 31, 2021 and for the second half of 2020, ProAssurance provided employer contributions to the plan of up to 5% of eligible contributions for qualified employees. For the first half of 2020 and for the year ended December 31, 2019, ProAssurance provided employer contributions to the plan of up to 10% of eligible contributions for qualified employees. ProAssurance also maintained a similar plan as a result of its acquisition of NORCAL on May 5, 2021 (see Note 2 for additional information), which was merged into the ProAssurance Savings Plan effective January 1, 2022. ProAssurance incurred expenses related to these savings plans of $4.1 million, $5.5 million and $7.2 million during the years ended December 31, 2021, 2020 and 2019, respectively. ProAssurance also maintains the ProAssurance Plan that allows eligible management employees to defer a portion of their current salary. ProAssurance incurred nominal expense related to the ProAssurance Plan in each of the years ended December 31, 2021, 2020 and 2019. ProAssurance's deferred compensation liabilities totaled $52.3 million and $30.3 million at December 31, 2021 and 2020, respectively. As a result of ProAssurance's acquisition of NORCAL, the Company's deferred compensation liabilities at December 31, 2021 included $18.4 million associated with the NORCAL Non-Qualified Deferred Compensation Plan and incurred nominal expense related to this plan for the year ended December 31, 2021. The NORCAL Non-Qualified Deferred Compensation Plan was terminated as of December 31, 2021. The liabilities included amounts due under the ProAssurance Plan and amounts due under individual agreements with current or former employees. Pension ProAssurance assumed a frozen defined benefit pension plan on May 5, 2021 as a result of its acquisition of NORCAL, which covers substantially all NORCAL employees (except those that were previous employees of Medicus Insurance Company and FD Insurance Company, employees of PPM RRG as well as new hires after December 31, 2013). Benefits are based on years of service and the employee’s average of the highest five years of annual compensation. Annual contributions to the defined benefit pension plan are above the minimum funding standards outlined in the Employee Retirement Income Security Act of 1974, as amended. ProAssurance makes contributions to the defined benefit pension plan with the goal of ensuring that it is adequately funded to meet its future obligations. ProAssurance did not make any contributions to NORCAL's defined benefit pension plan during the period from May 5, 2021 to December 31, 2021 and does not anticipate making any contributions in 2022. The defined benefit pension plan no longer has future service accruals or compensation increases because this plan was frozen effective December 31, 2015. The PBO for pension benefits represents the present value of benefits earned as of December 31 for vested and non-vested employees. The following table provides a reconciliation of the changes in the PBO and fair value of plan assets for the year ended December 31, 2021: ($ in thousands) Change in benefit obligation: PBO at January 1, 2021 $ — Acquired PBO from NORCAL acquisition 107,895 Interest cost 2,030 Actuarial (gain) loss 2,872 Benefits paid (1,149) Settlement payments (4,749) PBO at December 31, 2021 $ 106,899 Change in fair value of plan assets: Fair value of plan assets at January 1, 2021 $ — Fair value of plan assets acquired from NORCAL 109,443 Actual return on plan assets 6,899 Benefits paid (1,149) Settlement payments (4,749) Fair value of plan assets at December 31, 2021 $ 110,444 Funded (underfunded) status of the plan 3,545 Amount recognized in Consolidated Balance Sheets at December 31, 2021* 3,545 Net actuarial (gain) loss recognized in AOCI and not yet reflected in net periodic benefit cost (income) (1,468) *The funded balance is included as a component of other assets on the Consolidated Balance Sheets for the year ended December 31, 2021. As of December 31, 2021, the pension plan was remeasured to reflect settlement accounting primarily due to lump sum payments elected by covered employees that were terminated. The components of the net periodic benefit cost (income) for the year ended December 31, 2021 were as follows: ($ in thousands) Year Ended December 31, 2021 Components of net periodic benefit cost (income): Interest cost $ 2,030 Expected return on plan assets (2,494) Gain on settlement (65) Total net periodic benefit cost (income)* $ (529) Other changes recognized in OCI: Net actuarial (gain) loss (1,533) Reclassification of gain on settlement 65 (Gain) loss recognized in OCI (1,468) Total recognized in net periodic benefit cost (income) and OCI $ (1,997) *Net periodic benefit cost (income) is included as a component of operating expense on the Consolidated Statements of Income and Comprehensive Income for the year ended December 31, 2021. The components of the change in amounts not yet recognized as components of the net periodic benefit cost (income) were as follows: December 31, 2021 Items not yet recognized as a component of net periodic benefit cost (income) at January 1, 2021 $ — Net actuarial (gain) loss (1,533) Reclassification of gain (loss) on settlement 65 Items not yet recognized as a component of net periodic benefit cost (income) at December 31, 2021 $ (1,468) Amounts recognized in AOCI $ (1,468) The weighted average discount rate used to determine the projected benefit obligation of the defined benefit pension plan for the year ended December 31, 2021 and as of the date of the NORCAL acquisition on May 5, 2021 were as follows: December 31, 2021 May 5, 2021 Weighted average discount rate 2.78 % 2.95 % The weighted average discount rate and the weighted average expected return on plan assets used to determine net periodic benefit cost (credit) for the year ended December 31, 2021 were as follows: December 31, 2021 Weighted average discount rate 2.95 % Weighted average expected return on plan assets 3.75 % The long-term rate of return is based on the anticipated returns that will be earned by the portfolio over the long term. The weighted average expected return on plan assets is influenced, but not determined, by historical portfolio performance. ProAssurance has engaged a certified investment adviser to manage the defined benefit pension plan’s assets. The investment strategy is to build an efficient, well diversified portfolio based on a long-term strategic outlook of the investment markets. The investment markets outlook utilizes both historically based and forward-looking return forecasts to establish future return expectations for various asset classes. These return expectations are used to develop a core asset allocation based on the specific needs of the pension plan. The core asset allocation utilizes investment portfolios of various asset classes and multiple investment managers to help maximize the defined benefit pension plan’s return, while providing multiple layers of diversification to help minimize risk. The defined benefit pension plan’s target allocations, by asset category as of December 31, 2021, were as follows: December 31, 2021 Equity investments 18 % Fixed maturities 79 % Real estate 3 % 100 % The pension plan's assets consist of investments in pooled separate accounts that invest in mutual funds, equity investments, debt securities or real estate investments. The fair values of the assets in the defined benefit pension plan, by asset category as of December 31, 2021, were as follows: December 31, 2021 (In thousands) Level 1 Level 2 Level 3 Total* Pooled separate account investments: Large cap equity investments (1) $ 13,703 $ — $ — $ 13,703 Mid cap equity investments (1) 586 — — 586 Small cap equity investments (1) 229 — — 229 International equity investments (2) — 5,581 — 5,581 Corporate and government debt (3) — 86,728 — 86,728 Real estate (4) — — 3,617 3,617 Total $ 14,518 $ 92,309 $ 3,617 $ 110,444 *For some assets, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When this is the case, the asset is categorized based on the level of the most significant input to the fair value measurement. Assessments of the significance of a particular input to the fair value measurement require judgement and consideration of factors specific to the assets being valued. Management has determined that the NAV of the pooled separate accounts represents fair value because the NAV is published and available to current investors and is the basis for current transactions. Consequently, the pooled separate accounts are classified in the fair value hierarchy discussed in Note 3 based upon the ending NAV. The fair values of the underlying investments used to determine the NAV of the pooled separate accounts are primarily publicly quoted prices or quoted prices for similar assets in active or non-active markets, however other inputs may also be used as described below. Below is a description of the inputs and valuation methodologies used to determine the fair value of our defined benefit pension plan assets: (1) The portfolios invest primarily in publicly traded equity securities of large, mid-sized and small U.S. companies that are priced using the closing price of the applicable U.S. nationally recognized stock exchange. (2) The portfolios invest primarily in publicly traded equity securities of non-U.S. companies that are priced using the closing price of the applicable foreign stock exchange, which may require certain liquidity adjustments for non-active markets. (3) The portfolios invest in various fixed income securities, primarily of U.S. origin. These include, but are not limited to corporate bonds and U.S. Treasury obligations. The underlying securities are priced by industry standards vendors, using inputs such as benchmark yields, reported trades, broker/dealer quotes or issuer spreads. (4) The portfolios invest primarily in commercial real estate and includes mortgage loans which are collateralized by the associated properties. Real estate values are determined based upon annual appraisals with daily updates that are based on changes in factors such as occupancy levels, lease rates, overall market conditions and capital changes, among others. The following tables present summary information regarding changes in the fair value of the defined benefit pension plan assets measured using Level 3 inputs: Level 3 Fair Value Measurements (In thousands) Real Estate Total Balance, January 1, 2021 $ — $ — Acquired balance, May 5, 2021 3,383 3,383 Actual return on plan assets: Relating to assets still held at the reporting date: Investment return 613 613 Transfers out (379) (379) Balance, December 31, 2021 $ 3,617 $ 3,617 Based on current data and assumptions as of December 31, 2021, the following benefit payments are expected to be paid in future periods: 2022 $ 6,240 2023 6,030 2024 5,430 2025 5,740 2026 6,270 Thereafter 31,070 Total $ 60,780 |
Statutory Accounting and Divide
Statutory Accounting and Dividend Restrictions | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Statutory Accounting and Dividend Restrictions | Statutory Accounting and Dividend Restrictions ProAssurance’s domestic U.S. insurance subsidiaries are required to file statutory financial statements with state insurance regulatory authorities, prepared based upon SAP prescribed or permitted by regulatory authorities. ProAssurance did not use any prescribed or permitted SAP that differed from the NAIC's SAP at December 31, 2021, 2020 or 2019. The most significant differences between net income (loss) prepared in accordance with GAAP and statutory net income (loss) are generally due to: (a) policy acquisition and certain software and equipment costs which are deferred under GAAP but expensed for statutory purposes, (b) certain deferred income taxes which are recognized under GAAP but are not recognized for statutory purposes, (c) net unrealized gains or losses which are included in shareholders' equity related to available-for-sale fixed maturity securities carried at fair value under GAAP but are principally carried at amortized cost for statutory purposes and (d) accounting for goodwill and intangible assets. The NAIC specifies risk-based capital requirements for property and casualty insurance providers. At December 31, 2021, the Company estimates that actual statutory capital and surplus for each of ProAssurance’s insurance subsidiaries will exceed the minimum regulatory requirements. Statutory net income (loss) and capital and surplus of ProAssurance’s insurance subsidiaries are estimates and could differ from actual results upon completion and filing of statutory financial statements with state insurance regulatory authorities subsequent to filing this report on Form 10-K. Net income (loss) and capital and surplus of ProAssurance’s insurance subsidiaries on a statutory basis are shown in the following table. (In millions) Statutory Net Income (Loss) Statutory Capital and Surplus 2021 2020 2019 2021 2020 $73 $81 ($22) $1,452 $831 At December 31, 2021, $1.5 billion of ProAssurance's consolidated net assets were held at its domestic insurance subsidiaries, of which approximately $147 million are permitted to be paid as dividends over the course of 2022 without prior approval of state insurance regulators. However, the payment of any dividend requires prior notice to the insurance regulator in |
Schedule I - Summary of Investm
Schedule I - Summary of Investments - Other Than Investments In Related Parties | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Abstract] | |
Schedule I - Summary of Investments Other than Investments in Related Parties | December 31, 2021 Type of Investment Recorded Fair Amount Which is Fixed maturities Bonds: U.S. Government or government agencies and authorities $ 277,161 $ 275,583 $ 275,583 States, municipalities and political subdivisions 511,750 519,196 519,196 Foreign governments 35,303 35,971 35,971 Public utilities 93,561 94,683 94,683 All other corporate bonds 1,782,282 1,794,438 1,794,438 Asset-backed securities 1,158,704 1,157,521 1,157,521 Total Fixed Maturities 3,858,761 3,877,392 3,877,392 Equity Securities Common Stocks: Banks, trusts and insurance companies 7,388 7,470 7,470 Industrial, miscellaneous and all other 203,968 207,337 207,337 Total Equity Securities, trading 211,356 214,807 214,807 Other long-term investments 376,726 519,137 519,137 Short-term investments 217,114 216,987 216,987 Total Investments $ 4,663,957 $ 4,828,323 $ 4,828,323 |
Schedule II - Condensed Financi
Schedule II - Condensed Financial Information of Registrant | 12 Months Ended |
Dec. 31, 2021 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule II - Condensed Financial Information of Registrant | December 31, December 31, Assets Investment in subsidiaries, at equity $ 1,605,892 $ 1,383,527 Fixed maturities available for sale, at fair value — 33,824 Short-term investments 43,270 115,198 Investment in unconsolidated subsidiaries 915 915 Cash and cash equivalents 18,115 55,469 Due from subsidiaries 2,166 — Other assets 14,584 28,778 Total Assets $ 1,684,942 $ 1,617,711 Liabilities and Shareholders’ Equity Liabilities: Due to subsidiaries $ — $ 10,696 Dividends payable 2,698 2,694 Other liabilities 4,771 6,361 Debt less debt issuance costs 249,086 248,750 Total Liabilities 256,555 268,501 Shareholders’ Equity: Common stock 633 632 Other shareholders’ equity, including unrealized gains (losses) on securities of subsidiaries 1,427,754 1,348,578 Total Shareholders’ Equity 1,428,387 1,349,210 Total Liabilities and Shareholders’ Equity $ 1,684,942 $ 1,617,711 Year Ended December 31 2021 2020 2019 Revenues Net investment income (loss) $ (1,470) $ 331 $ 2,694 Equity in earnings (loss) of unconsolidated subsidiaries — — 40 Net investment gains (losses) 1,159 2,194 19 Other income (loss) 2,359 12 795 Total revenues 2,048 2,537 3,548 Expenses Interest expense 14,549 14,260 14,074 Other expenses 29,094 21,458 16,653 Total expenses 43,643 35,718 30,727 Income (loss) before income tax expense (benefit) and equity in net income (loss) of consolidated subsidiaries (41,595) (33,181) (27,179) Income tax expense (benefit) (9,833) 11,404 (28,455) Income (loss) before equity in net income (loss) of consolidated subsidiaries (31,762) (44,585) 1,276 Equity in net income (loss) of consolidated subsidiaries 175,886 (131,142) (272) Net income (loss) 144,124 (175,727) 1,004 Other comprehensive income (loss) (58,943) 38,272 53,866 Comprehensive income (loss) $ 85,181 $ (137,455) $ 54,870 Year Ended December 31 2021 2020 2019 Net cash provided (used) by operating activities $ 2,589 $ (21,450) $ 20,055 Investing activities Proceeds from sales or maturities of: Fixed maturities, available for sale 33,443 87,101 27,974 Net decrease (increase) in short-term investments 71,928 (51,206) 12,603 Dividends from subsidiaries 21,464 79,486 52,499 Contribution of capital to subsidiaries (214,237) (97,541) — Funds (advanced) repaid for Lloyd's FAL deposit 59,012 32,256 (4,894) Funds (advanced) repaid under Syndicate Credit Agreement — — 30,296 Other (151) (2,206) (936) Net cash provided (used) by investing activities (28,541) 47,890 117,542 Financing activities Subsidiary payments for common shares and share-based compensation awarded to subsidiary employees (307) 2,846 344 Dividends to shareholders (10,758) (38,664) (93,204) Other (337) (1,109) (4,538) Net cash provided (used) by financing activities (11,402) (36,927) (97,398) Increase (decrease) in cash and cash equivalents (37,354) (10,487) 40,199 Cash and cash equivalents at beginning of period 55,469 65,956 25,757 Cash and cash equivalents at end of period $ 18,115 $ 55,469 $ 65,956 Supplemental disclosure of cash flow information: Cash paid (refunded) during the year for income taxes, net $ (7,943) $ (9,117) $ 2,053 Cash paid during the year for interest $ 14,176 $ 13,888 $ 13,699 Significant non-cash transactions: Dividends declared and not yet paid $ 2,698 $ 2,694 $ 16,676 Securities transferred at fair value as dividends from subsidiaries $ — $ 34,915 $ 34,897 Operating ROU assets obtained in exchange for operating lease liabilities $ 412 $ — $ — Basis of Presentation The registrant-only financial statements should be read in conjunction with ProAssurance Corporation’s Consolidated Financial Statements and Notes thereto. At December 31, 2021 and 2020, PRA investment in subsidiaries is stated at the initial consolidation value plus equity in the undistributed earnings of subsidiaries since the date of acquisition. ProAssurance Corporation has a management agreement with several of its insurance subsidiaries whereby ProAssurance Corporation charges the subsidiaries a management fee for various management services provided to the subsidiary. Under the arrangement, the expenses associated with such services remain as expenses of ProAssurance Corporation and the management fee charged is reported as an offset to ProAssurance Corporation expenses. |
Schedule III - Supplementary In
Schedule III - Supplementary Insurance Information | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Abstract] | |
Schedule III - Supplementary Insurance Information | 2021 2020 2019 Net premiums earned Specialty P&C $ 695,008 $ 477,365 $ 499,058 Workers' Compensation Insurance 164,600 171,772 189,240 Segregated Portfolio Cell Reinsurance 63,688 66,352 78,563 Lloyd's Syndicates 48,372 77,226 80,671 Consolidated $ 971,668 $ 792,715 $ 847,532 Net investment income (1) Segregated Portfolio Cell Reinsurance $ 814 $ 1,084 $ 1,578 Lloyd's Syndicates 1,961 4,128 4,551 Corporate 67,747 66,786 87,140 Consolidated $ 70,522 $ 71,998 $ 93,269 Losses and loss adjustment expenses incurred related to current year, net of reinsurance Specialty P&C $ 608,106 $ 497,554 $ 526,744 Workers' Compensation Insurance 121,804 118,523 129,450 Segregated Portfolio Cell Reinsurance 42,721 46,200 62,546 Lloyd's Syndicates 25,101 49,569 46,958 Consolidated $ 797,732 $ 711,846 $ 765,698 Losses and loss adjustment expenses incurred related to prior year, net of reinsurance Specialty P&C $ (32,942) $ (27,480) $ 5,741 Workers' Compensation Insurance (7,100) (6,971) (7,801) Segregated Portfolio Cell Reinsurance (10,152) (16,595) (10,134) Lloyd's Syndicates 4,711 647 411 Consolidated $ (45,483) $ (50,399) $ (11,783) Paid losses and loss adjustment expenses, net of reinsurance Specialty P&C (2) $ 538,885 $ 379,656 $ 382,845 Workers' Compensation Insurance 121,302 118,496 117,848 Segregated Portfolio Cell Reinsurance 37,127 46,267 37,034 Lloyd's Syndicates 47,931 40,897 36,593 Inter-segment eliminations — (143) (196) Consolidated $ 745,245 $ 585,173 $ 574,124 Amortization of DPAC Specialty P&C $ 61,662 $ 53,562 $ 56,605 Workers' Compensation Insurance 15,100 15,895 17,144 Segregated Portfolio Cell Reinsurance 18,730 19,636 21,717 Lloyd's Syndicate 14,973 21,597 21,392 Inter-segment eliminations 140 (125) (1,528) Consolidated $ 110,605 $ 110,565 $ 115,330 Continued on the following page. 2021 2020 2019 Continued from previous page Other underwriting, policy acquisition and operating expenses Specialty P&C $ 66,047 $ 56,037 $ 63,705 Workers' Compensation Insurance 37,318 40,554 40,376 Segregated Portfolio Cell Reinsurance 2,905 1,073 1,484 Lloyd's Syndicates 2,984 8,539 13,319 Corporate 26,641 23,429 19,146 Non-segmented items (3) 24,977 — — Inter-segment eliminations (3,231) (2,316) (911) Consolidated $ 157,641 $ 127,316 $ 137,119 Net premiums written Specialty P&C $ 626,147 $ 451,019 $ 495,750 Workers' Compensation Insurance 161,865 164,871 182,233 Segregated Portfolio Cell Reinsurance 63,042 64,159 77,639 Lloyd's Syndicates 31,667 67,652 87,103 Consolidated $ 882,721 $ 747,701 $ 842,725 Deferred policy acquisition costs (1) $ 58,940 $ 47,196 $ 55,567 Reserve for losses and loss adjustment expenses (1) $ 3,579,940 $ 2,417,179 $ 2,346,526 Unearned premiums (1) $ 433,961 $ 361,547 $ 413,086 (1) Assets are not allocated to segments because investments, other than the investments that are solely allocated to the Segregated Portfolio Cell Reinsurance and Lloyd's Syndicates segments, and other assets are not managed at the segment level. See Note 18 of the Notes to Consolidated Financial Statements for additional information. (2) Paid losses for the year ended December 31, 2021 included paid losses of $158.3 million related to reserves acquired from NORCAL since May 5, 2021. See Note 10 of the Notes to Consolidated Financial Statements for additional information. (3) Represents pre-tax transaction-related costs associated with the acquisition of NORCAL that are not included in a segment as we do not consider these costs in assessing the financial performance of any of our operating or reportable segments. See Note 18 of the Notes to Consolidated Financial Statements for a reconciliation of our segment results to our consolidated results. |
Schedule IV - Reinsurance
Schedule IV - Reinsurance | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract] | |
Schedule IV - Reinsurance | 2021 2020 2019 Property and Liability * Premiums earned $ 1,020,107 $ 862,742 $ 926,035 Premiums ceded (93,998) (113,582) (124,171) Premiums assumed 45,559 43,555 45,668 Net premiums earned $ 971,668 $ 792,715 $ 847,532 Percentage of amount assumed to net 4.69% 5.49% 5.39% * All of ProAssurance’s premiums are related to property and liability coverages. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Organization and Nature of Business | Organization and Nature of Business ProAssurance Corporation (ProAssurance, PRA or the Company), a Delaware corporation, is an insurance holding company primarily for wholly owned specialty property and casualty and workers' compensation insurance entities including an entity that provides capital to Syndicate 1729 at Lloyd's. Risks insured are primarily liability risks located within the U.S. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of ProAssurance Corporation, its wholly owned subsidiaries and VIEs in which ProAssurance is the primary beneficiary. See Note 16 for more information on ProAssurance's VIE interests. Investments in entities where ProAssurance holds a greater than minor interest but does not hold a controlling interest are accounted for using the equity method. All significant intercompany accounts and transactions are eliminated in consolidation. ProAssurance subsidiaries located in the U.K. are normally reported on a quarter lag due to timing issues regarding the availability of information, except when information is available that is material to the current period. Furthermore, investment results associated with ProAssurance's FAL investments and certain U.S. paid administrative expenses are reported concurrently as that information is available on an earlier time frame. |
Reclassifications | Reclassifications Certain insignificant prior year amounts have been reclassified to conform to the current year presentation. |
Basis of Presentation | Basis of Presentation The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and disclosures related to these amounts at the date of the financial statements. |
Recognition of Revenues, Credit Losses, Earned But Unbilled Premiums and Lloyd's Premium Estimates | Recognition of Revenues Insurance premiums are recognized as revenues pro rata over the terms of the policies, which are principally one year in duration. Losses and Loss Adjustment Expenses ProAssurance establishes its reserve for losses and LAE ("reserve for losses" or "reserve") based on estimates of the future amounts necessary to pay claims and expenses associated with the investigation and settlement of claims. The reserve for losses is determined on the basis of individual claims and payments thereon as well as actuarially determined estimates of future losses based on past loss experience, available industry data and projections as to future claims frequency, severity, inflationary trends, judicial trends, legislative changes and settlement patterns. Management establishes the reserve for losses after taking into consideration a variety of factors including premium rates, historical paid and incurred loss development trends, and management's evaluation of the current loss environment including frequency, severity, expected effect of inflation, general economic and social trends, and the legal and political environment. Management also takes into consideration the conclusions reached by internal and consulting actuaries. Management updates and reviews the data underlying the estimation of the reserve for losses each reporting period and makes adjustments to loss estimation assumptions that best reflect emerging data. Both internal and consulting actuaries perform an in-depth review of the reserve for losses on at least a semi-annual basis using the loss and exposure data of ProAssurance's subsidiaries. Consulting actuaries provide reports to management regarding the adequacy of reserves. Estimating casualty insurance reserves, and particularly long-tailed insurance reserves, is a complex process. Long-tailed insurance is characterized by the extended period of time typically required both to assess the viability of a claim and potential damages, if any, and to reach a resolution of the claim. For a high proportion of the risks insured or reinsured by ProAssurance, the period of time required to resolve a claim is often five years or more, and claims may be subject to litigation. Estimating losses for these long-tailed claims requires ProAssurance to make and revise judgments and assessments regarding multiple uncertainties over an extended period of time. As a result, reserve estimates may vary significantly from the eventual outcome. Reserve estimates and the assumptions on which these estimates are predicated are regularly reviewed and updated as new information becomes available. Any adjustments necessary are reflected in current operations. Due to the size of ProAssurance’s reserve for losses, even a small percentage adjustment to these estimates could have a material effect on earnings in the period in which the adjustment is made, as was the case in 2021, 2020 and 2019. See Note 10 for additional information on ProAssurance's reserve for losses and LAE. The effect of adjustments made to reinsured losses is mitigated by the corresponding adjustment that is made to reinsurance recoveries. Thus, in any given year, ProAssurance may make significant adjustments to gross losses that have little effect on its net losses. Credit Losses ProAssurance's premiums receivable and reinsurance receivables are exposed to credit losses but to-date have not experienced any significant amount of credit losses. ProAssurance measures expected credit losses on its premiums receivables and reinsurance receivables on a collective (pool) basis when similar risk characteristics exist, and the Company will reassess its pools each reporting period to ensure all receivables within the pool continue to share similar risk characteristics. If the Company determines that a receivable does not share risk characteristics with its other receivables within a pool, it will evaluate that receivable for expected credit losses on an individual basis. ProAssurance measures expected credit losses associated with its premium receivables at the segment level as each segment’s premium receivables share similar risk characteristics including term, type of financial asset and similar historical and expected credit loss patterns. ProAssurance measures expected credit losses associated with its reinsurance receivables (related to both paid and unpaid losses) at the consolidated level as its reinsurance receivables share similar risk characteristics including type of financial asset, type of industry and similar historical and expected credit loss patterns. ProAssurance measures expected credit losses over the contractual term of each pool utilizing a loss rate method. Historical internal credit loss experience for each pool is the basis for the Company’s assessment of expected credit losses; however, the Company may also consider historical credit loss information from external sources. In addition to historical credit loss data, the Company also considers reasonable and supportable forecasts of future economic conditions in its estimate of expected credit losses by utilizing industry and macroeconomic factors that it believes most relevant to the collectability of each pool. Earned But Unbilled Premiums Workers’ compensation premiums are determined based upon the payroll of the insured, the applicable premium rates and an experience-based modification factor, where applicable. An audit of the policyholders’ records is conducted after policy expiration to make a final determination of applicable premiums. Audit premium due from or due to a policyholder as a result of an audit is reflected in net premiums written and earned when billed. ProAssurance tracks, by policy, the amount of additional premium billed in final audit invoices as a percentage of payroll exposure and uses this information to estimate the probable additional amount of EBUB as of the balance sheet date. Changes to the EBUB estimate are included in net premiums written and earned in the period recognized. As of December 31, 2021 and 2020, ProAssurance carried EBUB of $1.8 million and $3.0 million, respectively, as a part of premiums receivable. As a result of the economic impact of COVID-19, the Company recognized reductions in payroll exposure related to in-force policies that resulted in a significant decrease in audit premium and a reduction in our EBUB estimate during 2021 and 2020. ProAssurance will continue to monitor and adjust the estimate, if necessary, based on changes in insured payrolls and economic conditions, as experience develops or new information becomes known; however, the length and magnitude of such changes depends on future developments, which are highly uncertain and cannot be predicted. Lloyd’s Premium Estimates For certain insurance policies and reinsurance contracts written in the Lloyd’s Syndicates segment, premiums are initially recognized based upon estimates of ultimate premium. Estimated ultimate premium consists primarily of premium written under delegated underwriting authority arrangements, which consist primarily of binding authorities, and certain assumed reinsurance agreements. These estimates of ultimate premium are judgmental and are dependent upon certain assumptions, including historical premium trends for similar agreements. As reports are received from programs, ultimate premium estimates are revised, if necessary, with changes reflected in current operations. |
Reinsurance Receivables | Reinsurance Receivables ProAssurance enters into reinsurance agreements whereby other insurance entities agree to assume a portion of the risk associated with certain policies issued by ProAssurance. In return, ProAssurance agrees to pay a premium to the reinsurer. ProAssurance uses reinsurance to provide capacity to write larger limits of liability, to provide reimbursement for losses incurred under the higher limit coverages the Company offers, to provide protection against losses in excess of policy limits, and, in the case of risk sharing arrangements, to align the Company's objectives with those of its strategic business partners and to provide custom insurance solutions for large customer groups. Receivable from reinsurers on paid losses and LAE is the estimated amount of losses already paid that will be recoverable from reinsurers. Receivable from reinsurers on unpaid losses and LAE is the estimated amount of future loss payments that will be recoverable from reinsurers. Reinsurance recoveries are the portion of losses incurred during the period that are estimated to be allocable to reinsurers. Premiums ceded are the estimated premiums that will be due to reinsurers with respect to premiums earned and losses incurred during the period. These estimates are based upon management’s estimates of ultimate losses and the portion of those losses that are allocable to reinsurers under the terms of the related reinsurance agreements. Given the uncertainty inherent in management's estimate of the ultimate amounts of losses, these estimates may vary significantly from the ultimate outcome. Management regularly reviews these estimates and any adjustments necessary are reflected in the period in which the estimate is changed. Due to the size of the receivable from reinsurers, an adjustment to these estimates could have a material effect on ProAssurance's results of operations for the period in which the adjustment is made. Reinsurance contracts do not relieve ProAssurance from its obligations to policyholders. ProAssurance continually monitors its reinsurers to minimize its exposure to significant credit losses from reinsurer insolvencies (see additional discussion below under the heading "Credit Losses"). Any amount determined to be uncollectible is written off in the period in which the uncollectible amount is identified. See Note 6 for further information. |
Retroactive Insurance Contracts | Retroactive Insurance Contracts In certain instances, ProAssurance’s insurance contracts cover losses both on a prospective basis and retroactive basis, and accordingly, ProAssurance bifurcates the prospective and retroactive provisions of these contracts and accounts for each component separately, where practicable. Under the retroactive provisions of a contract, all premiums received and losses assumed are recognized immediately in earnings at the inception of the contract as all of the underlying loss events occurred in the past. If the estimated losses assumed differ from the premium received related to the retroactive provision of a contract, the resulting difference is deferred and recognized over the estimated claim payment period with the periodic amortization reflected in earnings as a component of net losses and LAE. Deferred gains are included as a component of the reserve for losses and LAE, and deferred losses are included |
Investments | Investments Recurring Fair Value Measurements Fair values of investment securities are primarily provided by independent pricing services. The pricing services provide an exchange-traded price, if available, or provide an estimated price determined using multiple observable inputs, including exchange-traded prices for similar assets. Management reviews valuations of securities obtained from the pricing services for accuracy based upon the specifics of the security, including class, maturity, credit rating, durations, collateral and comparable markets for similar securities. Multiple observable inputs are not available for certain of the Company's investments, including corporate debt not actively traded, certain asset-backed securities and investments in LPs/LLCs. Management values the corporate debt not actively traded and the other asset-backed securities either using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Management values certain investment funds, primarily LPs/LLCs, based on the NAV of the interest held, as provided by the fund. Nonrecurring Fair Value Measurements Management measures the fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include investments carried principally at cost, investments in tax credit partnerships, fixed assets, goodwill and other intangible assets. These assets would also include any equity method investments that do not provide a NAV. Fixed Maturities Fixed maturities are considered as either available-for-sale or trading securities. Available-for-sale securities are carried at fair value, determined as described above and in Note 3. Exclusive of impairment losses, discussed in a separate section that follows, unrealized holding gains and losses on available-for-sale securities are included, net of related tax effects, as a component of OCI in the Consolidated Statement of Income and Comprehensive Income during the period of change and as a component AOCI in shareholders' equity on the Consolidated Balance Sheet. Investment income includes amortization of premium and accretion of discount related to available-for-sale debt securities acquired at other than par value. Debt securities and mandatorily redeemable preferred stock with maturities beyond one year when purchased are classified as fixed maturities. Trading securities are carried at fair value, determined as described above, with the unrealized holding gains and losses included as a component of net investment gains (losses) in the Consolidated Statement of Income and Comprehensive Income during the period of change. Equity Investments Equity investments are carried at fair value, as described above, with the holding gains and losses included as a component of net investment gains (losses) in the Consolidated Statement of Income and Comprehensive Income during the period of change. Equity investments are primarily comprised of stocks, bond funds and investment funds. Short-term Investments Short-term investments, which have a maturity at purchase of one year or less, are primarily comprised of investments in U.S. Treasury obligations, commercial paper and money market funds. All balances are carried at fair value which approximates the cost of the securities due to their short-term nature. Other Investments Investments in convertible bond securities are carried at fair value as permitted by the accounting guidance for hybrid financial instruments, with changes in fair value recognized in income as a component of net investment gains (losses) during the period of change. Interest on convertible bond securities is recorded on an accrual basis based on contractual interest rates and is included in net investment income. Investment in Unconsolidated Subsidiaries Equity investments, primarily investments in LPs/LLCs, where ProAssurance is deemed to have influence because it holds a greater than a minor interest are accounted for using the equity method. Under the equity method, the recorded basis of the investment is adjusted each period for the investor’s pro rata share of the investee’s income or loss. Investments in unconsolidated subsidiaries include tax credit partnerships accounted for using the equity method, whereby ProAssurance’s proportionate share of income or loss is included in equity in earnings (loss) of unconsolidated subsidiaries. Tax credits received from the partnerships are recognized in the period received in the Consolidated Statements of Income and Comprehensive Income as either a reduction to current tax expense or as a component of deferred tax expense if they cannot be utilized in the period received. Business Owned Life Insurance ProAssurance owns life insurance contracts on certain management employees, which includes policies acquired from NORCAL. The life insurance contracts are carried at their current cash surrender value. Changes in the cash surrender value are included in income in the current period as investment income. Death proceeds from the contracts are recorded when the proceeds become payable under the policy terms. Realized Gains and Losses Realized investment gains and losses are recognized on the first-in, first-out basis for GAAP purposes and on the specific identification basis for tax purposes. Impairments ProAssurance evaluates its available-for-sale investment securities, which at December 31, 2021 and 2020 consisted entirely of fixed maturity securities, on at least a quarterly basis for the purpose of determining whether declines in fair value below recorded cost basis represent a credit loss. The Company considers a credit loss to have occurred: • if there is intent to sell the security; • if it is more likely than not that the security will be required to be sold before full recovery of its amortized cost basis; or • if the entire amortized basis of the security is not expected to be recovered. The assessment of whether the amortized cost basis of a security is expected to be recovered requires the Company to make assumptions regarding various matters affecting future cash flows. The choice of assumptions is subjective and requires the use of judgment. Actual credit losses experienced in future periods may differ from the Company’s estimates of those credit losses. Methodologies used to estimate the present value of expected cash flows are: The estimate of expected cash flows is determined by projecting a recovery value and a recovery time frame and assessing whether further principal and interest will be received. ProAssurance considers various factors in projecting recovery values and recovery time frames, including the following: • third-party research and credit rating reports; • the current credit standing of the issuer, including credit rating downgrades, whether before or after the balance sheet date; • the extent to which the decline in fair value is attributable to credit risk specifically associated with the security or its issuer; • internal assessments and the assessments of external portfolio managers regarding specific circumstances surrounding an investment, which indicate the investment is more or less likely to recover its amortized cost than other investments with a similar structure; • for asset-backed securities, the origination date of the underlying loans, the remaining average life, the probability that credit performance of the underlying loans will deteriorate in the future and ProAssurance's assessment of the quality of the collateral underlying the loan; • failure of the issuer of the security to make scheduled interest or principal payments; • any changes to the rating of the security by a rating agency; • recoveries or additional declines in fair value subsequent to the balance sheet date; • adverse legal or regulatory events; • significant deterioration in the market environment that may affect the value of collateral (e.g., decline in real estate prices); • significant deterioration in economic conditions; and • disruption in the business model resulting from changes in technology or new entrants to the industry. If deemed appropriate and necessary, a discounted cash flow analysis is performed to confirm whether a credit loss exists and, if so, the amount of the credit loss. ProAssurance uses the single best estimate approach for available-for-sale debt securities and considers all reasonably available data points, including industry analyses, credit ratings, expected defaults and the remaining payment terms of the debt security. For fixed rate available-for-sale debt securities, cash flows are discounted at the security's effective interest rate implicit in the security at the date of acquisition. If the available-for-sale debt security’s contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, for example, the prime rate, the LIBOR, or the U.S. Treasury bill weekly average, that security’s effective interest rate is calculated based on the factor as it changes over the life of the security. If ProAssurance intends to sell a debt security or believes it will more likely than not be required to sell a debt security before the amortized cost basis is recovered, any existing allowance will be written off against the security's amortized cost basis, with any remaining difference between the debt security's amortized cost basis and fair value recognized as an impairment loss in earnings. Exclusive of securities where there is an intent to sell or where it is not more likely than not that the security will be required to be sold before recovery of its amortized cost basis, impairment for debt securities is separated into a credit component and a non-credit component. The credit component of an impairment is the difference between the security’s amortized cost basis and the present value of its expected future cash flows, while the non-credit component is the remaining difference between the security’s fair value and the present value of expected future cash flows. An allowance for expected credit losses will be recorded for the expected credit losses through income and the non-credit component is recognized in OCI. The amount of impairment recognized is limited to the excess of the amortized cost over the fair value of the available-for-sale debt security. |
Derivatives | DerivativesProAssurance records derivative instruments at fair value in the Consolidated Balance Sheets. ProAssurance accounts for the changes in fair value of derivatives depending on whether the derivative is designated as a hedging instrument and if so, the type of hedging relationship. For derivative instruments not designated as hedging instruments, ProAssurance recognizes the change in fair value of the derivative in earnings during the period of change. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the Consolidated Balance Sheets and Consolidated Statements of Cash Flows, ProAssurance considers all demand deposits and overnight investments to be cash equivalents. |
Foreign Currency | Foreign Currency The functional currency of all ProAssurance foreign subsidiaries is the U.S. dollar. In recording foreign currency transactions, revenue and expense items are converted to U.S. dollars at the exchange rate prevailing at the transaction date. Monetary assets and liabilities originating in currencies other than the U.S. dollar are remeasured to U.S. dollars at the rates of exchange in effect as of the balance sheet date. The resulting foreign currency gains or losses are recognized in the Consolidated Statements of Income and Comprehensive Income as a component of other income. Monetary assets and liabilities include investments, cash and cash equivalents, accrued expenses and other liabilities. In addition, monetary assets and liabilities include certain premiums receivable and reserve for losses and LAE as a result of reinsurance transactions conducted with foreign cedents denominated in their local functional currencies. |
Pension, Other Assets and Liabilities | Pension As a result of the NORCAL acquisition, the Company sponsors a frozen qualified defined benefit pension plan which covers substantially all NORCAL employees (except those that were previous employees of Medicus Insurance Company and FD Insurance Company, employees of PPM RRG as well as new hires after December 31, 2013). Accounting for pension benefits requires the use of assumptions for the valuation of the PBO and the expected performance of the plan assets. The Company uses December 31 as the measurement date for calculating its obligation related to this defined benefit pension plan and for estimating net periodic benefit cost (credit) for the subsequent year. The PBO for pension benefits represents the present value of all future benefits earned as of the measurement date for vested and non-vested employees. At each measurement date, the Company reviews the various assumptions impacting the amounts recorded for the pension plan including the discount rates, which impacts the recorded value of the PBO and interest costs, and the expected return on plan assets. To estimate the discount rate at the measurement date, the Company uses a bond yield curve model, developed based on pricing and yield information for high quality corporate bonds. The assumption for the expected return on plan assets is based on the anticipated returns that will be earned by the portfolio over the long term. The expected return is influenced, but not determined, by historical portfolio performance. Accounting standards provide for the delayed recognition of differences between actual results and expected or estimated results. This delayed recognition of the differences is amortized into earnings over time. The differences between actual results and expected or estimated results are recognized in full in AOCI. Amounts recognized in AOCI are reclassified to earnings in a systematic manner over the average future service period of participants. Other Assets and Liabilities Other assets include the acquired NORCAL investments in a deferred compensation rabbi trust which are carried at fair value. These rabbi trust assets are related to other liabilities associated with funded deferred compensation agreements with NORCAL employees and previous members of NORCAL's Board of Directors. Other liabilities include the assumed NORCAL liability for deferred compensation balances associated with the rabbi trust assets and the reported balance is determined based on the amount of elective deferrals and employer contributions adjusted for periodic changes in fair value of the participant balances based on the performance of the funds selected by the participants. ProAssurance recognizes the net change in the fair value of the rabbi trust assets and associated deferred compensation liabilities as a component of net investment income during the period of change. |
Deferred Policy Acquisition Costs; Ceding Commission Income | Deferred Policy Acquisition Costs; Ceding Commission Income Costs that vary with and are directly related to the successful production of new and renewal premiums (primarily premium taxes, commissions and underwriting salaries) are deferred to the extent they are recoverable against unearned premiums and are amortized as related premiums are earned. Unearned ceding commission income is reported as an offset to DPAC, and ceding commission earned is reported as an offset to DPAC amortization. ProAssurance evaluates the recoverability of DPAC typically at the segment level each reporting period, or in a manner that is consistent with the way the Company manages its business. Any amounts estimated to be unrecoverable are charged to expense in the current period. As part of the evaluation of the recoverability of DPAC, ProAssurance also evaluates unearned premium for premium deficiencies. A premium deficiency is recognized if the sum of anticipated losses and loss adjustment expenses, unamortized DPAC and maintenance costs, net of anticipated investment income, exceeds the related unearned premium. If a premium deficiency is identified, the associated DPAC is written off, and a PDR is recorded for the excess deficiency as a component of net losses and loss adjustment expenses in the Consolidated Statements of Income and Comprehensive Income and as a component of the reserve for losses on the Consolidated Balance Sheets. |
Income Taxes/Deferred Taxes | Income Taxes/Deferred Taxes ProAssurance files a consolidated federal income tax return. Tax-related interest and penalties are recognized as components of tax expense. ProAssurance evaluates tax positions taken on tax returns and recognizes positions in the financial statements when it is more likely than not that the position will be sustained upon resolution with a taxing authority. If recognized, the benefit is measured as the largest amount of benefit that has a greater than fifty percent probability of being realized. Uncertain tax positions are reviewed each period by considering changes in facts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law, and adjustments would be made if considered necessary. Adjustments to unrecognized tax benefits may affect income tax expense, and the settlement of uncertain tax positions may require the use of cash. Other than differences related to timing, no significant adjustments were considered necessary during the years ended December 31, 2021 or 2020. Deferred federal income taxes arise from the recognition of temporary differences between the basis of assets and liabilities determined for financial reporting purposes and the basis determined for income tax purposes. ProAssurance’s temporary differences principally relate to loss reserves, unearned and advanced premiums, DPAC, NOL and tax credit carryforwards, compensation related items, unrealized investment gains (losses) and basis differentials in fixed assets, intangible assets and operating leases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be in effect when such benefits are realized. ProAssurance reviews its deferred tax assets quarterly for impairment. If management determines that it is more likely than not that some or all of a deferred tax asset will not be realized, a valuation allowance is recorded to reduce the carrying value of the asset. In assessing the need for a valuation allowance, management is required to make certain judgments and assumptions about the future operations of ProAssurance based on historical experience and information as of the measurement period regarding reversal of existing temporary differences, carryback capacity, future taxable income of the appropriate character (including its capital and operating characteristics) and tax planning strategies. |
Intangible Assets | Intangible AssetsIntangible assets with definite lives are amortized over the estimated useful life of the asset. Amortizable intangible assets primarily consist of policyholder relationships, renewal rights and trade names. Intangible assets with an indefinite life, primarily state licenses, are not amortized. Indefinite lived intangible assets are evaluated for impairment on an annual basis or upon the occurrence of certain triggering events or substantive changes in circumstances that indicate the intangible asset may be impaired. Amortizable intangible assets and other long-lived assets are tested for impairment at the asset group level upon the occurrence of certain triggering events or substantive changes in circumstances that indicate the carrying amount of the asset group may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset group are less than the carrying amounts of the related asset group. Impairment losses are measured as the amount by which the carrying amount of the asset groups exceed their fair values. The Company's asset groups generally correspond to the same level at which goodwill is tested for impairment. |
Goodwill | Goodwill Goodwill is tested for impairment annually or more frequently if circumstances indicate an impairment may have occurred. The date of the Company's annual goodwill impairment testing is October 1. Impairment of goodwill is tested at the reporting unit level, which is consistent with the Company's reportable segments identified in Note 18. Of the Company's five reporting units, two have net goodwill: Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance. See Note 8 for additional information about the Company's assessment of goodwill. Annual Impairment Assessment When testing goodwill for impairment on the Company's annual test date, it has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determine that an impairment is more likely than not, the Company is then required to perform a quantitative impairment test; otherwise, no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. Performance of the qualitative goodwill impairment assessment requires judgment in identifying and considering the significance of relevant key factors, events, and circumstances that affect the fair values of the Company's reporting units. This requires consideration and assessment of external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as the Company's actual and planned financial performance. The Company also gives consideration to the difference between each reporting unit's fair value and carrying value as of the most recent date that a fair value measurement was performed. If the results of the qualitative assessment conclude that it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, additional quantitative impairment testing is performed. The quantitative goodwill impairment test involves comparing the fair value of a reporting unit with its carrying value including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. However, if the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded in an amount equal to that excess. Any impairment charge recognized is limited to the amount of the respective reporting unit's allocated goodwill. |
Business Combination, Contingent Consideration | Business Combinations The Company accounted for its acquisition of NORCAL in accordance with GAAP relating to business combinations which required management to make certain estimates and assumptions including determining the fair value of the non-cash components of the acquisition consideration and the acquisition date fair values of the acquired tangible and identifiable intangible assets and assumed liabilities of NORCAL. Subsequent to the preliminary valuation of the non-cash components of the purchase consideration and net assets acquired, any adjustment identified associated with the purchase price allocation will be evaluated to determine whether the adjustment represents a measurement period adjustment in accordance with GAAP. If the adjustment is deemed to be a measurement period adjustment and is identified within one year of the acquisition, then the measurement period adjustment will be recorded in the current reporting period with a corresponding adjustment to the gain on bargain purchase. Contingent Consideration |
VOBA | VOBAVOBA is based on actuarially determined projections and reflects the estimated fair value of in-force contracts acquired in a business combination. VOBA is recorded as an asset when the in-force contracts acquired are expected to generate underwriting income and is recorded as a liability when the in-force contracts acquired are expected to generate an underwriting loss. VOBA liabilities (negative VOBA) are recorded as a component of the reserve for losses and loss adjustment expenses on the Consolidated Balance Sheets. To the extent negative VOBA relates to unearned premium, it is amortized over a period in proportion to the earn-out of the premium as a reduction to current accident year net losses and loss adjustment expenses. To the extent negative VOBA relates to the DDR reserve, it is amortized over a period in proportion to the approximate consumption of losses as a reduction to prior accident year net losses and loss adjustment expenses. |
Leases | Leases ProAssurance is involved in a number of leases, primarily for office facilities. The Company determines if an arrangement is a lease at the inception date of the contract and classifies all leases as either financing or operating. Operating leases are included in operating lease ROU assets and operating lease liabilities on the Consolidated Balance Sheets. The ROU asset represents the right to use the underlying asset for the lease term. As of December 31, 2021, ProAssurance has no leases that are classified as financing leases. Operating ROU assets and operating lease liabilities are initially recognized as of the lease commencement date based on the present value of the remaining lease payments, discounted over the term of the lease using a discount rate determined based on information available as of the commencement date. As the majority of ProAssurance's lessors do not provide an implicit discount rate, the Company uses its collateralized incremental borrowing rate in determining the present value of remaining lease payments. Due to the adoption of ASU 2016-02, the Company used its collateralized incremental borrowing rate as of January 1, 2019 for operating leases that commenced prior to that date. Subsequent to the initial recognition, the operating ROU asset and operating lease liability are amortized and accreted, respectively, over the lease term in a manner that results in a straight-line operating lease expense. Operating lease expense is included as a component of operating expense on the Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2021, 2020 and 2019. Leases with an initial term of twelve months or less are considered short-term and are not recorded on the Consolidated Balance Sheet; lease expense for these leases is also recognized on a straight-line basis over the lease term. Additionally, for leases entered into or reassessed after the adoption of ASU 2016-02 on January 1, 2019, ProAssurance accounts for lease and non-lease components of a contract as a single lease component. Operating lease ROU assets are evaluated for impairment at the asset group level whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. The carrying amount of an asset group, which includes the operating lease ROU asset and the related operating lease liability, is not recoverable if the carrying amount exceeds the sum of the undiscounted cash flows expected to result from the use of the asset group over the life of the primary asset in the asset group. That assessment is based on the carrying amount of the asset group, including the operating lease ROU asset and the related operating lease liability, at the date it is tested for recoverability and an impairment loss is measured and recognized as the amount by which the carrying amount of the asset group exceeds its fair value. Any impairment loss is allocated to each asset in the asset group, including the operating ROU asset. When a lease of an office facility is to be abandoned and will not be subleased, the Company first evaluates whether or not the operating lease ROU asset’s inclusion in an existing asset group continues to be appropriate and if the commitment to abandon the lease constitutes a change in circumstances requiring the operating lease ROU asset, or the larger asset group, to be tested for impairment. If an impairment test is required, it is performed in the same manner as discussed above. Any remaining carrying value of the operating lease ROU asset is amortized from the date the Company commits to a plan to abandon the lease to the expected date that the Company will cease to use the leased property. Leases to be abandoned in which the Company has the intent or practical ability to sublease continue to be accounted for under a held and use model, with no change to the amortization period of the operating lease ROU asset, and are evaluated for impairment as a separate asset group at the date the sublease is executed. |
Real Estate | Real Estate Real Estate balances are reported at cost or, for properties acquired in business combinations, estimated fair value on the date of acquisition, less accumulated depreciation. Real estate principally consists of properties in use as corporate offices. Depreciation is computed over the estimated useful lives of the related property using the straight-line method. Excess office capacity is leased or made available for lease; rental income is included in other income, and real estate expenses are included in operating expense. |
Treasury Shares | Treasury Shares Treasury shares are reported at cost and are reflected on the Consolidated Balance Sheets as an unallocated reduction of total equity. |
Share-Based Payments | Share-Based Payments Compensation cost for share-based payments is measured based on the grant-date fair value of the award, recognized over the period in which the employee is required to provide service in exchange for the award. Excess tax benefits (tax deductions realized in excess of the compensation costs recognized for the exercise of the awards, multiplied by the incremental tax rate) are reported as operating cash inflows. |
Subsequent Events | Subsequent Events ProAssurance evaluates events that occurred subsequent to December 31, 2021 for recognition or disclosure in its Consolidated Financial Statements. |
Accounting Changes Adopted and Accounting Changes Not Yet Adopted | Accounting Changes Adopted Clarifying the Interactions between Investments - Equity Securities, Investments - Equity Method and Joint Ventures, and Derivatives and Hedging (ASU 2020-01) Effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, the FASB amended guidance that clarifies the accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. ProAssurance adopted the guidance beginning January 1, 2021, and adoption had no material effect on ProAssurance's results of operations, financial position or cash flows. Accounting Changes Not Yet Adopted ProAssurance is not aware of any accounting changes not yet adopted as of December 31, 2021 that could have a material impact on its results of operations, financial position or cash flows. |
Fair Value Measurement | The fair values for securities included in the Level 2 category, with the few exceptions described below, were developed by one of several third-party, nationally recognized pricing services, including services that price only certain types of securities. Each service uses complex methodologies to determine values for securities and subject the values they develop to quality control reviews. Management selected a primary source for each type of security in the portfolio and reviewed the values provided for reasonableness by comparing data to alternate pricing services and to available market and trade data. Values that appeared inconsistent were further reviewed for appropriateness. Any value that did not appear reasonable was discussed with the service that provided the value and adjusted, if necessary. There were no material changes to the values supplied by the pricing services during the years ended December 31, 2021 and 2020. Level 2 Valuations Below is a summary description of the valuation methodologies primarily used by the pricing services for securities in the Level 2 category, by security type: U.S. Treasury obligations were valued based on quoted prices for identical assets, or, in markets that are not active, quotes for similar assets, taking into consideration adjustments for variations in contractual cash flows and yields to maturity. U.S. Government-sponsored enterprise obligations were valued using pricing models that consider current and historical market data, normal trading conventions, credit ratings and the particular structure and characteristics of the security being valued, such as yield to maturity, redemption options, and contractual cash flows. Adjustments to model inputs or model results were included in the valuation process when necessary to reflect recent regulatory, government or corporate actions or significant economic, industry or geographic events affecting the security’s fair value. State and municipal bonds were valued using a series of matrices that considered credit ratings, the structure of the security, the sector in which the security falls, yields and contractual cash flows. Valuations were further adjusted, when necessary, to reflect the expected effect on fair value of recent significant economic or geographic events or ratings changes. Corporate debt, multiple observable inputs consisted primarily of corporate bonds. The methodology used to value Level 2 corporate bonds was the same as the methodology previously described for U.S. Government-sponsored enterprise obligations. Bank loans were valued based on an average of broker quotes for the loans in question, if available. If quotes were not available, the loans were valued based on quoted prices for comparable loans or, if the loan was newly issued, by comparison to similar seasoned issues. Broker quotes were compared to actual trade prices to permit assessment of the reliability of the quotes; unreliable quotes were not considered in quoted averages. Residential and commercial mortgage-backed securities were valued using a pricing matrix which considers the issuer type, coupon rate and longest cash flows outstanding. The matrix used was based on the most recently available market information. Agency and non-agency collateralized mortgage obligations were both valued using models that consider the structure of the security, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Other asset-backed securities were valued using models that consider the structure of the security, monthly payment information, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Spreads and prepayment speeds consider collateral type. Fixed maturities, trading are held by the Lloyd's Syndicates segment and include U.S. Treasury obligations, corporate debt with multiple observable inputs and other asset-backed securities. These securities were valued using the respective valuation methodologies discussed above for each security type. Equity investments were securities not traded on an exchange on the valuation date. The securities were valued using the most recently available quotes for the securities. Short-term investments were securities maturing within one year, carried at fair value which approximated the cost of the securities due to their short-term nature. Other investments consisted primarily of convertible bonds valued using a pricing model that incorporated selected dealer quotes as well as current market data regarding equity prices and risk free rates. If dealer quotes were unavailable for the security being valued, quotes for securities with similar terms and credit status were used in the pricing model. Dealer quotes selected for use were those considered most accurate based on parameters such as underwriter status and historical reliability. Other assets consisted of an interest rate cap derivative instrument valued using a model which considers the volatilities from other instruments with similar maturities, strike prices, durations and forward yield curves. Under the terms of the interest rate cap agreement, ProAssurance paid a premium of $2 million for the right to receive cash payments based upon a notional amount of $35 million if and when the three-month LIBOR rises above 2.35%. Level 3 Valuations Below is a summary description of the valuation methodologies used as well as quantitative information regarding securities in the Level 3 category, by security type: Level 3 Valuation Methodologies Corporate debt, limited observable inputs consisted of corporate bonds valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were determined by management if not available. At December 31, 2021, 100% of the securities were rated and the average rating was BBB. At December 31, 2020, 100% of the securities were rated and the average rating was BB+. Residential mortgage-backed and other asset-backed securities consisted of securitizations of receivables valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were subjectively determined by management if not available. At December 31, 2021, 100% of the securities were rated and the average rating was BBB+. At December 31, 2020, 51% of the securities were rated and the average rating was AA-. Equity investments consisted of preferred stock for which limited observable inputs were available at December 31, 2021. The equity securities were primarily priced using broker/dealer quotes and internal models with some inputs that are unobservable. Other investments consisted of one convertible security for which limited observable inputs were available at December 31, 2021. The security was valued internally based on expected cash flows, including the expected final recovery, discounted at a yield that considered the lack of liquidity and the financial status of the issuer. |
Accounting Policies (Tables)
Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of rollforward of the allowance for expected credit losses related to premiums receivable | The following tables present a roll forward of the allowance for expected credit losses related to the Company's premiums receivable for the years ended December 31, 2021 and 2020. (In thousands) Premiums Receivable, Net Allowance for Expected Credit Losses Balance, December 31, 2020 $ 201,395 $ 6,131 Initial allowance recognized in the period for NORCAL premiums receivable (1) 2,137 Provision for expected credit losses 439 Write offs charged against the allowance (1,533) Recoveries of amounts previously written off 262 Balance, December 31, 2021 $ 241,095 $ 7,436 (In thousands) Premiums Allowance for Expected Credit Losses Balance, December 31, 2019 $ 249,540 $ 1,590 Cumulative-effect adjustment, before tax (2) 5,160 Provision for expected credit losses 827 Write offs charged against the allowance (2,019) Recoveries of amounts previously written off 573 Balance, December 31, 2020 $ 201,395 $ 6,131 (1) Represents an initial allowance for expected credit losses recognized during the second quarter of 2021 for NORCAL's premiums receivable to conform NORCAL to ProAssurance's accounting policies. See Note 2 for more information. (2) Due to the adoption of ASU 2016-13, ProAssurance recorded a cumulative-effect adjustment to beginning retained earnings as of January 1, 2020 to increase its consolidated allowance for expected credit losses related to its premiums receivable. |
Schedule of non-amortizable intangible assets | The following table provides additional information regarding ProAssurance's intangible assets. Gross Carrying Value Accumulated Amortization Amortization Expense December 31 December 31 Year Ended December 31 (In millions) 2021 2020 2021 2020 2021 2020 2019 Intangible Assets Non-amortizable $ 38.2 $ 25.8 Amortizable 100.3 98.8 $ 65.2 $ 58.9 $ 6.4 $ 6.2 $ 6.1 Total Intangible Assets $ 138.5 $ 124.6 |
Schedule of amortizable intangible assets | The following table provides additional information regarding ProAssurance's intangible assets. Gross Carrying Value Accumulated Amortization Amortization Expense December 31 December 31 Year Ended December 31 (In millions) 2021 2020 2021 2020 2021 2020 2019 Intangible Assets Non-amortizable $ 38.2 $ 25.8 Amortizable 100.3 98.8 $ 65.2 $ 58.9 $ 6.4 $ 6.2 $ 6.1 Total Intangible Assets $ 138.5 $ 124.6 |
Schedule of other liabilities | Other liabilities at December 31, 2021 and 2020 consisted of the following: (In thousands) 2021 2020 SPC dividends payable $ 66,456 $ 68,865 Deferred compensation liabilities 52,332 30,334 Contingent consideration 24,000 — All other 137,944 82,840 Total other liabilities $ 280,732 $ 182,039 |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of recognized identified assets acquired and liabilities assumed | The preliminary allocation of acquisition consideration is shown in the table below. (In thousands) Fixed maturities, available for sale $ 1,100,058 Equity investments, available for sale 374,484 Short-term investments 61,289 Business owned life insurance 12,581 Investment in unconsolidated subsidiaries 26,948 Other investments 32,461 Cash and cash equivalents 28,233 Premiums receivable 110,905 Receivable from reinsurers on paid losses and loss adjustment expenses 266 Receivable from reinsurers on unpaid losses and loss adjustment expenses 93,342 Prepaid reinsurance premiums 9,238 Deferred tax asset, net 46,759 Operating lease ROU assets 4,385 Intangible assets 14,000 Other assets 38,648 Reserve for losses and loss adjustment expenses (1,182,445) Unearned premiums (178,400) Reinsurance premiums payable (12,981) Operating lease liabilities (5,275) Other liabilities (51,279) Total identifiable net assets acquired $ 523,217 Gain on bargain purchase (74,408) Total acquisition consideration $ 448,809 |
Schedule of intangible assets acquired | Intangible assets acquired included the following: (In thousands) Estimated Fair Value on Acquisition Date Estimated Useful Life Trade name $ 1,000 3 Licenses 13,000 Indefinite Total $ 14,000 |
Schedule of present value of future insurance profits, expected amortization | The following table details the remaining expected amortization of these adjustments for the four years following the acquisition and thereafter. (In thousands) Amount at May 5, 2021 Estimated amortization period (years) Expected pre-tax amortization for year following the acquisition 2022 2023 2024 2025 Thereafter Fair value adjustment on reserves, net (1) $ 38,701 7 $ 10,595 $ 8,090 $ 5,083 $ 3,107 $ 4,058 Unearned premium VOBA, net (2) 11,676 1 4,939 — — — — DDR reserve VOBA (1) 3,467 15 224 243 243 243 2,375 Total $ 53,844 $ 15,758 $ 8,333 $ 5,326 $ 3,350 $ 6,433 (1) Amortization will be recorded as a reduction to prior accident year net losses and loss adjustment expenses. (2) Amortization will be recorded as a reduction to current accident year net losses and loss adjustment expenses. |
Schedule of pro forma information | The following table provides Pro Forma Consolidated Results and Actual Consolidated Results for the years ended December 31, 2021 and 2020 as if the NORCAL transaction had occurred on January 1, 2020. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the operating results that may have actually occurred had the acquisition of NORCAL been completed on January 1, 2020. In addition, the unaudited pro forma financial information does not give effect to any anticipated cost savings, operating efficiencies or other synergies that may be associated with the acquisition, or any estimated costs that have been or will be incurred to integrate the assets and operations of NORCAL. Year Ended December 31 (In thousands) 2021 2020 Revenue: ProAssurance Pro Forma Consolidated Results $ 1,247,272 $ 1,275,459 ProAssurance Actual Consolidated Results $ 1,124,410 $ 874,940 Net income (loss): ProAssurance Pro Forma Consolidated Results $ 88,223 $ (113,557) ProAssurance Actual Consolidated Results $ 144,124 $ (175,727) |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of assets | Fair values of assets measured at fair value on a recurring basis as of December 31, 2021 and December 31, 2020 are shown in the following tables. Where applicable, the tables also indicate the fair value hierarchy of the valuation techniques utilized to determine those fair values. For some assets, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When this is the case, the asset is categorized based on the level of the most significant input to the fair value measurement. Assessments of the significance of a particular input to the fair value measurement require judgment and consideration of factors specific to the assets being valued. December 31, 2021 Fair Value Measurements Using Total (In thousands) Level 1 Level 2 Level 3 Fair Value Assets: Fixed maturities, available-for-sale U.S. Treasury obligations $ — $ 238,507 $ — $ 238,507 U.S. Government-sponsored enterprise obligations — 20,234 — 20,234 State and municipal bonds — 519,196 — 519,196 Corporate debt, multiple observable inputs — 1,851,427 — 1,851,427 Corporate debt, limited observable inputs — — 47,129 47,129 Residential mortgage-backed securities — 453,644 297 453,941 Agency commercial mortgage-backed securities — 14,141 — 14,141 Other commercial mortgage-backed securities — 231,483 — 231,483 Other asset-backed securities — 451,459 6,205 457,664 Fixed maturities, trading — 43,670 — 43,670 Equity investments Financial 6,615 855 — 7,470 Industrial — — 2,500 2,500 Bond funds 187,059 — — 187,059 All other 17,778 — — 17,778 Short-term investments 174,944 42,043 — 216,987 Other investments 1,889 95,288 1,434 98,611 Other assets — 649 — 649 Total assets categorized within the fair value hierarchy $ 388,285 $ 3,962,596 $ 57,565 4,408,446 Assets carried at NAV, which approximates fair value and which are not categorized within the fair value hierarchy, reported as a part of: Investment in unconsolidated subsidiaries 270,816 Total assets at fair value $ 4,679,262 Liabilities: Other liabilities $ — $ — $ 24,000 $ 24,000 Total liabilities categorized within the fair value hierarchy $ — $ — $ 24,000 $ 24,000 December 31, 2020 Fair Value Measurements Using Total (In thousands) Level 1 Level 2 Level 3 Fair Value Assets: Fixed maturities, available-for-sale U.S. Treasury obligations $ — $ 107,059 $ — $ 107,059 U.S. Government-sponsored enterprise obligations — 12,261 — 12,261 State and municipal bonds — 332,920 — 332,920 Corporate debt, multiple observable inputs — 1,326,077 — 1,326,077 Corporate debt, limited observable inputs — — 3,265 3,265 Residential mortgage-backed securities — 274,509 2,032 276,541 Agency commercial mortgage-backed securities — 13,310 — 13,310 Other commercial mortgage-backed securities — 113,092 — 113,092 Other asset-backed securities — 266,345 6,661 273,006 Fixed maturities, trading — 48,456 — 48,456 Equity investments Financial 13,810 — — 13,810 Utilities/Energy 564 — — 564 Consumer oriented 1,262 — — 1,262 Industrial 2,240 — — 2,240 Bond funds 69,475 — — 69,475 All other 20,202 — — 20,202 Short-term investments 307,695 30,118 — 337,813 Other investments 1,509 42,607 — 44,116 Other assets — 329 — 329 Total assets categorized within the fair value hierarchy $ 416,757 $ 2,567,083 $ 11,958 2,995,798 Assets carried at NAV, which approximates fair value and which are not categorized within the fair value hierarchy, reported as a part of: Equity investments 12,548 Investment in unconsolidated subsidiaries 233,711 Total assets at fair value $ 3,242,057 |
Summary of quantitative information about Level 3 fair value measurements | Quantitative Information Regarding Level 3 Valuations Fair Value at ($ in thousands) December 31, 2021 December 31, 2020 Valuation Technique Unobservable Input Range Assets: Corporate debt, limited observable inputs $47,129 $3,265 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Residential mortgage-backed securities $297 $2,032 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Other asset-backed securities $6,205 $6,661 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Equity investments $2,500 $— Discounted Cash Flows Comparability Adjustment 0% - 10% (5%) Other investments $1,434 $— Discounted Cash Flows Comparability Adjustment 0% - 10% (5%) Liabilities: Other liabilities $24,000 $— Stochastic Model/Discounted Cash Flows N/A 0% - 10% (8%) |
Summary of changes in the fair value of assets measured at fair value | The following tables present summary information regarding changes in the fair value of assets measured using Level 3 inputs. December 31, 2021 Level 3 Fair Value Measurements – Assets (In thousands) Corporate Debt Asset-backed Securities Equity Investments Other Investments Total Balance, December 31, 2020 $ 3,265 $ 8,693 $ — $ — $ 11,958 Total gains (losses) realized and unrealized: Included in earnings, as a part of: Net investment income 1 (3) — — (2) Net investment gains (losses) (14) (11) 15 (774) (784) Included in other comprehensive income 27 (403) — — (376) Purchases 57,586 31,204 9,083 205 98,078 Sales (3,277) (800) (5,799) — (9,876) Transfers in 858 — 69 3,586 4,513 Transfers out (11,317) (32,178) (868) (1,583) (45,946) Balance, December 31, 2021 $ 47,129 $ 6,502 $ 2,500 $ 1,434 $ 57,565 Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end $ — $ — $ 10 $ (774) $ (764) December 31, 2020 Level 3 Fair Value Measurements – Assets (In thousands) Corporate Debt Asset-backed Securities Other Investments Total Balance, December 31, 2019 $ 5,079 $ 2,992 $ 3,086 $ 11,157 Total gains (losses) realized and unrealized: Included in earnings, as a part of: Net investment income (2) (18) — (20) Net investment gains (losses) — (8) 151 143 Included in other comprehensive income 216 109 — 325 Purchases 2,869 20,490 — 23,359 Sales (2,178) (4,346) — (6,524) Transfers in 945 605 — 1,550 Transfers out (3,664) (11,131) (3,237) (18,032) Balance, December 31, 2020 $ 3,265 $ 8,693 $ — $ 11,958 Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end $ — $ — $ 151 $ 151 |
Schedule of investments in LLCs and limited partnerships | The amount of ProAssurance's unfunded commitments related to these investments as of December 31, 2021 and fair values of these investments as of December 31, 2021 and 2020 were as follows: Unfunded Fair Value (In thousands) December 31, 2021 December 31, 2021 December 31, 2020 Equity investments: Mortgage fund (1) None $ — $ 12,548 Investment in unconsolidated subsidiaries: Private debt funds (2) $8,817 18,465 16,387 Long/short equity funds (3) None 655 596 Non-public equity funds (4) $52,938 160,219 138,357 Credit funds (5) $55,237 47,300 34,848 Strategy focused funds (6) $31,939 44,177 43,523 270,816 233,711 Total investments carried at NAV $ 270,816 $ 246,259 Below is additional information regarding each of the investments listed in the table above as of December 31, 2021. (1) This investment fund was focused on the structured mortgage market. The fund primarily invested in U.S. Agency mortgage-backed securities. Redemptions are allowed at the end of any calendar quarter with a prior notice requirement of 65 days and are paid within 45 days at the end of the redemption dealing day. (2) This investment is comprised of interests in two unrelated LP funds that are structured to provide interest distributions primarily through diversified portfolios of private debt instruments. One LP allows redemption by special consent, while the other does not permit redemption. Income and capital are to be periodically distributed at the discretion of the LPs over an anticipated time frame that spans from three (3) This investment holds primarily long and short North American equities and targets absolute returns using strategies designed to take advantage of market opportunities. Redemptions are permitted; however, redemptions above specified thresholds (lowest threshold is 90%) may be only partially payable until after a fund audit is completed and are then payable within 30 days. (4) This investment is comprised of interests in multiple unrelated LP funds, each structured to provide capital appreciation through diversified investments in private equity, which can include investments in buyout, venture capital, debt including senior, second lien and mezzanine, distressed debt, collateralized loan obligations and other private equity-oriented LPs. Two of the LPs allow redemption by terms set forth in the LP agreements; the others do not permit redemption. Income and capital are to be periodically distributed at the discretion of the LP over time frames that are anticipated to span up to ten years. (5) This investment is comprised of multiple unrelated LP funds. Two funds seek to obtain superior risk-adjusted absolute returns through a diversified portfolio of debt securities, including bonds, loans and other asset-backed instruments. The remaining funds focus on private middle market company mezzanine and senior secured loans, opportunities across the credit spectrum, mortgage backed-loans, as well as various types of loan-backed investments. Three of the funds allow redemptions at any quarter-end with prior notice requirements that vary from 90 to 180 days while two other funds allow for redemptions with consent of the General Partner. The remaining funds do not allow redemptions. For the funds that do not allow redemptions, income and capital are to be periodically distributed at the discretion of the LP over time frames throughout the remaining life of the funds. (6) This investment is comprised of multiple unrelated LPs/LLCs funds. One fund is an LLC focused on investing in North American consumer products companies, comprised of equity and equity-related securities, as well as debt instruments. A second fund is focused on aircraft investments, along with components and assets related to aircrafts. For both funds, redemptions are not permitted. Another fund is an LP focused on North American energy infrastructure assets that allows redemption with consent of the General Partner. The remaining funds are real estate focused LPs, one of which allows for redemption with prior notice. |
Financial instruments not measured at fair value | The following table provides the estimated fair value of the Company's financial instruments that, in accordance with GAAP for the type of investment, are measured using a methodology other than fair value. Fair values provided primarily fall within the Level 3 fair value category. December 31, 2021 December 31, 2020 (In thousands) Carrying Fair Carrying Fair Financial assets: BOLI $ 81,767 $ 81,767 $ 67,847 $ 67,847 Other investments $ 3,183 $ 3,183 $ 2,952 $ 2,952 Other assets $ 40,581 $ 40,583 $ 31,128 $ 31,141 Financial liabilities: Senior notes due 2023* $ 250,000 $ 264,000 $ 250,000 $ 269,160 Mortgage Loans* $ — $ — $ 36,113 $ 36,113 Contribution Certificates $ 175,900 $ 179,892 $ — $ — Other liabilities $ 52,332 $ 52,332 $ 30,334 $ 30,334 * Carrying value excludes unamortized debt issuance costs. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of amortized cost and estimated fair value of available-for-sale fixed maturities and equity securities | Available-for-sale fixed maturities at December 31, 2021 and December 31, 2020 included the following: December 31, 2021 (In thousands) Amortized Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturities, available-for-sale U.S. Treasury obligations $ 239,765 $ 1,166 $ 2,424 $ 238,507 U.S. Government-sponsored enterprise obligations 20,467 29 262 $ 20,234 State and municipal bonds 511,750 9,620 2,174 $ 519,196 Corporate debt 1,884,455 29,050 14,949 $ 1,898,556 Residential mortgage-backed securities 455,438 4,254 5,751 $ 453,941 Agency commercial mortgage-backed securities 13,909 294 62 $ 14,141 Other commercial mortgage-backed securities 231,226 2,530 2,273 $ 231,483 Other asset-backed securities 457,837 2,747 2,920 $ 457,664 $ 3,814,847 $ 49,690 $ 30,815 $ 3,833,722 December 31, 2020 (In thousands) Amortized Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturities, available-for-sale U.S. Treasury obligations $ 104,097 $ — $ 2,985 $ 23 $ 107,059 U.S. Government-sponsored enterprise obligations 12,103 — 158 — 12,261 State and municipal bonds 316,022 — 16,937 39 332,920 Corporate debt 1,267,992 552 63,204 1,302 1,329,342 Residential mortgage-backed securities 269,752 — 7,171 382 276,541 Agency commercial mortgage-backed securities 12,623 — 687 — 13,310 Other commercial mortgage-backed securities 109,244 — 4,788 940 113,092 Other asset-backed securities 269,742 — 4,006 742 273,006 $ 2,361,575 $ 552 $ 99,936 $ 3,428 $ 2,457,531 |
Schedule of available for sale securities by contractual maturity | The recorded cost basis and estimated fair value of available-for-sale fixed maturities at December 31, 2021, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. (In thousands) Amortized Due in one Due after Due after Due after Total Fair Fixed maturities, available-for-sale U.S. Treasury obligations $ 239,765 $ 20,327 $ 131,030 $ 85,457 $ 1,693 $ 238,507 U.S. Government-sponsored enterprise obligations 20,467 4,412 11,646 4,033 143 20,234 State and municipal bonds 511,750 21,480 166,434 194,053 137,229 519,196 Corporate debt 1,884,455 94,395 864,520 821,209 118,432 1,898,556 Residential mortgage-backed securities 455,438 453,941 Agency commercial mortgage-backed securities 13,909 14,141 Other commercial mortgage-backed securities 231,226 231,483 Other asset-backed securities 457,837 457,664 $ 3,814,847 $ 3,833,722 |
Schedule of investments held in a loss position | The following tables provide summarized information with respect to investments held in an unrealized loss position at December 31, 2021 and December 31, 2020, including the length of time the investment had been held in a continuous unrealized loss position. December 31, 2021 Total Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Loss Value Loss Value Loss Fixed maturities, available-for-sale U.S. Treasury obligations $ 190,054 $ 2,424 $ 181,689 $ 2,206 $ 8,365 $ 218 U.S. Government-sponsored enterprise obligations 16,287 262 16,287 262 — — State and municipal bonds 175,442 2,174 171,930 2,039 3,512 135 Corporate debt 945,196 14,949 866,731 11,828 78,465 3,121 Residential mortgage-backed securities 326,248 5,751 290,019 4,320 36,229 1,431 Agency commercial mortgage-backed securities 4,529 62 4,355 54 174 8 Other commercial mortgage-backed securities 151,827 2,273 145,467 1,884 6,360 389 Other asset-backed securities 278,915 2,920 271,463 2,796 7,452 124 $ 2,088,498 $ 30,815 $ 1,947,941 $ 25,389 $ 140,557 $ 5,426 December 31, 2020 Total Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Loss Value Loss Value Loss Fixed maturities, available-for-sale U.S. Treasury obligations $ 14,390 $ 23 $ 14,390 $ 23 $ — $ — State and municipal bonds 6,416 39 6,416 39 — — Corporate debt 94,695 1,302 79,436 1,020 15,259 282 Residential mortgage-backed securities 34,928 382 34,509 381 419 1 Other commercial mortgage-backed securities 18,766 940 18,480 935 286 5 Other asset-backed securities 43,739 742 37,850 701 5,889 41 $ 212,934 $ 3,428 $ 191,081 $ 3,099 $ 21,853 $ 329 |
Schedule of a roll forward allowance for expected credit losses on available-for-sale fixed maturities | The following tables present a roll forward of the allowance for expected credit losses on available-for-sale fixed maturities for the years ended December 31, 2021 and 2020. Year Ended December 31, 2021 (In thousands) Corporate Debt Total Balance, at December 31, 2020 $ 552 $ 552 Reductions related to: Securities sold during the period (552) (552) Balance, at December 31, 2021 $ — $ — Year Ended December 31, 2020 (In thousands) Corporate Debt Total Balance, at December 31, 2019 $ — $ — Additional credit losses related to securities for which: No allowance for credit losses has been previously recognized 1,508 1,508 Reductions related to: Securities sold during the period (956) (956) Balance, at December 31, 2020 $ 552 $ 552 |
Schedule of other information regarding sales and purchases of fixed maturity available-for-sale securities | Other information regarding sales and purchases of fixed maturity available-for-sale securities is as follows: Year Ended December 31 (In millions) 2021 2020 2019 Proceeds from sales (exclusive of maturities and paydowns) $ 504.0 $ 354.4 $ 177.1 Purchases $ 1,438.2 $ 917.0 $ 695.6 |
Schedule of net investment income | Net investment income by investment category was as follows: Year Ended December 31 (In thousands) 2021 2020 2019 Fixed maturities $ 74,437 $ 69,308 $ 72,593 Equities 2,539 4,369 17,650 Short-term investments, including Other 1,969 2,683 7,493 BOLI 2,698 2,023 2,017 Investment fees and expenses (11,121) (6,385) (6,484) Net investment income $ 70,522 $ 71,998 $ 93,269 |
Schedule of investment in unconsolidated subsidiaries | ProAssurance's investment in unconsolidated subsidiaries were as follows: December 31, 2021 Carrying Value (In thousands) Percentage December 31, December 31, Qualified affordable housing project tax credit partnerships See below $ 12,424 $ 27,719 All other investments, primarily investment fund LPs/LLCs See below 323,152 282,810 $ 335,576 $ 310,529 |
Schedule of equity method investments | The results recorded and tax credits recognized related to ProAssurance's tax credit partnership investments were as follows: Year Ended December 31 (In thousands) 2021 2020 2019 Qualified affordable housing project tax credit partnerships Losses recorded $ 15,239 $ 18,684 $ 19,231 Tax credits recognized $ 13,160 $ 17,465 $ 21,933 Historic tax credit partnership* Losses (gains) recorded $ (182) $ 1,092 $ 1,672 Tax credits recognized $ — $ 412 $ — *ProAssurance holds a historic tax credit partnership which was fully amortized in 2020. This partnership generated investment returns by providing benefits to fund investors in the form of tax credits, tax deductible project operating losses and positive cash flows. ProAssurance received a distribution associated with this investment during the first quarter of 2021, as a result of positive cash flows from a completed project, which was recognized as an operating gain. |
Schedule of net realized investment gains (losses) | The following table provides detailed information regarding net investment gains (losses): Year Ended December 31 (In thousands) 2021 2020 2019 Total impairment losses: Corporate debt $ — $ (1,745) $ (978) Portion of impairment losses recognized in other comprehensive income before taxes: Corporate debt — 237 227 Net impairment losses recognized in earnings — (1,508) (751) Gross realized gains, available-for-sale fixed maturities 14,311 13,855 3,786 Gross realized (losses), available-for-sale fixed maturities (1,218) (2,501) (538) Net realized gains (losses), trading fixed maturities (20) 288 74 Net realized gains (losses), equity investments 7,337 13,192 20,577 Net realized gains (losses), other investments 8,660 3,883 1,626 Change in unrealized holding gains (losses), trading fixed maturities (529) 501 705 Change in unrealized holding gains (losses), equity investments (2,941) (16,287) 30,674 Change in unrealized holding gains (losses), convertible securities, carried at fair value (1,701) 3,850 3,653 Other 411 405 68 Net investment gains (losses) $ 24,310 $ 15,678 $ 59,874 |
Schedule of cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the OTTI has been recorded in OCI | The following table presents a roll forward of cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the impairment was recorded in OCI. Year Ended December 31 (In thousands) 2021 2020 2019 Balance beginning of period $ 552 $ 470 $ 93 Additional credit losses recognized during the period, related to securities for which: No impairment has been previously recognized — 1,064 377 Impairment has been previously recognized — 258 — Reductions due to: Securities sold during the period (realized) (552) (1,240) — Balance December 31 $ — $ 552 $ 470 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Summary of the effect of reinsurance on premiums written and earned | The effects of reinsurance for the years ended December 31, 2021, 2020 and 2019 were as follows: Year Ended December 31 (In thousands) 2021 2020 2019 Direct $ 912,387 $ 814,298 $ 919,799 Assumed 47,637 40,124 47,691 Ceded (77,303) (106,721) (124,765) Net premiums written $ 882,721 $ 747,701 $ 842,725 Direct $ 1,020,107 $ 862,742 $ 926,035 Assumed 45,559 43,555 45,668 Ceded (93,998) (113,582) (124,171) Net premiums earned $ 971,668 $ 792,715 $ 847,532 Losses and loss adjustment expenses $ 798,893 $ 741,719 $ 871,780 Reinsurance recoveries (46,644) (80,272) (117,865) Net losses and loss adjustment expenses $ 752,249 $ 661,447 $ 753,915 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Summary of components of deferred tax assets and liabilities | Significant components of ProAssurance’s deferred tax assets and liabilities were as follows: December 31 (In thousands) 2021 2020 Deferred tax assets Unpaid loss discount $ 51,562 $ 36,452 Unearned premium adjustment 22,846 14,835 Compensation related 18,575 10,935 Basis differentials-investments — 2,595 Intangibles 13,915 522 Operating lease liabilities 4,290 4,224 Tax credit carryforward 48,701 36,155 Net operating loss carryforward 18,596 9,244 Other 909 1,700 Total gross deferred tax assets 179,394 116,662 Valuation allowance (8,945) (8,581) Total deferred tax assets, net of valuation allowance 170,449 108,081 Deferred tax liabilities Deferred policy acquisition costs (12,284) (8,929) Unpaid loss discount-transition (7,276) (6,297) Unrealized gains on investments, net (4,100) (19,351) Fixed assets (4,013) (4,441) Operating lease ROU assets (4,030) (4,015) Basis differentials-investments (11,277) — Basis differentials-foreign operations (828) (790) Intangibles (9,028) (7,153) Total deferred tax liabilities (52,836) (50,976) Net deferred tax assets (liabilities) $ 117,613 $ 57,105 |
Summary of reconciliation of unrecognized tax benefits | A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2021, 2020 and 2019, were as follows: (In thousands) 2021 2020 2019 Balance at January 1 $ 5,199 $ 5,070 $ 3,601 Increases for tax positions taken during the current year — — 1,749 Decreases for tax positions taken during the current year (1,630) (4,853) — Increases for tax positions taken during prior years — 5,342 — Decreases relating to a lapse of the applicable statute of limitations (549) (360) (280) Balance at December 31 $ 3,020 $ 5,199 $ 5,070 |
Summary of components of tax expense | Income tax expense (benefit) for each of the years ended December 31, 2021, 2020 and 2019 consisted of the following: (In thousands) 2021 2020 2019 Provision for income taxes: Current expense (benefit) Federal and foreign $ 885 $ (19,885) $ (2,147) State 279 (296) 982 Total current expense (benefit) 1,164 (20,181) (1,165) Deferred expense (benefit) Federal and foreign 1,290 (20,476) (27,404) State 29 (672) (1,239) Total deferred expense (benefit) 1,319 (21,148) (28,643) Total income tax expense (benefit) $ 2,483 $ (41,329) $ (29,808) |
Summary of reconciliation of expected income tax expense to actual income tax expense | A reconciliation of “expected” federal income tax expense (benefit) to actual income tax expense (benefit) for each of the years ended December 31, 2021, 2020 and 2019 were as follows: (In thousands) 2021 2020 2019 Computed “expected” tax expense (benefit) $ 30,787 $ (45,582) $ (6,049) Tax-exempt income (1) (1,298) (976) (1,528) Tax credits (13,160) (17,876) (21,933) Non-U.S. operating results (1,322) (1,307) (1,447) Tax deficiency (excess tax benefit) on share-based compensation 286 457 99 Tax rate differential on loss carryback — (7,758) (3,400) Goodwill impairment (2) — 31,413 — Non-taxable gain on bargain purchase (3) (15,626) — — Provision-to-return and other differences 3,574 1,217 3,595 Change in uncertain tax positions (1,909) (1,674) 1,956 State income taxes 460 (561) (376) Benefit from amended returns — — (550) Other 691 1,318 (175) Total income tax expense (benefit) $ 2,483 $ (41,329) $ (29,808) (1) Includes tax-exempt interest, dividends received deduction and change in cash surrender value of BOLI. (2) Represents the tax impact of the impairment of non-deductible goodwill in relation to the Specialty P&C reporting unit during the third quarter of 2020 (see further discussion on the impairment charge in Note 8). |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The table below presents the carrying amount of goodwill and accumulated impairment losses by reporting unit at December 31, 2021 and 2020: Reporting Unit (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Total Goodwill, gross as of January 1, 2020 $ 161,115 $ 44,110 $ 5,500 $ 210,725 Accumulated impairment losses* (161,115) — — (161,115) Goodwill, net as of December 31, 2020 $ — $ 44,110 $ 5,500 $ 49,610 Accumulated impairment losses — — — — Goodwill, net as of December 31, 2021 $ — $ 44,110 $ 5,500 $ 49,610 |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Schedule of reserve for losses and loss adjustment expenses | Activity in the reserve for losses and loss adjustment expenses is summarized as follows: (In thousands) 2021 2020 2019 Balance, beginning of year $ 2,417,179 $ 2,346,526 $ 2,119,847 Less reinsurance recoverables on unpaid losses and loss adjustment expenses 385,087 390,708 343,820 Net balance, beginning of year 2,032,092 1,955,818 1,776,027 Net reserves acquired from acquisitions 1,089,103 — — Net losses: Current year (1)(2)(3) 797,732 711,846 765,698 Favorable development of reserves established in prior years, net (45,483) (50,399) (11,783) Total 752,249 661,447 753,915 Paid related to: Current year (4) (109,925) (83,204) (115,133) Prior years (4) (635,320) (501,969) (458,991) Total paid (745,245) (585,173) (574,124) Net balance, end of year 3,128,199 2,032,092 1,955,818 Plus reinsurance recoverables on unpaid losses and loss adjustment expenses 451,741 385,087 390,708 Balance, end of year $ 3,579,940 $ 2,417,179 $ 2,346,526 (1) Current year net losses for the year ended December 31, 2019 included incurred losses of $2.1 million related to a loss portfolio transfer entered into during 2019 in the Specialty P&C segment. In addition, current year net losses in 2019 included a PDR of $9.2 million associated with the unearned premium of a large national healthcare account's claims-made policy in the Specialty P&C segment. Current year net losses for the year ended December 31, 2020 included the amortization of the aforementioned $9.2 million PDR which offsets the impact of the losses incurred associated with the premium earned related to the large national healthcare account's claims-made policy. (2) During 2020, the aforementioned large national healthcare account did not renew on terms offered by the Company and exercised its contractual option to purchase extended reporting endorsement or "tail" coverage. As a result, ProAssurance recognized total current year losses of $60.0 million (assumes a full limit loss) within the Specialty P&C segment for the year ended December 31, 2020. (3) Current year net losses for the year ended December 31, 2021 included $6.7 million of amortization of the negative VOBA associated with NORCAL's assumed unearned premium, which is being amortized over a period in proportion to the earn-out of the associated premium as a reduction to current accident year net losses (see Note 2). (4) Paid losses for the year ended December 31, 2021 included prior year paid losses of $136.0 million and current year paid losses of $22.3 million related to reserves acquired from NORCAL since May 5, 2021. |
Schedule of short-duration insurance contracts claims development | ProAssurance has elected to present reserve history for NORCAL in all periods shown in the Healthcare Professional Liability tables below, including periods prior to acquisition. Healthcare Professional Liability Claims-Made Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 555,440 $ 528,799 $ 510,085 $ 490,981 $ 474,631 $ 468,956 $ 458,826 $ 453,625 $ 451,152 $ 448,782 $ 402 7,103 2013 — $ 527,520 $ 513,937 $ 501,580 $ 489,378 $ 480,036 $ 466,798 $ 451,182 $ 455,346 457,038 $ (1,284) 7,697 2014 — — $ 509,774 $ 494,024 $ 491,403 $ 488,185 $ 474,317 $ 468,153 $ 470,189 466,554 $ (373) 7,523 2015 — — — $ 503,412 $ 486,760 $ 492,824 $ 491,180 $ 500,336 $ 500,550 503,600 $ (4,798) 7,402 2016 — — — — $ 484,153 $ 488,349 $ 507,586 $ 555,416 $ 554,395 560,840 $ (11,854) 7,993 2017 — — — — — $ 508,072 $ 506,207 $ 577,401 $ 569,737 573,570 $ (16,923) 8,054 2018 — — — — — — $ 544,617 $ 643,864 $ 630,169 636,023 $ (53,325) 8,575 2019 — — — — — — — $ 670,958 $ 664,934 642,370 $ 4,919 8,443 2020 — — — — — — — — $ 593,994 574,274 $ 127,489 6,563 2021 — — — — — — — — — 525,363 $ 345,154 4,799 Total $ 5,388,414 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 25,864 $ 136,883 $ 257,697 $ 331,521 $ 374,537 $ 401,604 $ 424,987 $ 434,141 $ 440,872 $ 441,417 2013 — $ 30,214 $ 142,759 $ 255,605 $ 328,982 $ 376,930 $ 398,549 $ 415,012 $ 430,916 435,158 2014 — — $ 30,483 $ 125,078 $ 246,510 $ 325,782 $ 389,983 $ 416,150 $ 434,540 439,575 2015 — — — $ 26,664 $ 125,234 $ 256,791 $ 351,703 $ 410,506 $ 446,069 463,224 2016 — — — — $ 27,442 $ 137,338 $ 276,548 $ 378,828 $ 440,163 472,441 2017 — — — — — $ 32,342 $ 147,515 $ 288,695 $ 351,548 419,180 2018 — — — — — — $ 34,238 $ 159,657 $ 279,204 367,522 2019 — — — — — — — $ 37,755 $ 144,225 259,889 2020 — — — — — — — — $ 32,270 117,153 2021 — — — — — — — — — 23,494 Total 3,439,053 All outstanding liabilities before 2012, net of reinsurance 22,023 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 1,971,384 Healthcare Professional Liability Occurrence Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 62,214 $ 61,719 $ 58,234 $ 51,382 $ 45,602 $ 44,575 $ 40,676 $ 36,946 $ 37,300 $ 37,553 $ 660 597 2013 — $ 51,996 $ 54,143 $ 49,970 $ 53,905 $ 56,640 $ 50,632 $ 49,270 $ 47,550 48,116 $ 1,640 636 2014 — — $ 45,975 $ 43,606 $ 44,075 $ 40,699 $ 37,653 $ 34,428 $ 33,353 35,139 $ 1,290 540 2015 — — — $ 52,531 $ 54,890 $ 56,621 $ 57,606 $ 52,455 $ 51,276 56,468 $ (2,578) 614 2016 — — — — $ 56,089 $ 49,795 $ 53,358 $ 56,345 $ 66,886 64,122 $ (240) 684 2017 — — — — — $ 45,463 $ 42,338 $ 40,983 $ 44,449 46,865 $ 4,381 731 2018 — — — — — — $ 59,351 $ 61,880 $ 63,576 73,599 $ 7,977 692 2019 — — — — — — — $ 63,548 $ 58,555 70,926 $ 21,587 752 2020 — — — — — — — — $ 165,955 178,804 $ 140,975 992 2021 — — — — — — — — — 82,590 $ 76,228 166 Total $ 694,182 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 480 $ 3,635 $ 11,445 $ 17,797 $ 26,830 $ 30,469 $ 32,384 $ 33,144 $ 34,373 $ 34,398 2013 — $ 539 $ 4,620 $ 12,130 $ 25,131 $ 30,474 $ 37,778 $ 40,775 $ 42,455 43,254 2014 — — $ 512 $ 4,674 $ 11,192 $ 17,349 $ 22,649 $ 25,671 $ 27,753 30,407 2015 — — — $ (180) $ 2,617 $ 9,953 $ 20,627 $ 28,482 $ 36,413 41,800 2016 — — — — $ 44 $ 2,750 $ 15,433 $ 28,362 $ 40,766 48,691 2017 — — — — — $ (6,631) $ (3,385) $ 3,592 $ 11,051 19,696 2018 — — — — — — $ 444 $ 6,193 $ 15,229 26,932 2019 — — — — — — — $ 628 $ 4,575 10,399 2020 — — — — — — — — $ 397 6,194 2021 — — — — — — — — — 762 Total 262,533 All outstanding liabilities before 2012, net of reinsurance 5,202 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 436,851 Medical Technology Liability Claims-Made Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 11,162 $ 9,989 $ 8,906 $ 7,441 $ 5,824 $ 4,797 $ 5,051 $ 3,889 $ 3,868 $ 3,864 $ 48 223 2013 — $ 9,807 $ 9,955 $ 9,536 $ 7,226 $ 4,697 $ 3,566 $ 3,504 $ 3,305 3,199 $ 96 218 2014 — — $ 9,989 $ 10,306 $ 9,012 $ 8,984 $ 7,679 $ 6,194 $ 5,888 5,636 $ 406 272 2015 — — — $ 9,376 $ 8,757 $ 7,193 $ 5,929 $ 5,081 $ 4,664 4,192 $ 771 156 2016 — — — — $ 9,200 $ 8,467 $ 7,413 $ 6,422 $ 6,241 4,491 $ 35 182 2017 — — — — — $ 11,049 $ 10,143 $ 8,306 $ 4,919 3,381 $ 505 100 2018 — — — — — — $ 10,141 $ 8,108 $ 7,506 4,961 $ 1,847 218 2019 — — — — — — — $ 10,072 $ 8,324 9,588 $ 4,660 359 2020 — — — — — — — — $ 11,082 10,671 $ 9,279 177 2021 — — — — — — — — — 13,914 $ 13,787 141 Total $ 63,897 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 568 $ 1,520 $ 2,805 $ 3,247 $ 3,366 $ 3,676 $ 3,800 $ 3,817 $ 3,817 $ 3,816 2013 — $ 102 $ 1,029 $ 1,967 $ 2,599 $ 3,092 $ 3,102 $ 3,102 $ 3,102 3,101 2014 — — $ 388 $ 1,527 $ 2,564 $ 3,046 $ 3,724 $ 3,776 $ 4,074 4,076 2015 — — — $ 25 $ 440 $ 1,625 $ 2,097 $ 2,567 $ 2,911 2,987 2016 — — — — $ 53 $ 1,690 $ 2,365 $ 2,959 $ 4,295 4,342 2017 — — — — — $ 56 $ 1,681 $ 2,017 $ 2,360 2,867 2018 — — — — — — $ 6 $ 191 $ 1,850 2,651 2019 — — — — — — — $ 584 $ 2,552 3,902 2020 — — — — — — — — $ 40 526 2021 — — — — — — — — — 4 Total 28,272 All outstanding liabilities before 2012, net of reinsurance 99 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 35,724 Workers' Compensation Insurance Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 80,285 $ 76,551 $ 75,848 $ 76,357 $ 75,836 $ 75,576 $ 75,076 $ 75,076 $ 75,076 $ 74,776 $ 236 16,205 2013 — $ 86,973 $ 85,935 $ 86,928 $ 88,010 $ 87,260 $ 87,260 $ 89,760 $ 89,560 89,010 $ 409 16,429 2014 — — $ 93,019 $ 93,529 $ 93,029 $ 93,029 $ 93,029 $ 93,029 $ 91,329 90,579 $ 782 16,210 2015 — — — $ 100,101 $ 100,454 $ 98,454 $ 97,654 $ 96,354 $ 93,054 92,072 $ 1,140 16,550 2016 — — — — $ 101,348 $ 97,348 $ 92,148 $ 84,799 $ 82,799 81,599 $ 1,182 15,978 2017 — — — — — $ 99,874 $ 99,874 $ 99,874 $ 97,874 95,674 $ 2,897 16,084 2018 — — — — — — $ 118,095 $ 118,095 $ 120,095 120,095 $ 327 18,013 2019 — — — — — — — $ 119,752 $ 119,752 115,352 $ 4,251 17,528 2020 — — — — — — — — $ 106,145 102,475 $ 5,438 14,512 2021 — — — — — — — — — 105,722 $ 30,379 14,982 Total $ 967,354 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 27,448 $ 56,122 $ 65,908 $ 70,558 $ 72,766 $ 73,662 $ 73,676 $ 73,768 $ 73,851 $ 73,976 2013 — $ 30,554 $ 63,825 $ 76,813 $ 82,369 $ 85,689 $ 86,783 $ 87,466 $ 87,772 88,033 2014 — — $ 30,368 $ 65,922 $ 77,631 $ 85,022 $ 87,314 $ 87,998 $ 88,487 88,977 2015 — — — $ 32,078 $ 65,070 $ 78,947 $ 83,483 $ 86,528 $ 87,884 88,476 2016 — — — — $ 28,377 $ 58,192 $ 69,237 $ 74,886 $ 76,954 77,546 2017 — — — — — $ 31,586 $ 70,333 $ 82,289 $ 87,129 88,504 2018 — — — — — — $ 41,619 $ 86,063 $ 104,216 110,928 2019 — — — — — — — $ 40,994 $ 88,008 100,373 2020 — — — — — — — — $ 33,431 74,532 2021 — — — — — — — — — 39,634 Total 830,979 All outstanding liabilities before 2012, net of reinsurance 12,631 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 149,006 Segregated Portfolio Cell Reinsurance - Workers' Compensation Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance December 31, 2021 ($ in thousands) Year Ended December 31, IBNR* Cumulative Number of Reported Claims 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 22,940 $ 21,513 $ 21,048 $ 20,028 $ 19,972 $ 19,864 $ 19,799 $ 19,727 $ 19,602 $ 19,519 $ 68 3,454 2013 — $ 23,809 $ 25,310 $ 26,758 $ 26,619 $ 26,260 $ 26,033 $ 25,938 $ 25,546 25,450 $ 9 3,723 2014 — — $ 28,248 $ 28,423 $ 29,000 $ 28,373 $ 28,281 $ 27,919 $ 27,482 27,360 $ 78 4,433 2015 — — — $ 36,423 $ 32,519 $ 28,746 $ 27,548 $ 26,720 $ 26,121 25,566 $ 144 4,949 2016 — — — — $ 37,601 $ 34,055 $ 30,998 $ 29,424 $ 28,437 28,411 $ 208 5,328 2017 — — — — — $ 42,725 $ 38,594 $ 34,246 $ 32,879 32,763 $ 389 5,707 2018 — — — — — — $ 43,654 $ 41,283 $ 40,017 38,569 $ 1,402 6,341 2019 — — — — — — — $ 48,505 $ 42,345 38,815 $ 2,670 6,153 2020 — — — — — — — — $ 40,094 38,602 $ 5,642 5,789 2021 — — — — — — — — — 39,510 $ 15,591 5,062 Total $ 314,565 * Includes expected development on reported claims Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (In thousands) Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Accident Year Unaudited 2012 $ 7,808 $ 14,740 $ 17,728 $ 18,474 $ 19,208 $ 19,402 $ 19,328 $ 19,311 $ 19,340 $ 19,391 2013 — $ 8,131 $ 19,054 $ 24,268 $ 25,209 $ 25,366 $ 25,489 $ 25,440 $ 25,442 25,442 2014 — — $ 9,933 $ 21,880 $ 26,173 $ 26,810 $ 26,959 $ 27,083 $ 27,110 27,119 2015 — — — $ 11,257 $ 21,706 $ 23,977 $ 24,781 $ 25,033 $ 25,125 25,144 2016 — — — — $ 10,980 $ 23,003 $ 26,285 $ 27,162 $ 27,211 27,585 2017 — — — — — $ 12,404 $ 24,791 $ 28,853 $ 31,140 31,631 2018 — — — — — — $ 12,517 $ 27,501 $ 33,236 35,575 2019 — — — — — — — $ 15,100 $ 29,604 33,314 2020 — — — — — — — — $ 11,238 26,626 2021 — — — — — — — — — 12,465 Total 264,292 All outstanding liabilities before 2012, net of reinsurance 377 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 50,650 |
Schedule of historical claims duration | Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Unaudited Healthcare Professional Liability Claims-Made 5.6% 20.0% 23.7% 15.9% 11.4% 5.8% 4.0% 2.2% 1.2% 0.1% Healthcare Professional Liability Occurrence (0.8%) 6.8% 15.4% 18.9% 17.0% 12.0% 6.7% 4.4% 2.5% 0.1% Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Unaudited Medical Technology Liability 3.5 % 21.9 % 22.7 % 12.9 % 14.4 % 3.7 % 2.6 % 0.2 % — % — % Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Unaudited Workers' Compensation Insurance 34.7 % 38.1 % 13.9 % 6.2 % 2.7 % 1.1 % 0.5 % 0.3 % 0.2 % 0.2 % Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Unaudited Segregated Portfolio Cell Reinsurance - workers' compensation 36.1 % 39.9 % 13.6 % 4.2 % 1.3 % 0.7 % (0.1 %) — % 0.1 % 0.3 % |
Schedule of reconciliation of claims development to liability | Below is a reconciliation of the claims development information to the Consolidated Balance Sheet: (In thousands) December 31, 2021 Net outstanding liabilities Healthcare Professional Liability claims-made $ 1,971,384 Healthcare Professional Liability occurrence 436,851 Medical Technology Liability claims-made 35,724 Workers' Compensation Insurance 149,006 Segregated Portfolio Cell Reinsurance - workers' compensation 50,650 Other short-duration lines 163,375 Liabilities for losses and loss adjustment expenses, net of reinsurance 2,806,990 Reinsurance recoverable on unpaid losses Healthcare Professional Liability claims-made 258,528 Healthcare Professional Liability occurrence 35,324 Medical Technology Liability claims-made 31,036 Workers' Compensation Insurance 47,963 Segregated Portfolio Cell Reinsurance - Workers' Compensation 22,455 Other short-duration lines 56,435 Total reinsurance recoverable on unpaid losses and loss adjustment expenses 451,741 Reserve for the future utilization of the DDR benefit 113,246 Unallocated loss adjustment expenses 152,209 Loss portfolio transfer (1) 16,610 Purchase accounting adjustments (2) 39,186 Other (42) 321,209 Gross liability for losses and loss adjustment expenses $ 3,579,940 (1) Represents the reserve for retroactive coverages, net of any applicable deferred gains, related to the loss portfolio transfer entered into during 2019. (2) Represents the remaining unamortized fair value adjustment on the net reserve for losses and loss adjustment expenses, the negative net VOBA recorded on the assumed unearned premium and negative VOBA recorded on the DDR reserve associated with our acquisition of NORCAL (see Note 2 for additional information). |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Schedule of lease cost | The following table provides a summary of the components of net lease expense as well as the reporting location in the Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2021, 2020 and 2019. (In thousands) Location in the Consolidated Statements of Income and Comprehensive Income Year Ended December 31 2021 2020 2019 Operating lease expense (1) Operating expense $ 5,047 $ 4,355 $ 4,485 Sublease income (2) Other income (263) (143) (152) Net lease expense $ 4,784 $ 4,212 $ 4,333 (1) Includes short-term lease costs and variable lease costs, if applicable. For the years ended December 31, 2021, 2020 and 2019, no short-term lease costs were recognized and variable lease costs were nominal in amount. (2) Sublease income excludes rental income from owned properties of $2.5 million during each of the years ended December 31, 2021, 2020 and 2019 which is included in other income. See “Item 2. Properties” for a listing of currently owned properties. The following table provides supplemental lease information for operating leases on the Consolidated Balance Sheet as of December 31, 2021 and December 31, 2020. Year Ended December 31 ($ in thousands) 2021 2020 Operating lease ROU assets $ 19,595 $ 19,013 Operating lease liabilities $ 20,844 $ 20,116 Weighted-average remaining lease term 7.05 years 8.31 years Weighted-average discount rate 2.84 % 2.97 % The following table provides supplemental lease information for the Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019. Year Ended December 31 (In thousands) 2021 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,775 $ 4,221 $ 4,767 |
Schedule of lease liability | The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of December 31, 2021. (In thousands) 2022 $ 5,396 2023 3,958 2024 2,525 2025 2,019 2026 1,748 Thereafter 7,378 Total future minimum lease payments 23,024 Less: Imputed interest 2,180 Total operating lease liabilities $ 20,844 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding long-term debt | ProAssurance’s outstanding debt consisted of the following: ($ in thousands) December 31, December 31, Senior Notes due 2023, unsecured, interest at 5.3% annually $ 250,000 $ 250,000 Contribution Certificates due 2031, interest at 3.0% (effective interest rate at 4.35%) paid annually beginning April 2022 175,900 — Mortgage Loans, outstanding borrowings were secured by first priority liens on two office buildings, and bore an interest rate of three-month LIBOR plus 1.325% (1.58% at December 31, 2020) determined quarterly — 36,113 Total principal 425,900 286,113 Less unamortized debt issuance costs 914 1,400 Debt less unamortized debt issuance costs $ 424,986 $ 284,713 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Schedule of common stock outstanding | The following is a summary of changes in common shares issued and outstanding during the years ended December 31, 2021, 2020 and 2019: (In thousands) 2021 2020 2019 Issued and outstanding shares - January 1 53,893 53,792 53,637 Shares issued due to vesting of share-based compensation awards 46 54 132 Other shares issued for compensation and shares reissued to stock purchase plan * 45 47 23 Issued and outstanding shares - December 31 53,984 53,893 53,792 * Shares issued were valued at fair value (the market price of a ProAssurance common share on the date of issue). |
Schedule of dividends declared | ProAssurance declared cash dividends during 2021, 2020 and 2019 as follows: Cash Dividends Declared, per Share 2021 2020 2019 First Quarter $ 0.05 $ 0.31 $ 0.31 Second Quarter $ 0.05 $ 0.05 $ 0.31 Third Quarter $ 0.05 $ 0.05 $ 0.31 Fourth Quarter $ 0.05 $ 0.05 $ 0.31 |
Schedule of reclassification adjustments related to available-for-sale securities | or the years ended December 31, 2020 and 2019, respectively. The changes in the balance of each component of AOCI for the years ended December 31, 2021, 2020 and 2019 were as follows: (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities (1)(2) Accumulated Other Comprehensive Income (Loss) Balance, December 31, 2020 $ 75,388 $ (57) $ (104) $ 75,227 OCI, before reclassifications, net of tax (50,242) — 1,406 (48,836) Amounts reclassified from AOCI, net of tax (10,217) 57 53 (10,107) Net OCI, current period (60,459) 57 1,459 (58,943) Balance, December 31, 2021 $ 14,929 $ — $ 1,355 $ 16,284 (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities (1) Accumulated Other Comprehensive Income (Loss) Balance, December 31, 2019 $ 37,333 $ (300) $ (78) $ 36,955 OCI, before reclassifications, net of tax 46,383 (187) (26) 46,170 Amounts reclassified from AOCI, net of tax (8,328) 430 — (7,898) Net OCI, current period 38,055 243 (26) 38,272 Balance, December 31, 2020 $ 75,388 $ (57) $ (104) $ 75,227 (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities (1) Accumulated Other Comprehensive Income (Loss) Balance December 31, 2018 $ (16,733) $ (121) $ (57) $ (16,911) OCI, before reclassifications, net of tax 56,041 (179) (21) 55,841 Amounts reclassified from AOCI, net of tax (1,975) — — (1,975) Net OCI, current period 54,066 (179) (21) 53,866 Balance, December 31, 2019 $ 37,333 $ (300) $ (78) $ 36,955 (1) The Company terminated Eastern's defined benefit plan, effective September 30, 2021, resulting in a settlement of the liabilities under the plan and the net loss previously reflected in AOCI being recognized in earnings for the year ended December 31, 2021. For the years ended December 31, 2020 and 2019, the unrecognized change in defined benefit plan liabilities represents the reestimation of the defined benefit plan liability assumed in the Eastern acquisition. The defined benefit plan was frozen as to the earnings of additional benefits and the benefit plan liability was reestimated annually. (2) As a result of the NORCAL acquisition, the Company sponsors another frozen defined benefit plan and recorded a net actuarial gain of $1.2 million, net of tax, in AOCI for the year ended December 31, 2021 (see Note 19). |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of compensation expense and related tax benefit recognized during each period, and compensation cost expense in future periods | The following table provides a summary of compensation expense and the total related tax benefit recognized during each period as well as estimated compensation cost that will be charged to expense in future periods. Share-Based Unrecognized Compensation Cost Year Ended December 31 December 31, 2021 ($ in millions, except remaining recognition period) 2021 2020 2019 Amount Weighted Average Remaining Total share-based compensation expense $ 4.4 $ 3.8 $ 3.5 $ 5.3 1.9 Tax benefit recognized $ 0.9 $ 0.8 $ 0.7 |
Summary of activity related to management share awards | Activity for restricted share units during 2021, 2020 and 2019 is summarized below. Grant date fair values are based on the market value of a share of ProAssurance common stock on the date of grant less the estimated net present value of expected dividends during the vesting period. 2021 2020 2019 Units Weighted Units Weighted Units Weighted Beginning non-vested balance 339,804 $ 36.09 320,625 $ 43.99 267,323 $ 49.16 Granted 131,521 $ 24.16 111,758 $ 29.18 164,196 $ 36.96 Forfeited (11,131) $ 35.49 (9,054) $ 40.13 (3,832) $ 45.09 Vested and released (73,012) $ 44.45 (83,525) $ 56.74 (107,062) $ 46.06 Ending non-vested balance 387,182 $ 30.78 339,804 $ 36.09 320,625 $ 43.99 |
Summary of activity for performance share awards | The table reflects the base number of units; actual awards that vest depend upon the extent to which performance objectives are achieved. Grant date fair values are based on the market value of a share of ProAssurance common stock on the date of grant less the estimated net present value of expected dividends during the vesting period. 2021 2020 2019 Base Units Weighted Base Units Weighted Base Units Weighted Beginning non-vested balance 90,979 $ 36.87 100,370 $ 50.10 135,202 $ 49.95 Granted 74,004 $ 24.04 38,609 $ 29.18 25,168 $ 40.18 Forfeited — $ — — $ — — $ — Expired* (27,202) $ 44.73 (48,000) $ 58.35 — $ — Vested and released — $ — — $ — (60,000) $ 45.59 Ending non-vested balance 137,781 $ 28.43 90,979 $ 36.87 100,370 $ 50.10 *Represents performance share units that did not vest as minimum performance objectives were not achieved. |
Summary of market value of ProAssurance common share on the grant date fair value | Purchase match unit activity during 2019 is summarized below. Grant date fair values are based on the market value of a ProAssurance common share on the date of grant less the estimated net present value of expected dividends during the vesting period. 2021 2020 2019 Units Weighted Units Weighted Units Weighted Beginning non-vested balance — $ — — $ — 44,682 $ 51.05 Granted — $ — — $ — — $ — Forfeited — $ — — $ — (1,400) $ 51.47 Vested and released — $ — — $ — (43,282) $ 51.03 Ending non-vested balance — $ — — $ — — $ — |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | The following table provides a reconciliation between the Company's basic weighted average number of common shares outstanding to its diluted weighted average number of common shares outstanding: (In thousands, except per share data) Year Ended December 31 2021 2020 2019 Weighted average number of common shares outstanding, basic 53,962 53,863 53,740 Dilutive effect of securities: Restricted Share Units 92 42 75 Performance Share Units 4 1 10 Purchase Match Units — — 16 Weighted average number of common shares outstanding, diluted 54,058 53,906 53,841 Effect of dilutive shares on earnings (loss) per share $ — $ — $ — |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information | The tabular information that follows shows the financial results of the Company's reportable segments reconciled to results reflected in the Consolidated Statements of Income and Comprehensive Income. ProAssurance does not consider goodwill or intangible asset impairments, a gain on bargain purchase or transaction-related costs for completed business combinations, including any related tax impacts, in assessing the financial performance of its operating and reportable segments, and thus are included in the reconciliation of segment results to consolidated results. Financial results by segment were as follows: Year Ended December 31, 2021 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 695,008 $ 164,600 $ 63,688 $ 48,372 $ — $ — $ 971,668 Net investment income — — 814 1,961 67,747 — 70,522 Equity in earnings (loss) of unconsolidated subsidiaries — — — — 48,974 — 48,974 Net investment gains (losses) — — 4,080 249 19,981 — 24,310 Other income (expense) (1) 3,370 2,211 3 912 5,531 (3,091) 8,936 Net losses and loss adjustment expenses (575,164) (114,704) (32,569) (29,812) — — (752,249) Underwriting, policy acquisition and operating expenses (1) (127,709) (52,418) (21,635) (17,957) (26,641) 3,091 (243,269) SPC U.S. federal income tax expense (2) — — (1,947) — — — (1,947) SPC dividend (expense) income — — (10,050) — — — (10,050) Interest expense — — — — (19,719) — (19,719) Income tax benefit (expense) — — — — (4,651) — (4,651) Segment results $ (4,495) $ (311) $ 2,384 $ 3,725 $ 91,222 $ — $ 92,525 Reconciliation of segments to consolidated results: Gain on bargain purchase 74,408 Transaction-related costs, net (3) (22,809) Net income (loss) $ 144,124 Significant non-cash items: Gain on bargain purchase $ 74,408 Depreciation and amortization, net of accretion $ 9,915 $ 3,583 $ 1,475 $ 66 $ 22,208 $ — $ 37,247 Year Ended December 31, 2020 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 477,365 $ 171,772 $ 66,352 $ 77,226 $ — $ — $ 792,715 Net investment income — — 1,084 4,128 66,786 — 71,998 Equity in earnings (loss) of unconsolidated subsidiaries — — — — (11,921) — (11,921) Net investment gains (losses) — — 3,085 988 11,605 — 15,678 Other income (expense) (1) 3,908 2,216 205 51 2,531 (2,441) 6,470 Net losses and loss adjustment expenses (470,074) (111,552) (29,605) (50,216) — — (661,447) Underwriting, policy acquisition and operating expenses (1) (109,599) (56,449) (20,709) (30,136) (23,429) 2,441 (237,881) SPC U.S. federal income tax expense (2) — — (1,746) — — — (1,746) SPC dividend (expense) income — — (14,304) — — — (14,304) Interest expense — — — — (15,503) — (15,503) Income tax benefit (expense) — — — 29 41,300 — 41,329 Segment results $ (98,400) $ 5,987 $ 4,362 $ 2,070 $ 71,369 $ — $ (14,612) Reconciliation of segments to consolidated results: Goodwill impairment (161,115) Net income (loss) $ (175,727) Significant non-cash items: Goodwill impairment $ 161,115 Depreciation and amortization, net of accretion $ 7,747 $ 3,690 $ 676 $ (4) $ 9,266 $ — $ 21,375 Year Ended December 31, 2019 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 499,058 $ 189,240 $ 78,563 $ 80,671 $ — $ — $ 847,532 Net investment income — — 1,578 4,551 87,140 — 93,269 Equity in earnings (loss) of unconsolidated subsidiaries — — — — (10,061) — (10,061) Net investment gains (losses) — — 4,020 768 55,086 — 59,874 Other income (expense) (1) 5,796 2,399 559 (573) 3,478 (2,439) 9,220 Net losses and loss adjustment expenses (532,485) (121,649) (52,412) (47,369) — — (753,915) Underwriting, policy acquisition and operating expenses (1) (120,310) (57,520) (23,201) (34,711) (19,146) 2,439 (252,449) SPC U.S. federal income tax expense (2) — — (1,059) — — — (1,059) SPC dividend (expense) income — — (4,579) — — — (4,579) Interest expense — — — — (16,636) — (16,636) Income tax benefit (expense) — — — — 29,808 — 29,808 Segment results $ (147,941) $ 12,470 $ 3,469 $ 3,337 $ 129,669 $ — $ 1,004 Net income (loss) $ 1,004 Significant non-cash items: Depreciation and amortization, net of accretion $ 6,586 $ 3,825 $ (41) $ (7) $ 8,302 $ — $ 18,665 (1) Certain fees for services provided to the SPCs at Inova Re and Eastern Re are recorded as expenses within the Segregated Portfolio Cell Reinsurance segment and as other income within the Workers' Compensation Insurance segment. These fees are primarily SPC rental fees and are eliminated between segments in consolidation. (2) Represents the provision for U.S. federal income taxes for SPCs at Inova Re, which have elected to be taxed as a U.S. corporation under Section 953(d) of the Internal Revenue Code. U.S. federal income taxes are included in the total SPC net results and are paid by the individual SPCs. (3) Represents the transaction-related costs, after-tax, associated with the acquisition of NORCAL. Pre-tax transaction-related costs of $25.0 million were included as a component of consolidated operating expense and the associated income tax benefit of $2.2 million was included as a component of consolidated income tax benefit (expense) on the Consolidated Statements of Income and Comprehensive Income for year ended December 31, 2021. |
Schedule of product and service revenue from external customers | The following table provides detailed information regarding ProAssurance's gross premiums earned by product as well as a reconciliation to net premiums earned. All gross premiums earned are from external customers except as noted. ProAssurance's insured risks are primarily within the U.S. Year Ended December 31 (In thousands) 2021 2020 2019 Specialty P&C Segment Gross premiums earned: HCPL $ 616,614 $ 411,716 $ 434,867 Small business unit 105,605 104,376 109,876 Medical technology liability 38,508 34,909 33,957 Other 684 821 2,096 Ceded premiums earned (66,403) (74,457) (81,738) Segment net premiums earned 695,008 477,365 499,058 Workers' Compensation Insurance Segment Gross premiums earned: Traditional business 175,459 184,204 203,195 Alternative market business 68,206 71,280 84,214 Ceded premiums earned (79,065) (83,712) (98,169) Segment net premiums earned 164,600 171,772 189,240 Segregated Portfolio Cell Reinsurance Segment Gross premiums earned: Workers' compensation (1) 65,023 68,518 81,765 HCPL (2) 7,336 6,594 6,059 Other — — 480 Ceded premiums earned (8,671) (8,760) (9,741) Segment net premiums earned 63,688 66,352 78,563 Lloyd's Syndicates Segment Gross premiums earned: Property and casualty (3) 60,590 98,990 101,222 Ceded premiums earned (12,218) (21,764) (20,551) Segment net premiums earned 48,372 77,226 80,671 Consolidated net premiums earned $ 971,668 $ 792,715 $ 847,532 (1) Premium for all periods is assumed from the Workers' Compensation Insurance segment. (2) Premium for all periods is assumed from the Specialty P&C segment. (3) Includes a nominal amount of premium assumed from the Specialty P&C segment for the year ended December 31, 2019. |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |
Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan | The following table provides a reconciliation of the changes in the PBO and fair value of plan assets for the year ended December 31, 2021: ($ in thousands) Change in benefit obligation: PBO at January 1, 2021 $ — Acquired PBO from NORCAL acquisition 107,895 Interest cost 2,030 Actuarial (gain) loss 2,872 Benefits paid (1,149) Settlement payments (4,749) PBO at December 31, 2021 $ 106,899 Change in fair value of plan assets: Fair value of plan assets at January 1, 2021 $ — Fair value of plan assets acquired from NORCAL 109,443 Actual return on plan assets 6,899 Benefits paid (1,149) Settlement payments (4,749) Fair value of plan assets at December 31, 2021 $ 110,444 Funded (underfunded) status of the plan 3,545 Amount recognized in Consolidated Balance Sheets at December 31, 2021* 3,545 Net actuarial (gain) loss recognized in AOCI and not yet reflected in net periodic benefit cost (income) (1,468) *The funded balance is included as a component of other assets on the Consolidated Balance Sheets for the year ended December 31, 2021. |
Schedule of Net Benefit Costs | The components of the net periodic benefit cost (income) for the year ended December 31, 2021 were as follows: ($ in thousands) Year Ended December 31, 2021 Components of net periodic benefit cost (income): Interest cost $ 2,030 Expected return on plan assets (2,494) Gain on settlement (65) Total net periodic benefit cost (income)* $ (529) Other changes recognized in OCI: Net actuarial (gain) loss (1,533) Reclassification of gain on settlement 65 (Gain) loss recognized in OCI (1,468) Total recognized in net periodic benefit cost (income) and OCI $ (1,997) *Net periodic benefit cost (income) is included as a component of operating expense on the Consolidated Statements of Income and Comprehensive Income for the year ended December 31, 2021. |
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) | The components of the net periodic benefit cost (income) for the year ended December 31, 2021 were as follows: ($ in thousands) Year Ended December 31, 2021 Components of net periodic benefit cost (income): Interest cost $ 2,030 Expected return on plan assets (2,494) Gain on settlement (65) Total net periodic benefit cost (income)* $ (529) Other changes recognized in OCI: Net actuarial (gain) loss (1,533) Reclassification of gain on settlement 65 (Gain) loss recognized in OCI (1,468) Total recognized in net periodic benefit cost (income) and OCI $ (1,997) *Net periodic benefit cost (income) is included as a component of operating expense on the Consolidated Statements of Income and Comprehensive Income for the year ended December 31, 2021. |
Schedule of Net Periodic Benefit Cost Not yet Recognized | The components of the change in amounts not yet recognized as components of the net periodic benefit cost (income) were as follows: December 31, 2021 Items not yet recognized as a component of net periodic benefit cost (income) at January 1, 2021 $ — Net actuarial (gain) loss (1,533) Reclassification of gain (loss) on settlement 65 Items not yet recognized as a component of net periodic benefit cost (income) at December 31, 2021 $ (1,468) Amounts recognized in AOCI $ (1,468) |
Defined Benefit Plan, Assumptions | The weighted average discount rate used to determine the projected benefit obligation of the defined benefit pension plan for the year ended December 31, 2021 and as of the date of the NORCAL acquisition on May 5, 2021 were as follows: December 31, 2021 May 5, 2021 Weighted average discount rate 2.78 % 2.95 % The weighted average discount rate and the weighted average expected return on plan assets used to determine net periodic benefit cost (credit) for the year ended December 31, 2021 were as follows: December 31, 2021 Weighted average discount rate 2.95 % Weighted average expected return on plan assets 3.75 % |
Schedule of Allocation of Plan Assets | The defined benefit pension plan’s target allocations, by asset category as of December 31, 2021, were as follows: December 31, 2021 Equity investments 18 % Fixed maturities 79 % Real estate 3 % 100 % December 31, 2021 (In thousands) Level 1 Level 2 Level 3 Total* Pooled separate account investments: Large cap equity investments (1) $ 13,703 $ — $ — $ 13,703 Mid cap equity investments (1) 586 — — 586 Small cap equity investments (1) 229 — — 229 International equity investments (2) — 5,581 — 5,581 Corporate and government debt (3) — 86,728 — 86,728 Real estate (4) — — 3,617 3,617 Total $ 14,518 $ 92,309 $ 3,617 $ 110,444 *For some assets, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When this is the case, the asset is categorized based on the level of the most significant input to the fair value measurement. Assessments of the significance of a particular input to the fair value measurement require judgement and consideration of factors specific to the assets being valued. |
Schedule of Changes in the Fair Value of Asset | Level 3 Fair Value Measurements (In thousands) Real Estate Total Balance, January 1, 2021 $ — $ — Acquired balance, May 5, 2021 3,383 3,383 Actual return on plan assets: Relating to assets still held at the reporting date: Investment return 613 613 Transfers out (379) (379) Balance, December 31, 2021 $ 3,617 $ 3,617 |
Schedule of Expected Benefit Payments | Based on current data and assumptions as of December 31, 2021, the following benefit payments are expected to be paid in future periods: 2022 $ 6,240 2023 6,030 2024 5,430 2025 5,740 2026 6,270 Thereafter 31,070 Total $ 60,780 |
Statutory Accounting and Divi_2
Statutory Accounting and Dividend Restrictions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Net income (loss) and capital surplus | Net income (loss) and capital and surplus of ProAssurance’s insurance subsidiaries on a statutory basis are shown in the following table. (In millions) Statutory Net Income (Loss) Statutory Capital and Surplus 2021 2020 2019 2021 2020 $73 $81 ($22) $1,452 $831 |
Accounting Policies - Narrative
Accounting Policies - Narrative (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)segmentreporting_unit | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of reportable segments | segment | 5 | ||
Insurance policy duration (years) | 1 year | ||
Minimum period for claims resolution (years) | 5 years | ||
Net of related allowance for expected credit losses | $ 7,436 | $ 6,131 | $ 1,590 |
Estimated aggregate amortization of intangible assets for 2022 | 6,500 | ||
Estimated aggregate amortization of intangible assets for 2023 | 6,500 | ||
Estimated aggregate amortization of intangible assets for 2024 | 6,100 | ||
Estimated aggregate amortization of intangible assets for 2025 | 5,700 | ||
Estimated aggregate amortization of intangible assets for 2026 | $ 3,700 | ||
Number of reporting units | reporting_unit | 2 | ||
Earned but unbilled premiums | $ 1,800 | 3,000 | |
Building and Building Improvements | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Real estate accumulated depreciation | 27,400 | 26,500 | |
Depreciation | $ 900 | $ 900 | $ 1,000 |
Accounting Policies - Premium R
Accounting Policies - Premium Receivable Expected Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Premiums Receivable, Net | $ 241,095 | $ 201,395 | $ 249,540 |
Premium Receivable, Allowance for Credit Loss [Roll Forward] | |||
Premium receivable, allowance for credit loss, beginning balance | 6,131 | 1,590 | |
Provision for expected credit losses | 439 | 827 | |
Initial allowance recognized in the period for NORCAL premium receivable | 2,137 | ||
Write offs charged against the allowance | (1,533) | (2,019) | |
Recoveries of amounts previously written off | 262 | 573 | |
Premium receivable, allowance for credit loss, ending balance | $ 7,436 | 6,131 | |
Cumulative Effect, Period of Adoption, Adjustment | |||
Premium Receivable, Allowance for Credit Loss [Roll Forward] | |||
Premium receivable, allowance for credit loss, beginning balance | $ 5,160 |
Accounting Policies - Intangibl
Accounting Policies - Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Gross carrying value non-amortizable | $ 38.2 | $ 25.8 | |
Gross carrying value amortizable | 100.3 | 98.8 | |
Total Intangible Assets | 138.5 | 124.6 | |
Accumulated amortization of intangible assets | 65.2 | 58.9 | |
Amortization expense of intangible assets | $ 6.4 | $ 6.2 | $ 6.1 |
Accounting Policies - Other Lia
Accounting Policies - Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | |||
SPC dividends payable | $ 66,456 | $ 68,865 | |
Deferred compensation liabilities | 52,332 | 30,334 | |
Contingent consideration | 24,000 | 0 | $ 0 |
All other | 137,944 | 82,840 | |
Total other liabilities | $ 280,732 | $ 182,039 |
Business Combination - Narrativ
Business Combination - Narrative (Details) - USD ($) | Sep. 16, 2021 | May 05, 2021 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||||||
Contingent consideration | $ 24,000,000 | $ 0 | $ 0 | |||
Gain on bargain purchase | 74,408,000 | 0 | $ 0 | |||
NORCAL Group | ||||||
Business Acquisition [Line Items] | ||||||
Percentage of interest acquired | 120.00% | 98.80% | ||||
Total acquisition consideration | $ 3,100,000 | $ 448,809,000 | ||||
Payments to acquire businesses | 248,000,000 | |||||
Business combination, consideration transferred, equity interests issued and issuable | 1,800,000 | |||||
Contingent consideration, maximum estimate | 84,000,000 | |||||
Contingent consideration | 24,000,000 | 24,000,000 | ||||
Proassurance actual revenue consolidation results | 230,300,000 | |||||
Proassurance actual net income consolidated results | 9,700,000 | |||||
Acquisition related costs | $ 25,000,000 | $ 25,000,000 | $ 1,800,000 | |||
Gain on bargain purchase | 74,408,000 | |||||
Deferred tax asset, net | 46,759,000 | |||||
Initial base consideration | 450,000,000 | |||||
Intangible assets | 14,000,000 | |||||
Business combination, fair values adjustments on gross reserve | 42,200,000 | |||||
Business combination, fair values adjustments on reinsurance recoverables | 3,500,000 | |||||
Present value of future insurance profits, expected amortization | 53,844,000 | |||||
Expected amortization | 14,600,000 | |||||
NORCAL Group | Fair value Adjustment on Reserves Net | ||||||
Business Acquisition [Line Items] | ||||||
Present value of future insurance profits, expected amortization | 38,701,000 | |||||
Estimated negative VOBA | 700,000 | |||||
NORCAL Group | Unearned Premium | ||||||
Business Acquisition [Line Items] | ||||||
Present value of future insurance profits, expected amortization | 11,676,000 | |||||
Estimated negative VOBA | 12,400,000 | |||||
NORCAL Group | DDR Reserve And Permatail Products | ||||||
Business Acquisition [Line Items] | ||||||
Present value of future insurance profits, expected amortization | 3,467,000 | |||||
NORCAL Group | Contribution Certificates | ||||||
Business Acquisition [Line Items] | ||||||
Principal amount | 191,000,000 | |||||
Debt instruments | $ 175,000,000 |
Business Combination - Schedule
Business Combination - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 16, 2021 | May 05, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||||
Gain on bargain purchase | $ (74,408) | $ 0 | $ 0 | ||
NORCAL Group | |||||
Business Acquisition [Line Items] | |||||
Fixed maturities, available for sale | $ 1,100,058 | ||||
Equity investments, available for sale | 374,484 | ||||
Short-term investments | 61,289 | ||||
Business owned life insurance | 12,581 | ||||
Investment in unconsolidated subsidiaries | 26,948 | ||||
Other investments | 32,461 | ||||
Cash and cash equivalents | 28,233 | ||||
Premiums receivable | 110,905 | ||||
Receivable from reinsurers on paid losses and loss adjustment expenses | 266 | ||||
Receivable from reinsurers on unpaid losses and loss adjustment expenses | 93,342 | ||||
Prepaid reinsurance premiums | 9,238 | ||||
Deferred tax asset, net | 46,759 | ||||
Operating lease ROU assets | 4,385 | ||||
Intangible assets | 14,000 | ||||
Other assets | 38,648 | ||||
Reserve for losses and loss adjustment expenses | (1,182,445) | ||||
Unearned premiums | (178,400) | ||||
Reinsurance premiums payable | (12,981) | ||||
Operating lease liabilities | (5,275) | ||||
Other liabilities | (51,279) | ||||
Total identifiable net assets acquired | 523,217 | ||||
Gain on bargain purchase | (74,408) | ||||
Total acquisition consideration | $ 3,100 | $ 448,809 |
Business Combination - Summary
Business Combination - Summary of Intangible Assets Acquired (Details) - NORCAL Group $ in Thousands | May 05, 2021USD ($) |
Business Acquisition [Line Items] | |
Total | $ 14,000 |
Licenses | |
Business Acquisition [Line Items] | |
Indefinite-lived intangible assets acquired | 13,000 |
Trade name | |
Business Acquisition [Line Items] | |
Finite-lived intangible assets acquired | $ 1,000 |
Acquired intangible assets useful life (in years) | 3 years |
Business Combination - Schedu_2
Business Combination - Schedule of Present Value Of Future Insurance Profits Expected Amortization (Details) - NORCAL Group $ in Thousands | May 05, 2021USD ($) |
Business Acquisition [Line Items] | |
Amortization, total | $ 53,844 |
2021 | 14,600 |
2022 | 15,758 |
2023 | 8,333 |
2024 | 5,326 |
2025 | 3,350 |
Thereafter | 6,433 |
Fair value Adjustment on Reserves Net | |
Business Acquisition [Line Items] | |
Amortization, total | $ 38,701 |
Estimated amortization period (years) | 7 years |
2022 | $ 10,595 |
2023 | 8,090 |
2024 | 5,083 |
2025 | 3,107 |
Thereafter | 4,058 |
Unearned Premium | |
Business Acquisition [Line Items] | |
Amortization, total | $ 11,676 |
Estimated amortization period (years) | 1 year |
2022 | $ 4,939 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
Thereafter | 0 |
DDR Reserve And Permatail Products | |
Business Acquisition [Line Items] | |
Amortization, total | $ 3,467 |
Estimated amortization period (years) | 15 years |
2022 | $ 224 |
2023 | 243 |
2024 | 243 |
2025 | 243 |
Thereafter | $ 2,375 |
Business Combination - Pro Form
Business Combination - Pro Forma and Actual Consolidated Results (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue: | |||
ProAssurance Actual Consolidated Results | $ 1,124,410 | $ 874,940 | $ 999,834 |
Net income (loss): | |||
ProAssurance Actual Consolidated Results | 144,124 | (175,727) | $ 1,004 |
NORCAL Group | |||
Revenue: | |||
ProAssurance Pro Forma Consolidated Results | 1,247,272 | 1,275,459 | |
Net income (loss): | |||
ProAssurance Pro Forma Consolidated Results | $ 88,223 | $ (113,557) |
Fair Value Measurement - Assets
Fair Value Measurement - Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Fixed maturities available for sale, at fair value | $ 3,833,722 | $ 2,457,531 |
Fixed maturities, trading | 43,670 | 48,456 |
Equity investments | 214,807 | 120,101 |
Level 3 | ||
Liabilities: | ||
Other liabilities | 24,000 | 0 |
Recurring fair value measurements | ||
Assets: | ||
Total assets categorized within the fair value hierarchy | 4,679,262 | 3,242,057 |
Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities, trading | 0 | 0 |
Other assets | 0 | 0 |
Total assets categorized within the fair value hierarchy | 388,285 | 416,757 |
Liabilities: | ||
Other liabilities | 0 | |
Total liabilities categorized within the fair value hierarchy | 0 | |
Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities, trading | 43,670 | 48,456 |
Other assets | 649 | 329 |
Total assets categorized within the fair value hierarchy | 3,962,596 | 2,567,083 |
Liabilities: | ||
Other liabilities | 0 | |
Total liabilities categorized within the fair value hierarchy | 0 | |
Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities, trading | 0 | 0 |
Other assets | 0 | 0 |
Total assets categorized within the fair value hierarchy | 57,565 | 11,958 |
Liabilities: | ||
Other liabilities | 24,000 | |
Total liabilities categorized within the fair value hierarchy | 24,000 | |
Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities, trading | 43,670 | 48,456 |
Other assets | 649 | 329 |
Total assets categorized within the fair value hierarchy | 4,408,446 | 2,995,798 |
Liabilities: | ||
Other liabilities | 24,000 | |
Total liabilities categorized within the fair value hierarchy | 24,000 | |
U.S. Treasury obligations | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 238,507 | 107,059 |
U.S. Treasury obligations | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
U.S. Treasury obligations | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 238,507 | 107,059 |
U.S. Treasury obligations | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
U.S. Treasury obligations | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 238,507 | 107,059 |
U.S. Government-sponsored enterprise obligations | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 20,234 | 12,261 |
U.S. Government-sponsored enterprise obligations | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
U.S. Government-sponsored enterprise obligations | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 20,234 | 12,261 |
U.S. Government-sponsored enterprise obligations | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
U.S. Government-sponsored enterprise obligations | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 20,234 | 12,261 |
State and municipal bonds | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 519,196 | 332,920 |
State and municipal bonds | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
State and municipal bonds | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 519,196 | 332,920 |
State and municipal bonds | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
State and municipal bonds | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 519,196 | 332,920 |
Corporate debt, multiple observable inputs | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Corporate debt, multiple observable inputs | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 1,851,427 | 1,326,077 |
Corporate debt, multiple observable inputs | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Corporate debt, multiple observable inputs | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 1,851,427 | 1,326,077 |
Corporate debt, limited observable inputs | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 47,129 | 3,265 |
Corporate debt, limited observable inputs | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Corporate debt, limited observable inputs | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Corporate debt, limited observable inputs | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 47,129 | 3,265 |
Corporate debt, limited observable inputs | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 47,129 | 3,265 |
Residential mortgage-backed securities | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 453,941 | 276,541 |
Residential mortgage-backed securities | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Residential mortgage-backed securities | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 453,644 | 274,509 |
Residential mortgage-backed securities | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 297 | 2,032 |
Residential mortgage-backed securities | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 453,941 | 276,541 |
Agency commercial mortgage-backed securities | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 14,141 | 13,310 |
Agency commercial mortgage-backed securities | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Agency commercial mortgage-backed securities | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 14,141 | 13,310 |
Agency commercial mortgage-backed securities | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Agency commercial mortgage-backed securities | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 14,141 | 13,310 |
Other commercial mortgage-backed securities | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 231,483 | 113,092 |
Other commercial mortgage-backed securities | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Other commercial mortgage-backed securities | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 231,483 | 113,092 |
Other commercial mortgage-backed securities | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Other commercial mortgage-backed securities | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 231,483 | 113,092 |
Other asset-backed securities | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 457,664 | 273,006 |
Other asset-backed securities | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 0 | 0 |
Other asset-backed securities | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 451,459 | 266,345 |
Other asset-backed securities | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 6,205 | 6,661 |
Other asset-backed securities | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities available for sale, at fair value | 457,664 | 273,006 |
Financial | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Equity investments | 6,615 | 13,810 |
Financial | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Equity investments | 855 | 0 |
Financial | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Equity investments | 0 | 0 |
Financial | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 7,470 | 13,810 |
Utilities/Energy | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Equity investments | 564 | |
Utilities/Energy | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Equity investments | 0 | |
Utilities/Energy | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Equity investments | 0 | |
Utilities/Energy | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 564 | |
Consumer oriented | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Equity investments | 1,262 | |
Consumer oriented | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Equity investments | 0 | |
Consumer oriented | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Equity investments | 0 | |
Consumer oriented | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 1,262 | |
Industrial | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Equity investments | 0 | 2,240 |
Industrial | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Equity investments | 0 | 0 |
Industrial | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Equity investments | 2,500 | 0 |
Industrial | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 2,500 | 2,240 |
Bond funds | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Equity investments | 187,059 | 69,475 |
Bond funds | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Equity investments | 0 | 0 |
Bond funds | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Equity investments | 0 | 0 |
Bond funds | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 187,059 | 69,475 |
All other | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Equity investments | 17,778 | 20,202 |
All other | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Equity investments | 0 | 0 |
All other | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Equity investments | 0 | 0 |
All other | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 17,778 | 20,202 |
Short-term investments | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Short-term investments | 174,944 | 307,695 |
Short-term investments | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Short-term investments | 42,043 | 30,118 |
Short-term investments | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Short-term investments | 0 | 0 |
Short-term investments | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Short-term investments | 216,987 | 337,813 |
Other investments | Recurring fair value measurements | Level 1 | ||
Assets: | ||
Short-term investments | 1,889 | 1,509 |
Other investments | Recurring fair value measurements | Level 2 | ||
Assets: | ||
Short-term investments | 95,288 | 42,607 |
Other investments | Recurring fair value measurements | Level 3 | ||
Assets: | ||
Short-term investments | 1,434 | 0 |
Other investments | Recurring fair value measurements | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Short-term investments | 98,611 | 44,116 |
Equity investments | Equity investments | Recurring fair value measurements | Fair Value Measured at Net Asset Value Per Share | ||
Assets: | ||
Total assets categorized within the fair value hierarchy | 12,548 | |
Investment in unconsolidated subsidiaries | Equity investments | Recurring fair value measurements | Fair Value Measured at Net Asset Value Per Share | ||
Assets: | ||
Total assets categorized within the fair value hierarchy | $ 270,816 | $ 233,711 |
Fair Value Measurement - Narrat
Fair Value Measurement - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | May 05, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Goodwill | $ 49,610,000 | $ 49,610,000 | $ 210,725,000 | ||
Goodwill impairment | $ 161,100,000 | 0 | 161,115,000 | 0 | |
Deferred compensation plan assets | 39,500,000 | 30,600,000 | |||
Deferred compensation liabilities | 52,332,000 | 30,334,000 | |||
Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Deferred compensation liabilities | 52,300,000 | 30,300,000 | |||
Fair Value, Nonrecurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value, net asset (liability) | 0 | 0 | |||
Specialty P&C | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Goodwill | 161,100,000 | 0 | 0 | $ 161,115,000 | |
Goodwill impairment | $ 161,100,000 | 0 | $ 161,115,000 | ||
NORCAL Group | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration, maximum estimate | $ 84,000,000 | ||||
Deferred compensation plan assets | 5,200,000 | ||||
NORCAL Group | Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Deferred compensation liabilities | $ 18,400,000 | ||||
Corporate debt, limited observable inputs | Rating BBB | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Credit quality percentage | 100.00% | ||||
Corporate debt, limited observable inputs | Rating BBplus | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Credit quality percentage | 100.00% | ||||
Other asset-backed securities | BBB Plus | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Credit quality percentage | 100.00% | ||||
Other asset-backed securities | Rating AA minus | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Credit quality percentage | 51.00% | ||||
Mortgage Loans | Three month LIBOR | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Basis spread on variable rate for debt | 1.325% | 1.58% | |||
Interest Rate Cap | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Premium paid on derivative for right to receive cash payments | $ 2,000,000 | ||||
Floor interest rate on derivative | 2.35% | ||||
Interest Rate Cap | Other Assets | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Notional Amount | $ 35,000,000 |
Fair Value Measurement - Quanti
Fair Value Measurement - Quantitative Information Regarding Level 3 Valuations (Details) $ in Thousands | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Assets: | ||
Estimated Fair Value | $ 3,833,722 | $ 2,457,531 |
Alternative investment | 270,816 | 246,259 |
Fair Value, Inputs, Level 3 | ||
Assets: | ||
Equity investments | 2,500 | 0 |
Alternative investment | 1,434 | 0 |
Liabilities: | ||
Other liabilities | $ 24,000 | 0 |
Fair Value, Inputs, Level 3 | Discounted Cash Flows | Comparability Adjustment | Minimum | ||
Assets: | ||
Equity securities measured at fair value | 0 | |
Other investments, measurement input | 0 | |
Fair Value, Inputs, Level 3 | Discounted Cash Flows | Comparability Adjustment | Maximum | ||
Assets: | ||
Equity securities measured at fair value | 0.10 | |
Other investments, measurement input | 0.10 | |
Fair Value, Inputs, Level 3 | Discounted Cash Flows | Comparability Adjustment | Weighted Average | ||
Assets: | ||
Equity securities measured at fair value | 0.05 | |
Other investments, measurement input | 0.05 | |
Fair Value, Inputs, Level 3 | Stochastic Model/Discounted Cash Flows | Comparability Adjustment | Minimum | ||
Liabilities: | ||
Other liabilities, measurement input | 0.00% | |
Fair Value, Inputs, Level 3 | Stochastic Model/Discounted Cash Flows | Comparability Adjustment | Maximum | ||
Liabilities: | ||
Other liabilities, measurement input | 10.00% | |
Fair Value, Inputs, Level 3 | Stochastic Model/Discounted Cash Flows | Comparability Adjustment | Weighted Average | ||
Liabilities: | ||
Other liabilities, measurement input | 8.00% | |
Fair Value, Inputs, Level 3 | Corporate debt, limited observable inputs | ||
Assets: | ||
Estimated Fair Value | $ 47,129 | 3,265 |
Fair Value, Inputs, Level 3 | Corporate debt, limited observable inputs | Market Comparable Securities | Comparability Adjustment | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Fair Value, Inputs, Level 3 | Corporate debt, limited observable inputs | Market Comparable Securities | Comparability Adjustment | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Fair Value, Inputs, Level 3 | Corporate debt, limited observable inputs | Market Comparable Securities | Comparability Adjustment | Weighted Average | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Fair Value, Inputs, Level 3 | Corporate debt, limited observable inputs | Discounted Cash Flows | Comparability Adjustment | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Fair Value, Inputs, Level 3 | Corporate debt, limited observable inputs | Discounted Cash Flows | Comparability Adjustment | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Fair Value, Inputs, Level 3 | Corporate debt, limited observable inputs | Discounted Cash Flows | Comparability Adjustment | Weighted Average | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Fair Value, Inputs, Level 3 | Residential mortgage-backed securities | ||
Assets: | ||
Estimated Fair Value | $ 297 | 2,032 |
Fair Value, Inputs, Level 3 | Residential mortgage-backed securities | Market Comparable Securities | Comparability Adjustment | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Fair Value, Inputs, Level 3 | Residential mortgage-backed securities | Market Comparable Securities | Comparability Adjustment | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Fair Value, Inputs, Level 3 | Residential mortgage-backed securities | Market Comparable Securities | Comparability Adjustment | Weighted Average | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Fair Value, Inputs, Level 3 | Residential mortgage-backed securities | Discounted Cash Flows | Comparability Adjustment | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Fair Value, Inputs, Level 3 | Residential mortgage-backed securities | Discounted Cash Flows | Comparability Adjustment | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Fair Value, Inputs, Level 3 | Residential mortgage-backed securities | Discounted Cash Flows | Comparability Adjustment | Weighted Average | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Fair Value, Inputs, Level 3 | Other asset-backed securities | ||
Assets: | ||
Estimated Fair Value | $ 6,205 | $ 6,661 |
Fair Value, Inputs, Level 3 | Other asset-backed securities | Market Comparable Securities | Comparability Adjustment | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Fair Value, Inputs, Level 3 | Other asset-backed securities | Market Comparable Securities | Comparability Adjustment | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Fair Value, Inputs, Level 3 | Other asset-backed securities | Market Comparable Securities | Comparability Adjustment | Weighted Average | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Fair Value, Inputs, Level 3 | Other asset-backed securities | Discounted Cash Flows | Comparability Adjustment | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Fair Value, Inputs, Level 3 | Other asset-backed securities | Discounted Cash Flows | Comparability Adjustment | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Fair Value, Inputs, Level 3 | Other asset-backed securities | Discounted Cash Flows | Comparability Adjustment | Weighted Average | ||
Assets: | ||
Assets measured at fair value | 0.025 |
Fair Value Measurement - Level
Fair Value Measurement - Level 3 Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||
Beginning Balance | $ 11,958 | $ 11,157 |
Total gains (losses) realized and unrealized: | ||
Included in other comprehensive income | (376) | 325 |
Purchases | 98,078 | 23,359 |
Sales | (9,876) | (6,524) |
Transfers in | 4,513 | 1,550 |
Transfers out | (45,946) | (18,032) |
Ending Balance | 57,565 | 11,958 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | (764) | 151 |
Net investment income | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | (2) | (20) |
Net investment gains (losses) | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | (784) | 143 |
Corporate debt | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||
Beginning Balance | 3,265 | 5,079 |
Total gains (losses) realized and unrealized: | ||
Included in other comprehensive income | 27 | 216 |
Purchases | 57,586 | 2,869 |
Sales | (3,277) | (2,178) |
Transfers in | 858 | 945 |
Transfers out | (11,317) | (3,664) |
Ending Balance | 47,129 | 3,265 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | 0 |
Corporate debt | Net investment income | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | 1 | (2) |
Corporate debt | Net investment gains (losses) | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | (14) | 0 |
Asset-backed Securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||
Beginning Balance | 8,693 | 2,992 |
Total gains (losses) realized and unrealized: | ||
Included in other comprehensive income | (403) | 109 |
Purchases | 31,204 | 20,490 |
Sales | (800) | (4,346) |
Transfers in | 0 | 605 |
Transfers out | (32,178) | (11,131) |
Ending Balance | 6,502 | 8,693 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | 0 |
Asset-backed Securities | Net investment income | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | (3) | (18) |
Asset-backed Securities | Net investment gains (losses) | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | (11) | (8) |
Equity Investments | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||
Beginning Balance | 0 | |
Total gains (losses) realized and unrealized: | ||
Included in other comprehensive income | 0 | |
Purchases | 9,083 | |
Sales | (5,799) | |
Transfers in | 69 | |
Transfers out | (868) | |
Ending Balance | 2,500 | 0 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 10 | |
Equity Investments | Net investment income | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | 0 | |
Equity Investments | Net investment gains (losses) | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | 15 | |
Other Investments | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||
Beginning Balance | 0 | 3,086 |
Total gains (losses) realized and unrealized: | ||
Included in other comprehensive income | 0 | 0 |
Purchases | 205 | 0 |
Sales | 0 | 0 |
Transfers in | 3,586 | 0 |
Transfers out | (1,583) | (3,237) |
Ending Balance | 1,434 | 0 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | (774) | 151 |
Other Investments | Net investment income | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | 0 | 0 |
Other Investments | Net investment gains (losses) | ||
Total gains (losses) realized and unrealized: | ||
Included in earnings | $ (774) | $ 151 |
Fair Value Measurement - Invest
Fair Value Measurement - Investments in LLCs and Limited Partnerships (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021USD ($)fund | Dec. 31, 2020USD ($) | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Alternative investment | $ 270,816 | $ 246,259 |
Mortgage fund | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Entities that calculate net asset value notice period (years) | 65 days | |
Payment period for redemption of LP valued at NAV (years) | 45 days | |
Private debt funds | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Number of unrelated LPs funds | fund | 2 | |
Number of LPs to allow redemption by special consent (in funds) | fund | 1 | |
Private debt funds | Minimum | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Anticipated time frame for distribution at the discretion of the LP (years) | 3 years | |
Private debt funds | Maximum | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Anticipated time frame for distribution at the discretion of the LP (years) | 8 years | |
Long/short equity funds | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Payment period for redemption of LP valued at NAV (years) | 30 days | |
Redemption percentage of LP at NAV for which initial payment is limited (percent) | 90.00% | |
Non-public equity funds | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Anticipated time frame for distribution at the discretion of the LP (years) | 10 years | |
Structured credit fund | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Prior notice requirement notice for two funds | 90 days | |
Prior notice requirement notice for one funds | 180 days | |
Equities | Mortgage fund | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | $ 0 | |
Alternative investment | 0 | 12,548 |
Investment in unconsolidated subsidiaries | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Alternative investment | 270,816 | 233,711 |
Investment in unconsolidated subsidiaries | Private debt funds | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 8,817 | |
Alternative investment | 18,465 | 16,387 |
Investment in unconsolidated subsidiaries | Long/short equity funds | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 0 | |
Alternative investment | 655 | 596 |
Investment in unconsolidated subsidiaries | Non-public equity funds | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 52,938 | |
Alternative investment | 160,219 | 138,357 |
Investment in unconsolidated subsidiaries | Structured credit fund | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 55,237 | |
Alternative investment | 47,300 | 34,848 |
Investment in unconsolidated subsidiaries | Strategy focused fund | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 31,939 | |
Alternative investment | $ 44,177 | $ 43,523 |
Fair Value Measurement - Method
Fair Value Measurement - Methodologies Other Than Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Carrying Value | ||
Financial assets: | ||
Other assets | $ 40,581 | $ 31,128 |
Financial liabilities: | ||
Other liabilities | 52,332 | 30,334 |
Carrying Value | Senior Notes | ||
Financial liabilities: | ||
Debt instruments | 250,000 | 250,000 |
Carrying Value | Mortgage Loans | ||
Financial liabilities: | ||
Debt instruments | 0 | 36,113 |
Carrying Value | Contribution Certificates | ||
Financial liabilities: | ||
Debt instruments | 175,900 | 0 |
Fair Value | ||
Financial assets: | ||
Other assets | 40,583 | 31,141 |
Financial liabilities: | ||
Other liabilities | 52,332 | 30,334 |
Fair Value | Senior Notes | ||
Financial liabilities: | ||
Debt instruments | 264,000 | 269,160 |
Fair Value | Mortgage Loans | ||
Financial liabilities: | ||
Debt instruments | 0 | 36,113 |
Fair Value | Contribution Certificates | ||
Financial liabilities: | ||
Debt instruments | 179,892 | 0 |
BOLI | Carrying Value | ||
Financial assets: | ||
Other investments | 81,767 | 67,847 |
BOLI | Fair Value | ||
Financial assets: | ||
Other investments | 81,767 | 67,847 |
Other Investments | Carrying Value | ||
Financial assets: | ||
Other investments | 3,183 | 2,952 |
Other Investments | Fair Value | ||
Financial assets: | ||
Other investments | $ 3,183 | $ 2,952 |
Investments - Available-For-Sal
Investments - Available-For-Sale Securities (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | $ 3,814,847,000 | $ 2,361,575,000 | |
Allowance for Expected Credit Losses | 0 | 552,000 | $ 0 |
Gross Unrealized Gains | 49,690,000 | 99,936,000 | |
Gross Unrealized Losses | 30,815,000 | 3,428,000 | |
Estimated Fair Value | 3,833,722,000 | 2,457,531,000 | |
U.S. Treasury obligations | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 239,765,000 | 104,097,000 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 1,166,000 | 2,985,000 | |
Gross Unrealized Losses | 2,424,000 | 23,000 | |
Estimated Fair Value | 238,507,000 | 107,059,000 | |
U.S. Government-sponsored enterprise obligations | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 20,467,000 | 12,103,000 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 29,000 | 158,000 | |
Gross Unrealized Losses | 262,000 | 0 | |
Estimated Fair Value | 20,234,000 | 12,261,000 | |
State and municipal bonds | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 511,750,000 | 316,022,000 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 9,620,000 | 16,937,000 | |
Gross Unrealized Losses | 2,174,000 | 39,000 | |
Estimated Fair Value | 519,196,000 | 332,920,000 | |
Corporate debt | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 1,884,455,000 | 1,267,992,000 | |
Allowance for Expected Credit Losses | 0 | 552,000 | $ 0 |
Gross Unrealized Gains | 29,050,000 | 63,204,000 | |
Gross Unrealized Losses | 14,949,000 | 1,302,000 | |
Estimated Fair Value | 1,898,556,000 | 1,329,342,000 | |
Residential mortgage-backed securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 455,438,000 | 269,752,000 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 4,254,000 | 7,171,000 | |
Gross Unrealized Losses | 5,751,000 | 382,000 | |
Estimated Fair Value | 453,941,000 | 276,541,000 | |
Agency commercial mortgage-backed securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 13,909,000 | 12,623,000 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 294,000 | 687,000 | |
Gross Unrealized Losses | 62,000 | ||
Estimated Fair Value | 14,141,000 | 13,310,000 | |
Other commercial mortgage-backed securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 231,226,000 | 109,244,000 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 2,530,000 | 4,788,000 | |
Gross Unrealized Losses | 2,273,000 | 940,000 | |
Estimated Fair Value | 231,483,000 | 113,092,000 | |
Other asset-backed securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 457,837,000 | 269,742,000 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 2,747,000 | 4,006,000 | |
Gross Unrealized Losses | 2,920,000 | 742,000 | |
Estimated Fair Value | $ 457,664,000 | $ 273,006,000 |
Investments - Available-For-S_2
Investments - Available-For-Sale Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Fixed maturities, available for sale | ||
Amortized Cost | $ 3,814,847 | $ 2,361,575 |
Total Fair Value | 3,833,722 | 2,457,531 |
U.S. Treasury obligations | ||
Fixed maturities, available for sale | ||
Amortized Cost | 239,765 | 104,097 |
Due in one year or less | 20,327 | |
Due after one year through five years | 131,030 | |
Due after five years through ten years | 85,457 | |
Due after ten years | 1,693 | |
Total Fair Value | 238,507 | 107,059 |
U.S. Government-sponsored enterprise obligations | ||
Fixed maturities, available for sale | ||
Amortized Cost | 20,467 | 12,103 |
Due in one year or less | 4,412 | |
Due after one year through five years | 11,646 | |
Due after five years through ten years | 4,033 | |
Due after ten years | 143 | |
Total Fair Value | 20,234 | 12,261 |
State and municipal bonds | ||
Fixed maturities, available for sale | ||
Amortized Cost | 511,750 | 316,022 |
Due in one year or less | 21,480 | |
Due after one year through five years | 166,434 | |
Due after five years through ten years | 194,053 | |
Due after ten years | 137,229 | |
Total Fair Value | 519,196 | 332,920 |
Corporate debt | ||
Fixed maturities, available for sale | ||
Amortized Cost | 1,884,455 | 1,267,992 |
Due in one year or less | 94,395 | |
Due after one year through five years | 864,520 | |
Due after five years through ten years | 821,209 | |
Due after ten years | 118,432 | |
Total Fair Value | 1,898,556 | 1,329,342 |
Residential mortgage-backed securities | ||
Fixed maturities, available for sale | ||
Amortized Cost | 455,438 | 269,752 |
Total Fair Value | 453,941 | 276,541 |
Agency commercial mortgage-backed securities | ||
Fixed maturities, available for sale | ||
Amortized Cost | 13,909 | 12,623 |
Total Fair Value | 14,141 | 13,310 |
Other commercial mortgage-backed securities | ||
Fixed maturities, available for sale | ||
Amortized Cost | 231,226 | 109,244 |
Total Fair Value | 231,483 | 113,092 |
Other asset-backed securities | ||
Fixed maturities, available for sale | ||
Amortized Cost | 457,837 | 269,742 |
Total Fair Value | $ 457,664 | $ 273,006 |
Investments - Available-For-S_3
Investments - Available-For-Sale Securities Narrative (Details) $ in Millions | 3 Months Ended | ||
Dec. 31, 2021USD ($)investment | Jun. 30, 2021USD ($) | Dec. 31, 2020 | |
Debt Securities, Available-for-sale [Line Items] | |||
Number of investment affiliates exceeding shareholder's equity ten percent threshold limit (in affiliates) | investment | 0 | ||
Threshold limit of investments based on shareholders' equity (percent) | 10.00% | ||
Securities on deposit with state insurance departments | $ 56.7 | ||
Syndicate 1729 | |||
Debt Securities, Available-for-sale [Line Items] | |||
Return of deposit assets | $ 8 | $ 24.5 | |
Proportion of capital provided to support Lloyd's syndicate (percent) | 5.00% | 29.00% | |
Syndicate 6131 | |||
Debt Securities, Available-for-sale [Line Items] | |||
Return of deposit assets | $ 26.6 | ||
Proportion of capital provided to support Lloyd's syndicate (percent) | 50.00% | 100.00% | |
Fixed maturities | |||
Debt Securities, Available-for-sale [Line Items] | |||
FAL deposit assets | $ 36.6 | ||
Cash and Cash Equivalents | |||
Debt Securities, Available-for-sale [Line Items] | |||
FAL deposit assets | $ 1.2 |
Investments - Investments Held
Investments - Investments Held in a Loss Position (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Fair value | ||
Fair value, total | $ 2,088,498 | $ 212,934 |
Fair value, less than 12 months | 1,947,941 | 191,081 |
Fair value, 12 months or longer | 140,557 | 21,853 |
Unrealized Loss | ||
Unrealized loss, total | 30,815 | 3,428 |
Unrealized loss, less than 12 months | 25,389 | 3,099 |
Unrealized loss, 12 months or longer | 5,426 | 329 |
U.S. Treasury obligations | ||
Fair value | ||
Fair value, total | 190,054 | 14,390 |
Fair value, less than 12 months | 181,689 | 14,390 |
Fair value, 12 months or longer | 8,365 | 0 |
Unrealized Loss | ||
Unrealized loss, total | 2,424 | 23 |
Unrealized loss, less than 12 months | 2,206 | 23 |
Unrealized loss, 12 months or longer | 218 | 0 |
U.S. Government-sponsored enterprise obligations | ||
Fair value | ||
Fair value, total | 16,287 | |
Fair value, less than 12 months | 16,287 | |
Fair value, 12 months or longer | 0 | |
Unrealized Loss | ||
Unrealized loss, total | 262 | |
Unrealized loss, less than 12 months | 262 | |
Unrealized loss, 12 months or longer | 0 | |
State and municipal bonds | ||
Fair value | ||
Fair value, total | 175,442 | 6,416 |
Fair value, less than 12 months | 171,930 | 6,416 |
Fair value, 12 months or longer | 3,512 | 0 |
Unrealized Loss | ||
Unrealized loss, total | 2,174 | 39 |
Unrealized loss, less than 12 months | 2,039 | 39 |
Unrealized loss, 12 months or longer | 135 | 0 |
Corporate debt | ||
Fair value | ||
Fair value, total | 945,196 | 94,695 |
Fair value, less than 12 months | 866,731 | 79,436 |
Fair value, 12 months or longer | 78,465 | 15,259 |
Unrealized Loss | ||
Unrealized loss, total | 14,949 | 1,302 |
Unrealized loss, less than 12 months | 11,828 | 1,020 |
Unrealized loss, 12 months or longer | 3,121 | 282 |
Residential mortgage-backed securities | ||
Fair value | ||
Fair value, total | 326,248 | 34,928 |
Fair value, less than 12 months | 290,019 | 34,509 |
Fair value, 12 months or longer | 36,229 | 419 |
Unrealized Loss | ||
Unrealized loss, total | 5,751 | 382 |
Unrealized loss, less than 12 months | 4,320 | 381 |
Unrealized loss, 12 months or longer | 1,431 | 1 |
Agency commercial mortgage-backed securities | ||
Fair value | ||
Fair value, total | 4,529 | |
Fair value, less than 12 months | 4,355 | |
Fair value, 12 months or longer | 174 | |
Unrealized Loss | ||
Unrealized loss, total | 62 | |
Unrealized loss, less than 12 months | 54 | |
Unrealized loss, 12 months or longer | 8 | |
Other commercial mortgage-backed securities | ||
Fair value | ||
Fair value, total | 151,827 | 18,766 |
Fair value, less than 12 months | 145,467 | 18,480 |
Fair value, 12 months or longer | 6,360 | 286 |
Unrealized Loss | ||
Unrealized loss, total | 2,273 | 940 |
Unrealized loss, less than 12 months | 1,884 | 935 |
Unrealized loss, 12 months or longer | 389 | 5 |
Other asset-backed securities | ||
Fair value | ||
Fair value, total | 278,915 | 43,739 |
Fair value, less than 12 months | 271,463 | 37,850 |
Fair value, 12 months or longer | 7,452 | 5,889 |
Unrealized Loss | ||
Unrealized loss, total | 2,920 | 742 |
Unrealized loss, less than 12 months | 2,796 | 701 |
Unrealized loss, 12 months or longer | $ 124 | $ 41 |
Investments - Investments Hel_2
Investments - Investments Held in a Loss Position Narrative (Details) $ in Millions | Dec. 31, 2021USD ($)securityissuer | Dec. 31, 2020USD ($)securityissuer |
Debt Securities, Available-for-sale [Line Items] | ||
Business owned life insurance cost | $ 43 | |
NORCAL Group | ||
Debt Securities, Available-for-sale [Line Items] | ||
Business owned life insurance cost | $ 10 | |
Non Government-Backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities in unrealized loss position (in securities) | security | 1,766 | 292 |
Debt securities in unrealized loss position as percentage of total debt securities held (percent) | 45.80% | 11.10% |
Number of issuers in unrealized loss position (in issuers) | issuer | 998 | 229 |
Single greatest unrealized loss position | $ 0.4 | $ 0.4 |
Second greatest unrealized loss position | $ 0.2 |
Investments - Credit Losses Rel
Investments - Credit Losses Related to Debt Securities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit loss beginning balance | $ 552,000 | $ 0 |
No allowance for credit losses has been previously recognized | 1,508,000 | |
Securities sold during the period | (552,000) | (956,000) |
Allowance for credit loss ending balance | 0 | 552,000 |
Corporate debt | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit loss beginning balance | 552,000 | 0 |
No allowance for credit losses has been previously recognized | 1,508,000 | |
Securities sold during the period | (552,000) | (956,000) |
Allowance for credit loss ending balance | $ 0 | $ 552,000 |
Investments - Sales and Purchas
Investments - Sales and Purchases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |||
Proceeds from sales (exclusive of maturities and paydowns) | $ 504,000 | $ 354,400 | $ 177,100 |
Purchases | $ 1,438,169 | $ 917,037 | $ 695,552 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Securities, Available-for-sale [Line Items] | |||
Investment fees and expenses | $ (11,121) | $ (6,385) | $ (6,484) |
Net investment income | 70,522 | 71,998 | 93,269 |
Fixed maturities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment income | 74,437 | 69,308 | 72,593 |
Equities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment income | 2,539 | 4,369 | 17,650 |
Short-term investments, including Other | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment income | 1,969 | 2,683 | 7,493 |
BOLI | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment income | $ 2,698 | $ 2,023 | $ 2,017 |
Investments - Investments in Un
Investments - Investments in Unconsolidated Subsidiaries (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of Equity Method Investments [Line Items] | ||
Investment in unconsolidated subsidiaries | $ 335,576 | $ 310,529 |
Qualified affordable housing project tax credit partnerships | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment in unconsolidated subsidiaries | 12,424 | 27,719 |
All other investments, primarily investment fund LPs/LLCs | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment in unconsolidated subsidiaries | $ 323,152 | $ 282,810 |
Investments - Investments in _2
Investments - Investments in Unconsolidated Subsidiaries Narrative (Details) $ in Thousands | Dec. 31, 2021USD ($)businesspartnership | Dec. 31, 2020USD ($) |
Debt Securities, Available-for-sale [Line Items] | ||
Investment in unconsolidated subsidiaries | $ 335,576 | $ 310,529 |
Number of LPs / LLCs with investment ownership percent over 25% (in businesses) | business | 4 | |
Tax Credit Partnerships Almost 100% Ownership | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of tax credit partnerships almost 100% ownership percentage (in investment interest) | partnership | 2 | |
Investment in unconsolidated subsidiaries | $ 3,200 | 9,400 |
Tax Credit Partnerships Less Than 20% Ownership | ||
Debt Securities, Available-for-sale [Line Items] | ||
Investment in unconsolidated subsidiaries | $ 9,200 | 18,300 |
Other Limited Partnerships and Limited Liability Company, Greater Than 25 Percent Ownership | ||
Debt Securities, Available-for-sale [Line Items] | ||
Percentage ownership | 25.00% | |
Investment in unconsolidated subsidiaries | $ 49,000 | 46,200 |
Other Limited Partnerships and Limited Liability Company Less than 25% Ownership | ||
Debt Securities, Available-for-sale [Line Items] | ||
Percentage ownership | 25.00% | |
Investment in unconsolidated subsidiaries | $ 274,200 | $ 236,600 |
Maximum | Tax Credit Partnerships Almost 100% Ownership | ||
Debt Securities, Available-for-sale [Line Items] | ||
Percentage ownership | 100.00% | |
Maximum | Tax Credit Partnerships Less Than 20% Ownership | ||
Debt Securities, Available-for-sale [Line Items] | ||
Percentage ownership | 20.00% |
Investments - Equity in Earning
Investments - Equity in Earnings (Loss) of Unconsolidated Subsidiaries (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |||
Losses recorded | $ 15,239 | $ 18,684 | $ 19,231 |
Tax credits recognized | 13,160 | 17,465 | 21,933 |
Losses (gains) recorded | (182) | 1,092 | 1,672 |
Tax credits recognized | $ 0 | $ 412 | $ 0 |
Investments - Equity in Earni_2
Investments - Equity in Earnings (Loss) of Unconsolidated Subsidiaries Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Tax Credit Carryforward [Line Items] | |||
Tax credits | $ 48.7 | ||
Tax Year 2039 | |||
Tax Credit Carryforward [Line Items] | |||
Tax credits | 46.7 | ||
Tax Year 2019 | |||
Tax Credit Carryforward [Line Items] | |||
Tax credits | 2 | ||
Tax Credit from Tax Credit Partnership Investments | |||
Tax Credit Carryforward [Line Items] | |||
Tax credits | $ 13.2 | $ 17.9 | $ 18.2 |
Investments - Net Realized Inve
Investments - Net Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |||
Impairment Losses | $ 0 | $ (1,745) | $ (978) |
Portion of impairment losses recognized in other comprehensive income (loss) before taxes | 0 | 237 | 227 |
Net impairment losses recognized in earnings | 0 | (1,508) | (751) |
Gross realized gains, available-for-sale fixed maturities | 14,311 | 13,855 | 3,786 |
Gross realized (losses), available-for-sale fixed maturities | (1,218) | (2,501) | (538) |
Net realized gains (losses), trading fixed maturities | (20) | 288 | 74 |
Net realized gains (losses), equity investments | 7,337 | 13,192 | 20,577 |
Net realized gains (losses), other investments | 8,660 | 3,883 | 1,626 |
Change in unrealized holding gains (losses), trading fixed maturities | (529) | 501 | 705 |
Change in unrealized holding gains (losses), equity investments | (2,941) | (16,287) | 30,674 |
Change in unrealized holding gains (losses), convertible securities, carried at fair value | (1,701) | 3,850 | 3,653 |
Other | 411 | 405 | 68 |
Total net investment gains (losses) | $ 24,310 | $ 15,678 | $ 59,874 |
Investments - Net Realized In_2
Investments - Net Realized Investment Gains (Losses) Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |||
OTTI loss, debt securities, portion recognized in earnings | $ 0 | $ 1,508 | $ 751 |
Net investment gains (losses) | $ 24,310 | $ 15,678 | $ 59,874 |
Investments - Roll Forward of C
Investments - Roll Forward of Cumulative Credit Losses Recorded in Earnings (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |||
Balance beginning of period | $ 552 | $ 470 | $ 93 |
No impairment has been previously recognized | 0 | 1,064 | 377 |
Impairment has been previously recognized | 0 | 258 | 0 |
Securities sold during the period (realized) | (552) | (1,240) | 0 |
Balance December 31 | $ 0 | $ 552 | $ 470 |
Retroactive Insurance Contrac_2
Retroactive Insurance Contracts (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Net premiums written | $ 882,721 | $ 747,701 | $ 842,725 | |
Net premiums earned | 971,668 | 792,715 | 847,532 | |
Loss adjustment expenses | $ 797,732 | $ 711,846 | $ 765,698 | |
Retroactive insurance contract | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Net premiums written | $ 4,500 | |||
Net premiums earned | 3,000 | |||
Prospective coverage for retroactive insurance contract | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Net premiums written | 2,200 | |||
Net premiums earned | 700 | |||
Retroactive coverage for retroactive insurance contract | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Net premiums written | 2,300 | |||
Net premiums earned | $ 2,300 |
Reinsurance - Premiums Written
Reinsurance - Premiums Written and Earned (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of the effect of reinsurance on premiums written and earned | |||
Direct premiums written | $ 912,387 | $ 814,298 | $ 919,799 |
Assumed premiums written | 47,637 | 40,124 | 47,691 |
Ceded premiums written | (77,303) | (106,721) | (124,765) |
Net premiums written | 882,721 | 747,701 | 842,725 |
Direct premiums earned | 1,020,107 | 862,742 | 926,035 |
Assumed premiums earned | 45,559 | 43,555 | 45,668 |
Ceded premiums earned | (93,998) | (113,582) | (124,171) |
Net premiums earned | 971,668 | 792,715 | 847,532 |
Losses and loss adjustment expenses | 798,893 | 741,719 | 871,780 |
Reinsurance recoveries | (46,644) | (80,272) | (117,865) |
Net losses and loss adjustment expenses | $ 752,249 | $ 661,447 | $ 753,915 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) | 12 Months Ended | |||
Dec. 31, 2021USD ($)reinsurer | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2019USD ($) | |
Ceded Credit Risk [Line Items] | ||||
Premium ceded increase (reduction) amount | $ (3,900,000) | $ 700,000 | $ 2,800,000 | |
Amount due from reinsurers total | $ 468,300,000 | |||
Number of major reinsurers | reinsurer | 0 | |||
Amount of reinsurance recoverables collateralized by letters of credit | $ 97,900,000 | |||
Allowance for created losses related to reinsurance receivables | 0 | 0 | 0 | |
Loss on uncollectible accounts in the period | 0 | 0 | 0 | |
Cash receipt for reinsurance commutations | 14,599,000 | 14,370,000 | ||
Specialty P&C | ||||
Ceded Credit Risk [Line Items] | ||||
Amount of reinsurance recoverables collateralized by letters of credit | 7,000,000 | $ 3,800,000 | ||
Cash receipt for reinsurance commutations | $ 6,800,000 | $ 3,100,000 | ||
Minimum | ||||
Ceded Credit Risk [Line Items] | ||||
Major reinsurer threshold | $ 51,700,000 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets | ||
Unpaid loss discount | $ 51,562 | $ 36,452 |
Unearned premium adjustment | 22,846 | 14,835 |
Compensation related | 18,575 | 10,935 |
Basis differentials-investments | 0 | 2,595 |
Intangibles | 13,915 | 522 |
Operating lease liabilities | 4,290 | 4,224 |
Tax credit carryforward | 48,701 | 36,155 |
Net operating loss carryforward | 18,596 | 9,244 |
Other | 909 | 1,700 |
Total gross deferred tax assets | 179,394 | 116,662 |
Valuation allowance | (8,945) | (8,581) |
Total deferred tax assets, net of valuation allowance | 170,449 | 108,081 |
Deferred tax liabilities | ||
Deferred policy acquisition costs | (12,284) | (8,929) |
Unpaid loss discount-transition | (7,276) | (6,297) |
Unrealized gains on investments, net | (4,100) | (19,351) |
Fixed assets | (4,013) | (4,441) |
Operating lease ROU assets | (4,030) | (4,015) |
Basis differentials-investments | (11,277) | 0 |
Basis differentials-foreign operations | (828) | (790) |
Intangibles | (9,028) | (7,153) |
Total deferred tax liabilities | (52,836) | (50,976) |
Net deferred tax assets (liabilities) | $ 117,613 | $ 57,105 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | May 05, 2021 | Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Contingency [Line Items] | |||||
Tax credit carryforwards | $ 48,700,000 | ||||
Increase (decrease) in valuation allowance | 400,000 | $ 3,100,000 | |||
Deferred tax asset, net | 117,613,000 | 57,105,000 | |||
Income tax receivable | 7,900,000 | 18,900,000 | |||
Uncertain tax positions that would impact effective tax rate | 300,000 | 800,000 | |||
Gain on bargain purchase | 74,408,000 | 0 | $ 0 | ||
Goodwill impairment | $ 161,100,000 | 0 | 161,115,000 | $ 0 | |
Non-deductible goodwill impairment loss | 149,600,000 | ||||
Deductible goodwill impairment losses | $ 11,500,000 | ||||
Interest Expense | |||||
Income Tax Contingency [Line Items] | |||||
Accrued liability for interest | 400,000 | 500,000 | |||
NORCAL Group | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss carryforwards | 43,000,000 | ||||
Net deferred tax assets reflecting the remeasurement | $ 46,759,000 | ||||
Gain on bargain purchase | $ 74,408,000 | ||||
Inova Re | |||||
Income Tax Contingency [Line Items] | |||||
Deferred tax asset, net | 600,000 | 500,000 | |||
Tax Year 2039 | |||||
Income Tax Contingency [Line Items] | |||||
Tax credit carryforwards | 46,700,000 | ||||
Tax Year 2020 | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss carryforwards | 33,300,000 | ||||
Income tax refund, CARES Act | 11,700,000 | ||||
Tax Year 2019 | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss carryforwards | 25,600,000 | ||||
Tax credit carryforwards | 2,000,000 | ||||
Income tax refund, CARES Act | 9,000,000 | ||||
Federal | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss carryforwards | 43,600,000 | ||||
State | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss carryforwards | 74,200,000 | ||||
Valuation allowance related to NOL carryforwards | 3,200,000 | 1,900,000 | |||
Foreign | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss carryforwards | 26,600,000 | ||||
Valuation allowance related to NOL carryforwards | $ 5,000,000 | $ 6,200,000 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of unrecognized tax benefits | |||
Balance at January 1 | $ 5,199 | $ 5,070 | $ 3,601 |
Increases for tax positions taken during the current year | 0 | 0 | 1,749 |
Decreases for tax positions taken during the current year | (1,630) | (4,853) | 0 |
Increases for tax positions taken during prior years | 0 | 5,342 | 0 |
Decreases relating to a lapse of the applicable statute of limitations | (549) | (360) | (280) |
Balance at December 31 | $ 3,020 | $ 5,199 | $ 5,070 |
Income Taxes - Components of Ta
Income Taxes - Components of Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current expense (benefit) | |||
Federal and foreign | $ 885 | $ (19,885) | $ (2,147) |
State | 279 | (296) | 982 |
Total current expense (benefit) | 1,164 | (20,181) | (1,165) |
Deferred expense (benefit) | |||
Federal and foreign | 1,290 | (20,476) | (27,404) |
State | 29 | (672) | (1,239) |
Total deferred expense (benefit) | 1,319 | (21,148) | (28,643) |
Total income tax expense (benefit) | $ 2,483 | $ (41,329) | $ (29,808) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of expected income tax expense to actual income tax expense | |||
Computed “expected” tax expense (benefit) | $ 30,787 | $ (45,582) | $ (6,049) |
Tax-exempt income | (1,298) | (976) | (1,528) |
Tax credits | (13,160) | (17,876) | (21,933) |
Non-U.S. operating results | (1,322) | (1,307) | (1,447) |
Tax deficiency (excess tax benefit) on share-based compensation | 286 | 457 | 99 |
Tax rate differential on loss carryback | 0 | (7,758) | (3,400) |
Goodwill impairment | 0 | 31,413 | 0 |
Non-taxable gain on bargain purchase | (15,626) | 0 | 0 |
Provision-to-return and other differences | 3,574 | 1,217 | 3,595 |
Change in uncertain tax positions | (1,909) | (1,674) | 1,956 |
State income taxes | 460 | (561) | (376) |
Benefit from amended returns | 0 | 0 | (550) |
Other | 691 | 1,318 | (175) |
Total income tax expense (benefit) | $ 2,483 | $ (41,329) | $ (29,808) |
Goodwill (Narrative) (Details)
Goodwill (Narrative) (Details) | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($) | Dec. 31, 2021USD ($)reporting_unitsegment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Goodwill [Line Items] | ||||
Number of reportable segments | segment | 5 | |||
Number of reporting units | reporting_unit | 2 | |||
Goodwill impairment | $ | $ 161,100,000 | $ 0 | $ 161,115,000 | $ 0 |
Number of reporting units with goodwill less than carrying amount | reporting_unit | 2 | |||
Specialty P&C | ||||
Goodwill [Line Items] | ||||
Goodwill impairment | $ | $ 161,100,000 | $ 0 | $ 161,115,000 |
Goodwill (Carrying Amount of Go
Goodwill (Carrying Amount of Goodwill) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | $ 49,610,000 | $ 210,725,000 | ||
Goodwill, impairment loss | $ (161,100,000) | 0 | (161,115,000) | $ 0 |
Goodwill, ending balance | 49,610,000 | 49,610,000 | 210,725,000 | |
Specialty P&C | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 0 | 161,115,000 | ||
Goodwill, impairment loss | (161,100,000) | 0 | (161,115,000) | |
Goodwill, ending balance | $ 161,100,000 | 0 | 0 | 161,115,000 |
Workers' Compensation Insurance | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 44,110,000 | 44,110,000 | ||
Goodwill, impairment loss | 0 | 0 | ||
Goodwill, ending balance | 44,110,000 | 44,110,000 | 44,110,000 | |
Segregated Portfolio Cell Reinsurance | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 5,500,000 | 5,500,000 | ||
Goodwill, impairment loss | 0 | 0 | ||
Goodwill, ending balance | $ 5,500,000 | $ 5,500,000 | $ 5,500,000 |
Deferred Policy Acquisition C_2
Deferred Policy Acquisition Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Insurance [Abstract] | |||
Amortization of deferred policy acquisition costs | $ 110,605 | $ 110,565 | $ 115,330 |
Premium deficiency reserve | $ 9,200 | $ 9,200 |
Reserve for Losses and Loss A_3
Reserve for Losses and Loss Adjustment Expenses - Narrative and Activity in the Reserve (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Loss Contingencies [Line Items] | ||||
Minimum period for claims resolution (years) | 5 years | |||
Net reserves acquired from acquisitions | $ 1,089,103 | $ 0 | $ 0 | |
Summary of reserve for losses and loss adjustment expenses | ||||
Balance, beginning of year | 2,417,179 | 2,346,526 | 2,119,847 | |
Less reinsurance recoverables on unpaid losses and loss adjustment expenses | 385,087 | 390,708 | 343,820 | |
Net balance, beginning of year | 2,032,092 | 1,955,818 | 1,776,027 | |
Net reserves acquired from acquisitions | 1,089,103 | 0 | 0 | |
Net losses: | ||||
Current year | 797,732 | 711,846 | 765,698 | |
Favorable development of reserves established in prior years, net | (45,483) | (50,399) | (11,783) | |
Total | 752,249 | 661,447 | 753,915 | |
Paid related to: | ||||
Current year | (109,925) | (83,204) | (115,133) | |
Prior years | (635,320) | (501,969) | (458,991) | |
Total paid | (745,245) | (585,173) | (574,124) | |
Net balance, end of year | 3,128,199 | 2,032,092 | 1,955,818 | |
Plus reinsurance recoverables on unpaid losses and loss adjustment expenses | 451,741 | 385,087 | 390,708 | |
Balance, end of year | 3,579,940 | 2,417,179 | 2,346,526 | |
Premium deficiency reserve | 9,200 | 9,200 | ||
NORCAL Group | ||||
Net losses: | ||||
Current year | 6,700 | |||
Paid related to: | ||||
Current year | (22,300) | |||
Prior years | (136,000) | |||
Total paid | (158,300) | |||
Specialty P&C | ||||
Net losses: | ||||
Current year | 608,106 | 497,554 | 526,744 | |
Favorable development of reserves established in prior years, net | $ 1,000 | (32,942) | (27,480) | 5,741 |
Paid related to: | ||||
Premium deficiency reserve | 9,200 | 9,200 | ||
Specialty P&C | NORCAL Group | ||||
Net losses: | ||||
Favorable development of reserves established in prior years, net | 7,900 | |||
Specialty P&C | Retroactive insurance contract | ||||
Net losses: | ||||
Current year | $ 2,900 | $ 60,000 | $ 2,100 |
Reserve for Losses and Loss A_4
Reserve for Losses and Loss Adjustment Expenses - Claim Development (Details) $ in Thousands | 12 Months Ended | |||||||||
Dec. 31, 2021USD ($)claim | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | |
Claims Development [Line Items] | ||||||||||
Liabilities for losses and loss adjustment expenses, net of reinsurance | $ 2,806,990 | |||||||||
Healthcare Professional Liability claims-made | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 5,388,414 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 3,439,053 | |||||||||
All outstanding liabilities before 2012, net of reinsurance | 22,023 | |||||||||
Liabilities for losses and loss adjustment expenses, net of reinsurance | 1,971,384 | |||||||||
Healthcare Professional Liability claims-made | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 448,782 | $ 451,152 | $ 453,625 | $ 458,826 | $ 468,956 | $ 474,631 | $ 490,981 | $ 510,085 | $ 528,799 | $ 555,440 |
Incurred but Not Reported Liabilities (IBNR) | $ 402 | |||||||||
Cumulative Number of Reported Claims | claim | 7,103 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 441,417 | 440,872 | 434,141 | 424,987 | 401,604 | 374,537 | 331,521 | 257,697 | 136,883 | 25,864 |
Healthcare Professional Liability claims-made | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 457,038 | 455,346 | 451,182 | 466,798 | 480,036 | 489,378 | 501,580 | 513,937 | 527,520 | |
Incurred but Not Reported Liabilities (IBNR) | $ (1,284) | |||||||||
Cumulative Number of Reported Claims | claim | 7,697 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 435,158 | 430,916 | 415,012 | 398,549 | 376,930 | 328,982 | 255,605 | 142,759 | 30,214 | |
Healthcare Professional Liability claims-made | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 466,554 | 470,189 | 468,153 | 474,317 | 488,185 | 491,403 | 494,024 | 509,774 | ||
Incurred but Not Reported Liabilities (IBNR) | $ (373) | |||||||||
Cumulative Number of Reported Claims | claim | 7,523 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 439,575 | 434,540 | 416,150 | 389,983 | 325,782 | 246,510 | 125,078 | 30,483 | ||
Healthcare Professional Liability claims-made | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 503,600 | 500,550 | 500,336 | 491,180 | 492,824 | 486,760 | 503,412 | |||
Incurred but Not Reported Liabilities (IBNR) | $ (4,798) | |||||||||
Cumulative Number of Reported Claims | claim | 7,402 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 463,224 | 446,069 | 410,506 | 351,703 | 256,791 | 125,234 | 26,664 | |||
Healthcare Professional Liability claims-made | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 560,840 | 554,395 | 555,416 | 507,586 | 488,349 | 484,153 | ||||
Incurred but Not Reported Liabilities (IBNR) | $ (11,854) | |||||||||
Cumulative Number of Reported Claims | claim | 7,993 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 472,441 | 440,163 | 378,828 | 276,548 | 137,338 | 27,442 | ||||
Healthcare Professional Liability claims-made | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 573,570 | 569,737 | 577,401 | 506,207 | 508,072 | |||||
Incurred but Not Reported Liabilities (IBNR) | $ (16,923) | |||||||||
Cumulative Number of Reported Claims | claim | 8,054 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 419,180 | 351,548 | 288,695 | 147,515 | 32,342 | |||||
Healthcare Professional Liability claims-made | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 636,023 | 630,169 | 643,864 | 544,617 | ||||||
Incurred but Not Reported Liabilities (IBNR) | $ (53,325) | |||||||||
Cumulative Number of Reported Claims | claim | 8,575 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 367,522 | 279,204 | 159,657 | 34,238 | ||||||
Healthcare Professional Liability claims-made | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 642,370 | 664,934 | 670,958 | |||||||
Incurred but Not Reported Liabilities (IBNR) | $ 4,919 | |||||||||
Cumulative Number of Reported Claims | claim | 8,443 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 259,889 | 144,225 | 37,755 | |||||||
Healthcare Professional Liability claims-made | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 574,274 | 593,994 | ||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 127,489 | |||||||||
Cumulative Number of Reported Claims | claim | 6,563 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 117,153 | 32,270 | ||||||||
Healthcare Professional Liability claims-made | 2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 525,363 | |||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 345,154 | |||||||||
Cumulative Number of Reported Claims | claim | 4,799 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 23,494 | |||||||||
Healthcare Professional Liability occurrence | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 694,182 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 262,533 | |||||||||
All outstanding liabilities before 2012, net of reinsurance | 5,202 | |||||||||
Liabilities for losses and loss adjustment expenses, net of reinsurance | 436,851 | |||||||||
Healthcare Professional Liability occurrence | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 37,553 | 37,300 | 36,946 | 40,676 | 44,575 | 45,602 | 51,382 | 58,234 | 61,719 | 62,214 |
Incurred but Not Reported Liabilities (IBNR) | $ 660 | |||||||||
Cumulative Number of Reported Claims | claim | 597 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 34,398 | 34,373 | 33,144 | 32,384 | 30,469 | 26,830 | 17,797 | 11,445 | 3,635 | 480 |
Healthcare Professional Liability occurrence | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 48,116 | 47,550 | 49,270 | 50,632 | 56,640 | 53,905 | 49,970 | 54,143 | 51,996 | |
Incurred but Not Reported Liabilities (IBNR) | $ 1,640 | |||||||||
Cumulative Number of Reported Claims | claim | 636 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 43,254 | 42,455 | 40,775 | 37,778 | 30,474 | 25,131 | 12,130 | 4,620 | 539 | |
Healthcare Professional Liability occurrence | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 35,139 | 33,353 | 34,428 | 37,653 | 40,699 | 44,075 | 43,606 | 45,975 | ||
Incurred but Not Reported Liabilities (IBNR) | $ 1,290 | |||||||||
Cumulative Number of Reported Claims | claim | 540 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 30,407 | 27,753 | 25,671 | 22,649 | 17,349 | 11,192 | 4,674 | 512 | ||
Healthcare Professional Liability occurrence | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 56,468 | 51,276 | 52,455 | 57,606 | 56,621 | 54,890 | 52,531 | |||
Incurred but Not Reported Liabilities (IBNR) | $ (2,578) | |||||||||
Cumulative Number of Reported Claims | claim | 614 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 41,800 | 36,413 | 28,482 | 20,627 | 9,953 | 2,617 | (180) | |||
Healthcare Professional Liability occurrence | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 64,122 | 66,886 | 56,345 | 53,358 | 49,795 | 56,089 | ||||
Incurred but Not Reported Liabilities (IBNR) | $ (240) | |||||||||
Cumulative Number of Reported Claims | claim | 684 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 48,691 | 40,766 | 28,362 | 15,433 | 2,750 | 44 | ||||
Healthcare Professional Liability occurrence | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 46,865 | 44,449 | 40,983 | 42,338 | 45,463 | |||||
Incurred but Not Reported Liabilities (IBNR) | $ 4,381 | |||||||||
Cumulative Number of Reported Claims | claim | 731 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 19,696 | 11,051 | 3,592 | (3,385) | (6,631) | |||||
Healthcare Professional Liability occurrence | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 73,599 | 63,576 | 61,880 | 59,351 | ||||||
Incurred but Not Reported Liabilities (IBNR) | $ 7,977 | |||||||||
Cumulative Number of Reported Claims | claim | 692 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 26,932 | 15,229 | 6,193 | 444 | ||||||
Healthcare Professional Liability occurrence | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 70,926 | 58,555 | 63,548 | |||||||
Incurred but Not Reported Liabilities (IBNR) | $ 21,587 | |||||||||
Cumulative Number of Reported Claims | claim | 752 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 10,399 | 4,575 | 628 | |||||||
Healthcare Professional Liability occurrence | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 178,804 | 165,955 | ||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 140,975 | |||||||||
Cumulative Number of Reported Claims | claim | 992 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 6,194 | 397 | ||||||||
Healthcare Professional Liability occurrence | 2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 82,590 | |||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 76,228 | |||||||||
Cumulative Number of Reported Claims | claim | 166 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 762 | |||||||||
Medical Technology Liability claims-made | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 63,897 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 28,272 | |||||||||
All outstanding liabilities before 2012, net of reinsurance | 99 | |||||||||
Liabilities for losses and loss adjustment expenses, net of reinsurance | 35,724 | |||||||||
Medical Technology Liability claims-made | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 3,864 | 3,868 | 3,889 | 5,051 | 4,797 | 5,824 | 7,441 | 8,906 | 9,989 | 11,162 |
Incurred but Not Reported Liabilities (IBNR) | $ 48 | |||||||||
Cumulative Number of Reported Claims | claim | 223 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 3,816 | 3,817 | 3,817 | 3,800 | 3,676 | 3,366 | 3,247 | 2,805 | 1,520 | 568 |
Medical Technology Liability claims-made | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 3,199 | 3,305 | 3,504 | 3,566 | 4,697 | 7,226 | 9,536 | 9,955 | 9,807 | |
Incurred but Not Reported Liabilities (IBNR) | $ 96 | |||||||||
Cumulative Number of Reported Claims | claim | 218 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 3,101 | 3,102 | 3,102 | 3,102 | 3,092 | 2,599 | 1,967 | 1,029 | 102 | |
Medical Technology Liability claims-made | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 5,636 | 5,888 | 6,194 | 7,679 | 8,984 | 9,012 | 10,306 | 9,989 | ||
Incurred but Not Reported Liabilities (IBNR) | $ 406 | |||||||||
Cumulative Number of Reported Claims | claim | 272 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 4,076 | 4,074 | 3,776 | 3,724 | 3,046 | 2,564 | 1,527 | 388 | ||
Medical Technology Liability claims-made | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 4,192 | 4,664 | 5,081 | 5,929 | 7,193 | 8,757 | 9,376 | |||
Incurred but Not Reported Liabilities (IBNR) | $ 771 | |||||||||
Cumulative Number of Reported Claims | claim | 156 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 2,987 | 2,911 | 2,567 | 2,097 | 1,625 | 440 | 25 | |||
Medical Technology Liability claims-made | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 4,491 | 6,241 | 6,422 | 7,413 | 8,467 | 9,200 | ||||
Incurred but Not Reported Liabilities (IBNR) | $ 35 | |||||||||
Cumulative Number of Reported Claims | claim | 182 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 4,342 | 4,295 | 2,959 | 2,365 | 1,690 | 53 | ||||
Medical Technology Liability claims-made | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 3,381 | 4,919 | 8,306 | 10,143 | 11,049 | |||||
Incurred but Not Reported Liabilities (IBNR) | $ 505 | |||||||||
Cumulative Number of Reported Claims | claim | 100 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 2,867 | 2,360 | 2,017 | 1,681 | 56 | |||||
Medical Technology Liability claims-made | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 4,961 | 7,506 | 8,108 | 10,141 | ||||||
Incurred but Not Reported Liabilities (IBNR) | $ 1,847 | |||||||||
Cumulative Number of Reported Claims | claim | 218 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 2,651 | 1,850 | 191 | 6 | ||||||
Medical Technology Liability claims-made | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 9,588 | 8,324 | 10,072 | |||||||
Incurred but Not Reported Liabilities (IBNR) | $ 4,660 | |||||||||
Cumulative Number of Reported Claims | claim | 359 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 3,902 | 2,552 | 584 | |||||||
Medical Technology Liability claims-made | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 10,671 | 11,082 | ||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 9,279 | |||||||||
Cumulative Number of Reported Claims | claim | 177 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 526 | 40 | ||||||||
Medical Technology Liability claims-made | 2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 13,914 | |||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 13,787 | |||||||||
Cumulative Number of Reported Claims | claim | 141 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 4 | |||||||||
Workers' Compensation Insurance | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 967,354 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 830,979 | |||||||||
All outstanding liabilities before 2012, net of reinsurance | 12,631 | |||||||||
Liabilities for losses and loss adjustment expenses, net of reinsurance | 149,006 | |||||||||
Workers' Compensation Insurance | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 74,776 | 75,076 | 75,076 | 75,076 | 75,576 | 75,836 | 76,357 | 75,848 | 76,551 | 80,285 |
Incurred but Not Reported Liabilities (IBNR) | $ 236 | |||||||||
Cumulative Number of Reported Claims | claim | 16,205 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 73,976 | 73,851 | 73,768 | 73,676 | 73,662 | 72,766 | 70,558 | 65,908 | 56,122 | 27,448 |
Workers' Compensation Insurance | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 89,010 | 89,560 | 89,760 | 87,260 | 87,260 | 88,010 | 86,928 | 85,935 | 86,973 | |
Incurred but Not Reported Liabilities (IBNR) | $ 409 | |||||||||
Cumulative Number of Reported Claims | claim | 16,429 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 88,033 | 87,772 | 87,466 | 86,783 | 85,689 | 82,369 | 76,813 | 63,825 | 30,554 | |
Workers' Compensation Insurance | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 90,579 | 91,329 | 93,029 | 93,029 | 93,029 | 93,029 | 93,529 | 93,019 | ||
Incurred but Not Reported Liabilities (IBNR) | $ 782 | |||||||||
Cumulative Number of Reported Claims | claim | 16,210 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 88,977 | 88,487 | 87,998 | 87,314 | 85,022 | 77,631 | 65,922 | 30,368 | ||
Workers' Compensation Insurance | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 92,072 | 93,054 | 96,354 | 97,654 | 98,454 | 100,454 | 100,101 | |||
Incurred but Not Reported Liabilities (IBNR) | $ 1,140 | |||||||||
Cumulative Number of Reported Claims | claim | 16,550 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 88,476 | 87,884 | 86,528 | 83,483 | 78,947 | 65,070 | 32,078 | |||
Workers' Compensation Insurance | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 81,599 | 82,799 | 84,799 | 92,148 | 97,348 | 101,348 | ||||
Incurred but Not Reported Liabilities (IBNR) | $ 1,182 | |||||||||
Cumulative Number of Reported Claims | claim | 15,978 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 77,546 | 76,954 | 74,886 | 69,237 | 58,192 | 28,377 | ||||
Workers' Compensation Insurance | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 95,674 | 97,874 | 99,874 | 99,874 | 99,874 | |||||
Incurred but Not Reported Liabilities (IBNR) | $ 2,897 | |||||||||
Cumulative Number of Reported Claims | claim | 16,084 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 88,504 | 87,129 | 82,289 | 70,333 | 31,586 | |||||
Workers' Compensation Insurance | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 120,095 | 120,095 | 118,095 | 118,095 | ||||||
Incurred but Not Reported Liabilities (IBNR) | $ 327 | |||||||||
Cumulative Number of Reported Claims | claim | 18,013 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 110,928 | 104,216 | 86,063 | 41,619 | ||||||
Workers' Compensation Insurance | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 115,352 | 119,752 | 119,752 | |||||||
Incurred but Not Reported Liabilities (IBNR) | $ 4,251 | |||||||||
Cumulative Number of Reported Claims | claim | 17,528 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 100,373 | 88,008 | 40,994 | |||||||
Workers' Compensation Insurance | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 102,475 | 106,145 | ||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 5,438 | |||||||||
Cumulative Number of Reported Claims | claim | 14,512 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 74,532 | 33,431 | ||||||||
Workers' Compensation Insurance | 2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 105,722 | |||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 30,379 | |||||||||
Cumulative Number of Reported Claims | claim | 14,982 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 39,634 | |||||||||
Segregated Portfolio Cell Reinsurance | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 314,565 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 264,292 | |||||||||
All outstanding liabilities before 2012, net of reinsurance | 377 | |||||||||
Liabilities for losses and loss adjustment expenses, net of reinsurance | 50,650 | |||||||||
Segregated Portfolio Cell Reinsurance | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 19,519 | 19,602 | 19,727 | 19,799 | 19,864 | 19,972 | 20,028 | 21,048 | 21,513 | 22,940 |
Incurred but Not Reported Liabilities (IBNR) | $ 68 | |||||||||
Cumulative Number of Reported Claims | claim | 3,454 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 19,391 | 19,340 | 19,311 | 19,328 | 19,402 | 19,208 | 18,474 | 17,728 | 14,740 | $ 7,808 |
Segregated Portfolio Cell Reinsurance | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 25,450 | 25,546 | 25,938 | 26,033 | 26,260 | 26,619 | 26,758 | 25,310 | 23,809 | |
Incurred but Not Reported Liabilities (IBNR) | $ 9 | |||||||||
Cumulative Number of Reported Claims | claim | 3,723 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 25,442 | 25,442 | 25,440 | 25,489 | 25,366 | 25,209 | 24,268 | 19,054 | $ 8,131 | |
Segregated Portfolio Cell Reinsurance | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 27,360 | 27,482 | 27,919 | 28,281 | 28,373 | 29,000 | 28,423 | 28,248 | ||
Incurred but Not Reported Liabilities (IBNR) | $ 78 | |||||||||
Cumulative Number of Reported Claims | claim | 4,433 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 27,119 | 27,110 | 27,083 | 26,959 | 26,810 | 26,173 | 21,880 | $ 9,933 | ||
Segregated Portfolio Cell Reinsurance | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 25,566 | 26,121 | 26,720 | 27,548 | 28,746 | 32,519 | 36,423 | |||
Incurred but Not Reported Liabilities (IBNR) | $ 144 | |||||||||
Cumulative Number of Reported Claims | claim | 4,949 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 25,144 | 25,125 | 25,033 | 24,781 | 23,977 | 21,706 | $ 11,257 | |||
Segregated Portfolio Cell Reinsurance | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 28,411 | 28,437 | 29,424 | 30,998 | 34,055 | 37,601 | ||||
Incurred but Not Reported Liabilities (IBNR) | $ 208 | |||||||||
Cumulative Number of Reported Claims | claim | 5,328 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 27,585 | 27,211 | 27,162 | 26,285 | 23,003 | $ 10,980 | ||||
Segregated Portfolio Cell Reinsurance | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 32,763 | 32,879 | 34,246 | 38,594 | 42,725 | |||||
Incurred but Not Reported Liabilities (IBNR) | $ 389 | |||||||||
Cumulative Number of Reported Claims | claim | 5,707 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 31,631 | 31,140 | 28,853 | 24,791 | $ 12,404 | |||||
Segregated Portfolio Cell Reinsurance | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 38,569 | 40,017 | 41,283 | 43,654 | ||||||
Incurred but Not Reported Liabilities (IBNR) | $ 1,402 | |||||||||
Cumulative Number of Reported Claims | claim | 6,341 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 35,575 | 33,236 | 27,501 | $ 12,517 | ||||||
Segregated Portfolio Cell Reinsurance | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 38,815 | 42,345 | 48,505 | |||||||
Incurred but Not Reported Liabilities (IBNR) | $ 2,670 | |||||||||
Cumulative Number of Reported Claims | claim | 6,153 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 33,314 | 29,604 | $ 15,100 | |||||||
Segregated Portfolio Cell Reinsurance | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 38,602 | 40,094 | ||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 5,642 | |||||||||
Cumulative Number of Reported Claims | claim | 5,789 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 26,626 | $ 11,238 | ||||||||
Segregated Portfolio Cell Reinsurance | 2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 39,510 | |||||||||
Incurred but Not Reported Liabilities (IBNR) | $ 15,591 | |||||||||
Cumulative Number of Reported Claims | claim | 5,062 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 12,465 | |||||||||
Minimum | Healthcare Professional Liability claims-made | ||||||||||
Claims Development [Line Items] | ||||||||||
Initial loss ratio | 87.00% | |||||||||
Maximum | Healthcare Professional Liability claims-made | ||||||||||
Claims Development [Line Items] | ||||||||||
Initial loss ratio | 106.00% |
Reserve for Losses and Loss A_5
Reserve for Losses and Loss Adjustment Expenses - Historical Claims Duration (Details) | Dec. 31, 2021 |
Healthcare Professional Liability claims-made | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Historical claims duration, year 1 (percent) | 5.60% |
Historical claims duration, year 2 (percent) | 20.00% |
Historical claims duration, year 3 (percent) | 23.70% |
Historical claims duration, year 4 (percent) | 15.90% |
Historical claims duration, year 5 (percent) | 11.40% |
Historical claims duration, year 6 (percent) | 5.80% |
Historical claims duration, year 7 (percent) | 4.00% |
Historical claims duration, year 8 (percent) | 2.20% |
Historical claims duration, year 9 (percent) | 1.20% |
Historical claims duration, year 10 (percent) | 0.10% |
Healthcare Professional Liability occurrence | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Historical claims duration, year 1 (percent) | (0.80%) |
Historical claims duration, year 2 (percent) | 6.80% |
Historical claims duration, year 3 (percent) | 15.40% |
Historical claims duration, year 4 (percent) | 18.90% |
Historical claims duration, year 5 (percent) | 17.00% |
Historical claims duration, year 6 (percent) | 12.00% |
Historical claims duration, year 7 (percent) | 6.70% |
Historical claims duration, year 8 (percent) | 4.40% |
Historical claims duration, year 9 (percent) | 2.50% |
Historical claims duration, year 10 (percent) | 0.10% |
Medical technology liability | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Historical claims duration, year 1 (percent) | 3.50% |
Historical claims duration, year 2 (percent) | 21.90% |
Historical claims duration, year 3 (percent) | 22.70% |
Historical claims duration, year 4 (percent) | 12.90% |
Historical claims duration, year 5 (percent) | 14.40% |
Historical claims duration, year 6 (percent) | 3.70% |
Historical claims duration, year 7 (percent) | 2.60% |
Historical claims duration, year 8 (percent) | 0.20% |
Historical claims duration, year 9 (percent) | 0.00% |
Historical claims duration, year 10 (percent) | 0.00% |
Workers' Compensation Insurance | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Historical claims duration, year 1 (percent) | 34.70% |
Historical claims duration, year 2 (percent) | 38.10% |
Historical claims duration, year 3 (percent) | 13.90% |
Historical claims duration, year 4 (percent) | 6.20% |
Historical claims duration, year 5 (percent) | 2.70% |
Historical claims duration, year 6 (percent) | 1.10% |
Historical claims duration, year 7 (percent) | 0.50% |
Historical claims duration, year 8 (percent) | 0.30% |
Historical claims duration, year 9 (percent) | 0.20% |
Historical claims duration, year 10 (percent) | 0.20% |
Segregated Portfolio Cell Reinsurance | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Historical claims duration, year 1 (percent) | 36.10% |
Historical claims duration, year 2 (percent) | 39.90% |
Historical claims duration, year 3 (percent) | 13.60% |
Historical claims duration, year 4 (percent) | 4.20% |
Historical claims duration, year 5 (percent) | 1.30% |
Historical claims duration, year 6 (percent) | 0.70% |
Historical claims duration, year 7 (percent) | (0.10%) |
Historical claims duration, year 8 (percent) | 0.00% |
Historical claims duration, year 9 (percent) | 0.10% |
Historical claims duration, year 10 (percent) | 0.30% |
Reserve for Losses and Loss A_6
Reserve for Losses and Loss Adjustment Expenses - Reconciliation of Claims Development (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Net outstanding liabilities | $ 2,806,990 | |||
Total reinsurance recoverable on unpaid losses and loss adjustment expenses | 451,741 | $ 385,087 | $ 390,708 | $ 343,820 |
Reserve for the future utilization of the DDR benefit | 113,246 | |||
Unallocated loss adjustment expenses | 152,209 | |||
Loss portfolio transfers | 16,610 | |||
Purchase accounting adjustments | 39,186 | |||
Other | (42) | |||
Liability for unpaid claims and claim adjustment expense | 321,209 | |||
Gross liability for losses and loss adjustment expenses | 3,579,940 | $ 2,417,179 | $ 2,346,526 | $ 2,119,847 |
Healthcare Professional Liability claims-made | ||||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Net outstanding liabilities | 1,971,384 | |||
Total reinsurance recoverable on unpaid losses and loss adjustment expenses | 258,528 | |||
Healthcare Professional Liability occurrence | ||||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Net outstanding liabilities | 436,851 | |||
Total reinsurance recoverable on unpaid losses and loss adjustment expenses | 35,324 | |||
Medical technology liability | ||||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Net outstanding liabilities | 35,724 | |||
Total reinsurance recoverable on unpaid losses and loss adjustment expenses | 31,036 | |||
Workers' Compensation Insurance | ||||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Net outstanding liabilities | 149,006 | |||
Total reinsurance recoverable on unpaid losses and loss adjustment expenses | 47,963 | |||
Segregated Portfolio Cell Reinsurance | ||||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Net outstanding liabilities | 50,650 | |||
Total reinsurance recoverable on unpaid losses and loss adjustment expenses | 22,455 | |||
Other short-duration lines | ||||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Net outstanding liabilities | 163,375 | |||
Total reinsurance recoverable on unpaid losses and loss adjustment expenses | $ 56,435 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands, £ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Nov. 30, 2021 | Dec. 31, 2021USD ($) | Jun. 30, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jul. 01, 2022USD ($) | Jul. 01, 2022GBP (£) | Dec. 31, 2021GBP (£) | May 05, 2021USD ($) | |
Other Commitment, Fiscal Year Maturity | ||||||||||
Contingent consideration | $ 24,000 | $ 24,000 | $ 0 | $ 0 | ||||||
NORCAL Group | ||||||||||
Other Commitment, Fiscal Year Maturity | ||||||||||
Contingent consideration, maximum estimate | $ 84,000 | |||||||||
Contingent consideration | 24,000 | $ 24,000 | $ 24,000 | |||||||
Data analytics services | ||||||||||
Other Commitments [Line Items] | ||||||||||
Non-renew notice, period | 6 months | |||||||||
Other Commitment, Fiscal Year Maturity | ||||||||||
Period of long-term purchase commitment | 3 years | |||||||||
Contractual obligation, due in next year | 3,500 | $ 3,500 | ||||||||
Extension period for long-term purchase commitment | 1 year | |||||||||
Operating expense | $ 2,600 | $ 4,300 | $ 4,900 | |||||||
Contractual obligation | 9,900 | 9,900 | ||||||||
Funding commitments | ||||||||||
Other Commitments [Line Items] | ||||||||||
Funding commitments related to non-public investment entities | 244,000 | 244,000 | ||||||||
Qualified affordable housing project | ||||||||||
Other Commitment, Fiscal Year Maturity | ||||||||||
Qualified affordable housing project funding commitments | 600 | 600 | ||||||||
Qualified affordable housing project funding commitments, due in 2022 | 400 | 400 | ||||||||
Qualified affordable housing project funding commitments, due in 2023 and 2024 | 100 | 100 | ||||||||
Qualified affordable housing project funding commitments, due in 2025 and 2026 | 100 | 100 | ||||||||
Lloyd's Syndicates | ||||||||||
Other Commitments [Line Items] | ||||||||||
Unused commitments | $ 40,600 | $ 40,600 | £ 30 | |||||||
Non-renew notice, period | 30 days | |||||||||
Auto-renewal period prior to maturity date | 1 year | |||||||||
Interest rate on revolving credit agreement (percent) | 3.80% | 3.80% | 3.80% | |||||||
FAL deposit assets | $ 37,800 | $ 37,800 | ||||||||
Lloyd's Syndicates | Forecast | ||||||||||
Other Commitments [Line Items] | ||||||||||
Current lending capacity under revolving credit agreement | $ 20,300 | £ 15 | ||||||||
Syndicate 1729 | ||||||||||
Other Commitments [Line Items] | ||||||||||
Return of deposit assets | $ 8,000 | $ 24,500 | ||||||||
Proportion of capital provided to support Lloyd's syndicate (percent) | 5.00% | 5.00% | 29.00% | 5.00% | ||||||
Syndicate 6131 | ||||||||||
Other Commitments [Line Items] | ||||||||||
Return of deposit assets | $ 26,600 | |||||||||
Proportion of capital provided to support Lloyd's syndicate (percent) | 50.00% | 50.00% | 100.00% | 50.00% |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | May 05, 2021 | |
Lessee, Lease, Description [Line Items] | ||
Renewal term | 15 years | |
Option to terminate period | 1 year | |
NORCAL Group | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease ROU assets | $ 4,385 | |
Operating lease liabilities | $ (5,275) | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lease terms | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lease terms | 10 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Operating lease expense | $ 5,047,000 | $ 4,355,000 | $ 4,485,000 |
Sublease income | (263,000) | (143,000) | (152,000) |
Net lease expense | 4,784,000 | 4,212,000 | 4,333,000 |
Short-term lease, cost | 0 | 0 | 0 |
Rental income | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 |
Leases - Supplemental Lease Inf
Leases - Supplemental Lease Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Operating lease ROU assets | $ 19,595 | $ 19,013 | |
Operating lease liabilities | $ 20,844 | $ 20,116 | |
Weighted-average remaining lease term | 7 years 18 days | 8 years 3 months 21 days | |
Weighted-average discount rate | 2.84% | 2.97% | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 5,775 | $ 4,221 | $ 4,767 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
2022 | $ 5,396 | |
2023 | 3,958 | |
2024 | 2,525 | |
2025 | 2,019 | |
2026 | 1,748 | |
Thereafter | 7,378 | |
Total future minimum lease payments | 23,024 | |
Less: Imputed interest | 2,180 | |
Total operating lease liabilities | $ 20,844 | $ 20,116 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021USD ($)building | Dec. 31, 2020USD ($) | |
Debt Instrument [Line Items] | ||
Total principal | $ 425,900 | $ 286,113 |
Less unamortized debt issuance costs | 914 | 1,400 |
Debt less unamortized debt issuance costs | 424,986 | 284,713 |
Contribution Certificates | ||
Debt Instrument [Line Items] | ||
Total principal | $ 175,900 | 0 |
Interest rate | 3.00% | |
Effective interest rate | 4.35% | |
Senior Notes | Senior notes due 2023 | ||
Debt Instrument [Line Items] | ||
Total principal | $ 250,000 | 250,000 |
Interest rate | 5.30% | |
Mortgage Loans | ||
Debt Instrument [Line Items] | ||
Total principal | $ 0 | $ 36,113 |
Debt instrument, number of buildings recapitalized | building | 2 | |
Mortgage Loans | Three month LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate for debt | 1.325% | 1.58% |
Debt - Narrative (Details)
Debt - Narrative (Details) | May 05, 2021USD ($) | Aug. 31, 2021USD ($) | Jul. 31, 2021USD ($) | Jun. 30, 2021USD ($) | Dec. 31, 2021USD ($)lenderbuilding | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2017USD ($) | Dec. 01, 2019USD ($) |
Debt Instrument [Line Items] | |||||||||
Repayments of outstanding mortgage loans | $ 36,113,000 | $ 1,502,000 | $ 1,447,000 | ||||||
Number of participating lenders | lender | 7 | ||||||||
Contribution Certificates | NORCAL Group | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal amount | $ 191,000,000 | ||||||||
Debt instruments | 175,000,000 | ||||||||
Premium paid on derivative for right to receive cash payments | $ 16,000,000 | ||||||||
Debt instrument term | 10 years | ||||||||
Revolving Credit Agreement | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayments of lines of credit | $ 15,000,000 | ||||||||
Senior Notes | Senior notes due 2023 | Base Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate for debt | 0.40% | ||||||||
Mortgage Loans | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument term | 10 years | ||||||||
Debt instrument, number of buildings recapitalized | building | 2 | ||||||||
Repayments of outstanding mortgage loans | $ 19,700,000 | $ 15,600,000 | |||||||
Mortgage Loans | ProAssurance Indemnity | |||||||||
Debt Instrument [Line Items] | |||||||||
Total principal payments | $ 17,900,000 | ||||||||
Mortgage Loans | PICA | |||||||||
Debt Instrument [Line Items] | |||||||||
Total principal payments | $ 22,600,000 | ||||||||
Line of Credit | Revolving Credit Agreement | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit facility, maximum borrowing | $ 300,000,000 | $ 250,000,000 | |||||||
Additional borrowing capacity | $ 50,000,000 | ||||||||
Maximum allowable consolidated funded indebtedness ratio (percent) | 0.35 | ||||||||
Minimum net worth required | $ 1,000,000,000 | ||||||||
Line of Credit | Revolving Credit Agreement | Federal Funds Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate for debt | 0.50% | ||||||||
Line of Credit | Revolving Credit Agreement | One month LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate for debt | 1.00% | ||||||||
Line of Credit | Revolving Credit Agreement | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate for debt | 0.00% | ||||||||
Commitment fee percentages (percent) | 0.15% | ||||||||
Line of Credit | Revolving Credit Agreement | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate for debt | 1.88% | ||||||||
Commitment fee percentages (percent) | 0.30% |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||||
Common shares authorized (in shares) | 100,000,000 | 100,000,000 | ||
Authorized preferred stock (in shares) | 50,000,000 | 50,000,000 | ||
Authorization common shares for the issuance under incentive compensation plans (in shares) | 1,300,000 | |||
Number of shares available for grant (in shares) | 700,000 | |||
Dividends declared | $ 10,800 | $ 24,800 | $ 66,700 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total Shareholders’ Equity | 1,428,387 | 1,349,210 | 1,511,913 | $ 1,523,002 |
Total authorizations which remain available for use | 109,600 | |||
OCI included deferred tax expense | (15,000) | $ 9,600 | $ 14,200 | |
Retained Earnings, Unappropriated | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total Shareholders’ Equity | $ 404,700 |
Shareholders' Equity - Changes
Shareholders' Equity - Changes in Common Shares (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Common Stock Outstanding Rollforward [Roll Forward] | |||
Beginning Balance (in shares) | 53,893 | 53,792 | 53,637 |
Shares issued due to vesting of share-based compensation awards (in shares) | 46 | 54 | 132 |
Other shares issued for compensation and shares reissued to stock purchase plan (in shares) | 45 | 47 | 23 |
Ending Balance (in shares) | 53,984 | 53,893 | 53,792 |
Shareholders' Equity - Cash Div
Shareholders' Equity - Cash Dividends Declared (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | |||||||||||||||
Cash dividends declared, per common share (in dollars per share) | $ 0.05 | $ 0.05 | $ 0.05 | $ 0.05 | $ 0.05 | $ 0.05 | $ 0.05 | $ 0.31 | $ 0.31 | $ 0.31 | $ 0.31 | $ 0.31 | $ 0.20 | $ 0.46 | $ 1.24 |
Shareholders' Equity (Roll Forw
Shareholders' Equity (Roll Forward of AOCI) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | $ 1,349,210 | $ 1,511,913 | $ 1,523,002 |
OCI, before reclassifications, net of tax | (48,836) | 46,170 | 55,841 |
Amounts reclassified from AOCI, net of tax | (10,107) | (7,898) | (1,975) |
Net OCI, current period | (58,943) | 38,272 | 53,866 |
Ending balance | 1,428,387 | 1,349,210 | 1,511,913 |
Net actuarial gain | 1,533 | ||
Unrealized Investment Gains (Losses) | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 75,388 | 37,333 | (16,733) |
OCI, before reclassifications, net of tax | (50,242) | 46,383 | 56,041 |
Amounts reclassified from AOCI, net of tax | (10,217) | (8,328) | (1,975) |
Net OCI, current period | (60,459) | 38,055 | 54,066 |
Ending balance | 14,929 | 75,388 | 37,333 |
Non-credit Impairments | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (57) | (300) | (121) |
OCI, before reclassifications, net of tax | 0 | (187) | (179) |
Amounts reclassified from AOCI, net of tax | 57 | 430 | 0 |
Net OCI, current period | 57 | 243 | (179) |
Ending balance | 0 | (57) | (300) |
Unrecognized Change in Defined Benefit Plan Liabilities | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (104) | (78) | (57) |
OCI, before reclassifications, net of tax | 1,406 | (26) | (21) |
Amounts reclassified from AOCI, net of tax | 53 | 0 | 0 |
Net OCI, current period | 1,459 | (26) | (21) |
Ending balance | 1,355 | (104) | (78) |
Accumulated Other Comprehensive Income (Loss) | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 75,227 | 36,955 | (16,911) |
Ending balance | 16,284 | $ 75,227 | $ 36,955 |
Accumulated Other Comprehensive Income (Loss) | NORCAL Group | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Net actuarial gain | $ 1,200 |
Share-Based Payments - Narrativ
Share-Based Payments - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2021USD ($)awardshares | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of award types (in award types) | award | 2 | ||
Restricted Stock and Performance Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected average period (years) | 3 years | ||
Restricted Share Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected average period (years) | 5 years | ||
Aggregate grant date fair value | $ 3,200,000 | $ 4,700,000 | $ 4,900,000 |
Aggregate intrinsic value | $ 1,800,000 | $ 2,600,000 | $ 4,600,000 |
Vested and released (in shares) | shares | (73,012) | (83,525) | (107,062) |
Purchase Match Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected average period (years) | 3 years | ||
Aggregate grant date fair value | $ 2,200,000 | ||
Aggregate intrinsic value | $ 1,700,000 | ||
Vested and released (in shares) | shares | 0 | 0 | (43,282) |
Annual contribution for the purchase of shares | $ 5,000 | ||
Performance Share Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate grant date fair value | $ 2,700,000 | ||
Aggregate intrinsic value | $ 2,600,000 | ||
The percentage of award vest (percent) | 95.00% | ||
Vested and released (in shares) | shares | 0 | 0 | (60,000) |
Performance Share Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
The percentage of award vest (percent) | 50.00% | ||
Performance Share Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
The percentage of award vest (percent) | 200.00% |
Share-Based Payments - Compensa
Share-Based Payments - Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of compensation expense and related tax benefit recognized during each period and compensation cost expense in future periods | |||
Total share-based compensation expense | $ 4,390 | $ 3,840 | $ 3,527 |
Tax benefit recognized | 900 | $ 800 | $ 700 |
Unrecognized Compensation Cost, amount | $ 5,300 | ||
Weighted Average Remaining Recognition Period | 1 year 10 months 24 days |
Share-Based Payments - Restrict
Share-Based Payments - Restricted Share Units (Details) - Restricted Share Units - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary Activity for restricted share units, number of shares | |||
Beginning balance (in shares) | 339,804 | 320,625 | 267,323 |
Granted (in shares) | 131,521 | 111,758 | 164,196 |
Forfeited (in shares) | (11,131) | (9,054) | (3,832) |
Vested and released (in shares) | (73,012) | (83,525) | (107,062) |
Ending balance (in shares) | 387,182 | 339,804 | 320,625 |
Summary Activity for restricted share units, weighted average grant date fair value | |||
Beginning balance (in dollars per share) | $ 36.09 | $ 43.99 | $ 49.16 |
Granted (in dollars per share) | 24.16 | 29.18 | 36.96 |
Forfeited (in dollars per share) | 35.49 | 40.13 | 45.09 |
Vested and released (in dollars per share) | 44.45 | 56.74 | 46.06 |
Ending balance (in dollars per share) | $ 30.78 | $ 36.09 | $ 43.99 |
Share-Based Payments - Performa
Share-Based Payments - Performance Share Units (Details) - Performance Share Units - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary Activity for restricted share units, number of shares | |||
Beginning balance (in shares) | 90,979 | 100,370 | 135,202 |
Granted (in shares) | 74,004 | 38,609 | 25,168 |
Forfeited (in shares) | 0 | 0 | 0 |
Expired (in shares) | (27,202) | (48,000) | 0 |
Vested and released (in shares) | 0 | 0 | (60,000) |
Ending balance (in shares) | 137,781 | 90,979 | 100,370 |
Summary Activity for restricted share units, weighted average grant date fair value | |||
Beginning balance (in dollars per share) | $ 36.87 | $ 50.10 | $ 49.95 |
Granted (in dollars per share) | 24.04 | 29.18 | 40.18 |
Forfeited (in dollars per share) | 0 | 0 | 0 |
Expired (in dollars per share) | 44.73 | 58.35 | 0 |
Vested and released (in dollars per share) | 0 | 0 | 45.59 |
Ending balance (in dollars per share) | $ 28.43 | $ 36.87 | $ 50.10 |
Share-Based Payments - Purchase
Share-Based Payments - Purchase Match Units (Details) - Purchase Match Units - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary Activity for restricted share units, number of shares | |||
Beginning balance (in shares) | 0 | 0 | 44,682 |
Granted (in shares) | 0 | 0 | 0 |
Forfeited (in shares) | 0 | 0 | (1,400) |
Vested and released (in shares) | 0 | 0 | (43,282) |
Ending balance (in shares) | 0 | 0 | 0 |
Summary Activity for restricted share units, weighted average grant date fair value | |||
Beginning balance (in dollars per share) | $ 0 | $ 0 | $ 51.05 |
Granted (in dollars per share) | 0 | 0 | 0 |
Forfeited (in dollars per share) | 0 | 0 | 51.47 |
Vested and released (in dollars per share) | 0 | 0 | 51.03 |
Ending balance (in dollars per share) | $ 0 | $ 0 | $ 0 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Variable Interest Entity [Line Items] | ||
Assets | $ 6,191,477 | $ 4,654,803 |
Liabilities | 4,763,090 | 3,305,593 |
Variable Interest Entity, Primary Beneficiary | PPM RRG | ||
Variable Interest Entity [Line Items] | ||
Assets | 140,000 | |
Surplus notes | 5,000 | |
Liabilities | 140,000 | |
Investment in unconsolidated subsidiaries | Variable Interest Entity, Not Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Assets | $ 303,700 | $ 282,200 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average number of common shares outstanding, basic (in shares) | 53,962,000 | 53,863,000 | 53,740,000 |
Weighted average number of common shares outstanding, diluted (in shares) | 54,058,000 | 53,906,000 | 53,841,000 |
Effect of dilutive shares on earnings per share (in dollars per share) | $ 0 | $ 0 | $ 0 |
Antidilutive shares excluded from computation of earnings per share (in shares) | 28,000 | 114,000 | 0 |
Restricted Share Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dilutive securities (in shares) | 92,000 | 42,000 | 75,000 |
Performance Share Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dilutive securities (in shares) | 4,000 | 1,000 | 10,000 |
Purchase Match Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dilutive securities (in shares) | 0 | 0 | 16,000 |
Segment Information - Narrative
Segment Information - Narrative (Details) - segment | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 5 | |
Number of operating segments | 5 | |
Workers' Compensation Insurance | ||
Segment Reporting Information [Line Items] | ||
Alternative market solutions percentage ceded | 100.00% | |
Syndicate 1729 | ||
Segment Reporting Information [Line Items] | ||
Proportion of capital provided to support Lloyd's syndicate (percent) | 5.00% | 29.00% |
Syndicate 6131 | ||
Segment Reporting Information [Line Items] | ||
Proportion of capital provided to support Lloyd's syndicate (percent) | 50.00% | 100.00% |
Segment Information - Financial
Segment Information - Financial Data by Segment (Details) - USD ($) | May 05, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | $ 971,668,000 | $ 792,715,000 | $ 847,532,000 | |||
Net investment income | 70,522,000 | 71,998,000 | 93,269,000 | |||
Equity in earnings (loss) of unconsolidated subsidiaries | 48,974,000 | (11,921,000) | (10,061,000) | |||
Net investment gains (losses) | 24,310,000 | 15,678,000 | 59,874,000 | |||
Other income (expense) | 8,936,000 | 6,470,000 | 9,220,000 | |||
Net losses and loss adjustment expenses | (752,249,000) | (661,447,000) | (753,915,000) | |||
Underwriting, policy acquisition and operating expenses | (243,269,000) | (237,881,000) | (252,449,000) | |||
SPC U.S. federal income tax expense | (1,947,000) | (1,746,000) | (1,059,000) | |||
SPC dividend (expense) income | (10,050,000) | (14,304,000) | (4,579,000) | |||
Interest expense | (19,719,000) | (15,503,000) | (16,636,000) | |||
Income tax benefit (expense) | (4,651,000) | 41,329,000 | 29,808,000 | |||
Segment results | 92,525,000 | (14,612,000) | 1,004,000 | |||
Gain on bargain purchase | 74,408,000 | 0 | 0 | |||
Goodwill impairment | $ 161,100,000 | 0 | 161,115,000 | 0 | ||
Net income (loss) | 144,124,000 | (175,727,000) | 1,004,000 | |||
Depreciation and amortization, net of accretion | 37,247,000 | 21,375,000 | 18,665,000 | |||
Income tax expense (benefit) | 2,483,000 | (41,329,000) | (29,808,000) | |||
NORCAL Group | ||||||
Segment Reporting Information [Line Items] | ||||||
Gain on bargain purchase | $ 74,408,000 | |||||
Transaction-related costs, net | $ (25,000,000) | (25,000,000) | (1,800,000) | |||
Income tax expense (benefit) | (2,200,000) | |||||
Specialty P&C | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 695,008,000 | 477,365,000 | 499,058,000 | |||
Workers' Compensation Insurance | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 164,600,000 | 171,772,000 | 189,240,000 | |||
Segregated Portfolio Cell Reinsurance | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 63,688,000 | 66,352,000 | 78,563,000 | |||
Lloyd's Syndicates | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 48,372,000 | 77,226,000 | 80,671,000 | |||
Operating segments | Specialty P&C | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 695,008,000 | 477,365,000 | 499,058,000 | |||
Net investment income | 0 | 0 | 0 | |||
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 | 0 | |||
Net investment gains (losses) | 0 | 0 | 0 | |||
Other income (expense) | 3,370,000 | 3,908,000 | 5,796,000 | |||
Net losses and loss adjustment expenses | (575,164,000) | (470,074,000) | (532,485,000) | |||
Underwriting, policy acquisition and operating expenses | (127,709,000) | (109,599,000) | (120,310,000) | |||
SPC U.S. federal income tax expense | 0 | 0 | 0 | |||
SPC dividend (expense) income | 0 | 0 | 0 | |||
Interest expense | 0 | 0 | 0 | |||
Income tax benefit (expense) | 0 | 0 | 0 | |||
Segment results | (4,495,000) | (98,400,000) | (147,941,000) | |||
Depreciation and amortization, net of accretion | 9,915,000 | 7,747,000 | 6,586,000 | |||
Operating segments | Workers' Compensation Insurance | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 164,600,000 | 171,772,000 | 189,240,000 | |||
Net investment income | 0 | 0 | 0 | |||
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 | 0 | |||
Net investment gains (losses) | 0 | 0 | 0 | |||
Other income (expense) | 2,211,000 | 2,216,000 | 2,399,000 | |||
Net losses and loss adjustment expenses | (114,704,000) | (111,552,000) | (121,649,000) | |||
Underwriting, policy acquisition and operating expenses | (52,418,000) | (56,449,000) | (57,520,000) | |||
SPC U.S. federal income tax expense | 0 | 0 | 0 | |||
SPC dividend (expense) income | 0 | 0 | 0 | |||
Interest expense | 0 | 0 | 0 | |||
Income tax benefit (expense) | 0 | 0 | 0 | |||
Segment results | (311,000) | 5,987,000 | 12,470,000 | |||
Depreciation and amortization, net of accretion | 3,583,000 | 3,690,000 | 3,825,000 | |||
Operating segments | Segregated Portfolio Cell Reinsurance | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 63,688,000 | 66,352,000 | 78,563,000 | |||
Net investment income | 814,000 | 1,084,000 | 1,578,000 | |||
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 | 0 | |||
Net investment gains (losses) | 4,080,000 | 3,085,000 | 4,020,000 | |||
Other income (expense) | 3,000 | 205,000 | 559,000 | |||
Net losses and loss adjustment expenses | (32,569,000) | (29,605,000) | (52,412,000) | |||
Underwriting, policy acquisition and operating expenses | (21,635,000) | (20,709,000) | (23,201,000) | |||
SPC U.S. federal income tax expense | (1,947,000) | (1,746,000) | (1,059,000) | |||
SPC dividend (expense) income | (10,050,000) | (14,304,000) | (4,579,000) | |||
Interest expense | 0 | 0 | 0 | |||
Income tax benefit (expense) | 0 | 0 | 0 | |||
Segment results | 2,384,000 | 4,362,000 | 3,469,000 | |||
Depreciation and amortization, net of accretion | 1,475,000 | 676,000 | (41,000) | |||
Operating segments | Lloyd's Syndicates | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 48,372,000 | 77,226,000 | 80,671,000 | |||
Net investment income | 1,961,000 | 4,128,000 | 4,551,000 | |||
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 | 0 | |||
Net investment gains (losses) | 249,000 | 988,000 | 768,000 | |||
Other income (expense) | 912,000 | 51,000 | (573,000) | |||
Net losses and loss adjustment expenses | (29,812,000) | (50,216,000) | (47,369,000) | |||
Underwriting, policy acquisition and operating expenses | (17,957,000) | (30,136,000) | (34,711,000) | |||
SPC U.S. federal income tax expense | 0 | 0 | 0 | |||
SPC dividend (expense) income | 0 | 0 | 0 | |||
Interest expense | 0 | 0 | 0 | |||
Income tax benefit (expense) | 0 | 29,000 | 0 | |||
Segment results | 3,725,000 | 2,070,000 | 3,337,000 | |||
Depreciation and amortization, net of accretion | 66,000 | (4,000) | (7,000) | |||
Operating segments | Corporate | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 0 | 0 | 0 | |||
Net investment income | 67,747,000 | 66,786,000 | 87,140,000 | |||
Equity in earnings (loss) of unconsolidated subsidiaries | 48,974,000 | (11,921,000) | (10,061,000) | |||
Net investment gains (losses) | 19,981,000 | 11,605,000 | 55,086,000 | |||
Other income (expense) | 5,531,000 | 2,531,000 | 3,478,000 | |||
Net losses and loss adjustment expenses | 0 | 0 | 0 | |||
Underwriting, policy acquisition and operating expenses | (26,641,000) | (23,429,000) | (19,146,000) | |||
SPC U.S. federal income tax expense | 0 | 0 | 0 | |||
SPC dividend (expense) income | 0 | 0 | 0 | |||
Interest expense | (19,719,000) | (15,503,000) | (16,636,000) | |||
Income tax benefit (expense) | (4,651,000) | 41,300,000 | 29,808,000 | |||
Segment results | 91,222,000 | 71,369,000 | 129,669,000 | |||
Depreciation and amortization, net of accretion | 22,208,000 | 9,266,000 | 8,302,000 | |||
Inter-segment Eliminations | ||||||
Segment Reporting Information [Line Items] | ||||||
Net premiums earned | 0 | 0 | 0 | |||
Net investment income | 0 | 0 | 0 | |||
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 | 0 | |||
Net investment gains (losses) | 0 | 0 | 0 | |||
Other income (expense) | (3,091,000) | (2,441,000) | (2,439,000) | |||
Net losses and loss adjustment expenses | 0 | 0 | 0 | |||
Underwriting, policy acquisition and operating expenses | 3,091,000 | 2,441,000 | 2,439,000 | |||
SPC U.S. federal income tax expense | 0 | 0 | 0 | |||
SPC dividend (expense) income | 0 | 0 | 0 | |||
Interest expense | 0 | 0 | 0 | |||
Income tax benefit (expense) | 0 | 0 | 0 | |||
Segment results | 0 | 0 | 0 | |||
Depreciation and amortization, net of accretion | 0 | 0 | $ 0 | |||
Segment Reconciling Items | ||||||
Segment Reporting Information [Line Items] | ||||||
Gain on bargain purchase | 74,408,000 | |||||
Transaction-related costs, net | $ (22,809,000) | |||||
Goodwill impairment | $ 161,115,000 |
Segment Information - Gross Pre
Segment Information - Gross Premiums Earned by Product (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||
Ceded premiums earned | $ (93,998) | $ (113,582) | $ (124,171) |
Net premiums earned | 971,668 | 792,715 | 847,532 |
Specialty P&C Segment | |||
Segment Reporting Information [Line Items] | |||
Ceded premiums earned | (66,403) | (74,457) | (81,738) |
Net premiums earned | 695,008 | 477,365 | 499,058 |
Specialty P&C Segment | HCPL | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 616,614 | 411,716 | 434,867 |
Specialty P&C Segment | Small business unit | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 105,605 | 104,376 | 109,876 |
Specialty P&C Segment | Medical technology liability | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 38,508 | 34,909 | 33,957 |
Specialty P&C Segment | Other | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 684 | 821 | 2,096 |
Workers' Compensation Insurance | |||
Segment Reporting Information [Line Items] | |||
Ceded premiums earned | (79,065) | (83,712) | (98,169) |
Net premiums earned | 164,600 | 171,772 | 189,240 |
Workers' Compensation Insurance | Traditional business | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 175,459 | 184,204 | 203,195 |
Workers' Compensation Insurance | Alternative market business | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 68,206 | 71,280 | 84,214 |
Segregated Portfolio Cell Reinsurance Segment | |||
Segment Reporting Information [Line Items] | |||
Ceded premiums earned | (8,671) | (8,760) | (9,741) |
Net premiums earned | 63,688 | 66,352 | 78,563 |
Segregated Portfolio Cell Reinsurance Segment | HCPL | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 7,336 | 6,594 | 6,059 |
Segregated Portfolio Cell Reinsurance Segment | Other | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 0 | 0 | 480 |
Segregated Portfolio Cell Reinsurance Segment | Workers' compensation | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 65,023 | 68,518 | 81,765 |
Lloyd's Syndicates Segment | |||
Segment Reporting Information [Line Items] | |||
Gross premiums earned | 60,590 | 98,990 | 101,222 |
Ceded premiums earned | (12,218) | (21,764) | (20,551) |
Net premiums earned | $ 48,372 | $ 77,226 | $ 80,671 |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | 18 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2021 | |
Defined Contribution Plan Disclosure [Line Items] | |||||
Incurred expense related to savings and retirement plans | $ 4,100 | $ 5,500 | $ 7,200 | ||
ProAssurance deferred compensation liabilities total | 52,332 | $ 30,334 | $ 52,332 | ||
NORCAL Group | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
ProAssurance deferred compensation liabilities total | $ 18,400 | $ 18,400 | |||
Maximum | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Percentage of benefit plan contribution by employer (percent) | 10.00% | 5.00% | 10.00% | 5.00% |
Benefit Plans - Changes in PBO
Benefit Plans - Changes in PBO and Fair Value of Plan Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Change in benefit obligation: | ||
Defined benefit plan, benefit obligation, beginning balance | $ 0 | |
Acquired PBO from NORCAL acquisition | 107,895 | |
Interest cost | 2,030 | |
Actuarial (gain) loss | 2,872 | |
Benefits paid | (1,149) | |
Settlement payments | (4,749) | |
Defined benefit plan, benefit obligation, ending balance | 106,899 | |
Change in fair value of plan assets: | ||
Defined benefit plan beginning balance | 0 | |
Fair value of plan assets acquired from NORCAL | 109,443 | |
Actual return on plan assets | 6,899 | |
Benefits paid | (1,149) | |
Settlement payments | (4,749) | |
Defined benefit plan ending balance | 110,444 | |
Funded (underfunded) status of the plan | 3,545 | |
Amount Recognized in Consolidated Balance sheet at December 31, 2021 | 3,545 | |
Net actuarial (gain) loss recognized in AOCI and not yet reflected in net periodic benefit cost (income) | $ (1,468) | $ 0 |
Benefit Plans - Net Periodic Be
Benefit Plans - Net Periodic Benefit Cost Credit (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Components of net periodic benefit cost (income): | |
Interest cost | $ 2,030 |
Expected return on plan assets | (2,494) |
Gain on settlement | (65) |
Total net periodic benefit cost (income) | (529) |
Other changes recognized in OCI: | |
Net actuarial (gain) loss | (1,533) |
Reclassification of gain on settlement | 65 |
(Gain) loss recognized in OCI | (1,468) |
Total recognized in net periodic benefit cost (income) and OCI | $ (1,997) |
Benefit Plans - Recognized Comp
Benefit Plans - Recognized Components (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Change In Amounts Not Yet Recognized As Components Of Net Periodic Benefit Cost (Income) [Roll Forward] | |
Items not yet recognized as a component of net periodic benefit cost (income), beginning balance | $ 0 |
Net actuarial (gain) loss | (1,533) |
Reclassification of gain (loss) on settlement | 65 |
Items not yet recognized as a component of net periodic benefit cost (income), ending balance | (1,468) |
Amounts recognized in AOCI | $ (1,468) |
Benefit Plans - Weighted Averag
Benefit Plans - Weighted Average Discount Rate (Details) | 12 Months Ended | |
Dec. 31, 2021 | May 05, 2021 | |
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||
Weighted average discount rate | 2.78% | 2.95% |
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | ||
Weighted average discount rate | 2.95% | |
Weighted average expected return on plan assets | 3.75% |
Benefit Plans - Pension Plan_s
Benefit Plans - Pension Plan’s Target Allocations (Details) | Dec. 31, 2021 |
Defined Benefit Plan Disclosure [Line Items] | |
Target allocation | 100.00% |
Equity investments | |
Defined Benefit Plan Disclosure [Line Items] | |
Target allocation | 18.00% |
Fixed maturities | |
Defined Benefit Plan Disclosure [Line Items] | |
Target allocation | 79.00% |
Real estate | |
Defined Benefit Plan Disclosure [Line Items] | |
Target allocation | 3.00% |
Benefit Plans - Fair Values of
Benefit Plans - Fair Values of the Assets in the Pension Plan (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | $ 110,444 | $ 0 |
Level 3 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 3,617 | 0 |
Level 3 | Real estate | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 3,617 | $ 0 |
Fair Value, Recurring | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 110,444 | |
Fair Value, Recurring | Large cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 13,703 | |
Fair Value, Recurring | Mid cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 586 | |
Fair Value, Recurring | Small cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 229 | |
Fair Value, Recurring | International equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 5,581 | |
Fair Value, Recurring | Corporate and government debt | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 86,728 | |
Fair Value, Recurring | Real estate | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 3,617 | |
Fair Value, Recurring | Level 1 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 14,518 | |
Fair Value, Recurring | Level 1 | Large cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 13,703 | |
Fair Value, Recurring | Level 1 | Mid cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 586 | |
Fair Value, Recurring | Level 1 | Small cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 229 | |
Fair Value, Recurring | Level 1 | International equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 1 | Corporate and government debt | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 1 | Real estate | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 2 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 92,309 | |
Fair Value, Recurring | Level 2 | Large cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 2 | Mid cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 2 | Small cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 2 | International equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 5,581 | |
Fair Value, Recurring | Level 2 | Corporate and government debt | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 86,728 | |
Fair Value, Recurring | Level 2 | Real estate | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 3 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 3,617 | |
Fair Value, Recurring | Level 3 | Large cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 3 | Mid cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 3 | Small cap equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 3 | International equity investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 3 | Corporate and government debt | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | 0 | |
Fair Value, Recurring | Level 3 | Real estate | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets | $ 3,617 |
Benefit Plans - Changes in the
Benefit Plans - Changes in the Fair Value of Assets (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |
Defined benefit plan beginning balance | $ 0 |
Defined benefit plan ending balance | 110,444 |
Level 3 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |
Defined benefit plan beginning balance | 0 |
Acquired balance, May 5, 2021 | 3,383 |
Relating to assets still held at the reporting date: | |
Investment return | 613 |
Transfers out | (379) |
Defined benefit plan ending balance | 3,617 |
Real estate | Level 3 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |
Defined benefit plan beginning balance | 0 |
Acquired balance, May 5, 2021 | 3,383 |
Relating to assets still held at the reporting date: | |
Investment return | 613 |
Transfers out | (379) |
Defined benefit plan ending balance | $ 3,617 |
Benefit Plans - Paid in Future
Benefit Plans - Paid in Future Periods (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Retirement Benefits [Abstract] | |
2022 | $ 6,240 |
2023 | 6,030 |
2024 | 5,430 |
2025 | 5,740 |
2026 | 6,270 |
Thereafter | 31,070 |
Total | $ 60,780 |
Statutory Accounting and Divi_3
Statutory Accounting and Dividend Restrictions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Insurance [Abstract] | |||
Statutory Net Income (Loss) | $ 73 | $ 81 | $ (22) |
Statutory Capital and Surplus | 1,452 | $ 831 | |
Net assets held at domestic insurance subsidiaries | 1,500 | ||
Statutory dividend payments permitted from insurance subsidiaries | $ 147 |
Schedule I - Summary of Inves_2
Schedule I - Summary of Investments - Other Than Investments In Related Parties (Details) $ in Thousands | Dec. 31, 2021USD ($) |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | $ 4,663,957 |
Fair Value | 4,828,323 |
Amount Which is Presented in the Balance Sheet | 4,828,323 |
U.S. Government or government agencies and authorities | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 277,161 |
Fair Value | 275,583 |
Amount Which is Presented in the Balance Sheet | 275,583 |
States, municipalities and political subdivisions | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 511,750 |
Fair Value | 519,196 |
Amount Which is Presented in the Balance Sheet | 519,196 |
Foreign governments | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 35,303 |
Fair Value | 35,971 |
Amount Which is Presented in the Balance Sheet | 35,971 |
Public utilities | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 93,561 |
Fair Value | 94,683 |
Amount Which is Presented in the Balance Sheet | 94,683 |
All other corporate bonds | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 1,782,282 |
Fair Value | 1,794,438 |
Amount Which is Presented in the Balance Sheet | 1,794,438 |
Asset-backed securities | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 1,158,704 |
Fair Value | 1,157,521 |
Amount Which is Presented in the Balance Sheet | 1,157,521 |
Total Fixed Maturities | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 3,858,761 |
Fair Value | 3,877,392 |
Amount Which is Presented in the Balance Sheet | 3,877,392 |
Banks, trusts and insurance companies | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 7,388 |
Fair Value | 7,470 |
Amount Which is Presented in the Balance Sheet | 7,470 |
Industrial, miscellaneous and all other | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 203,968 |
Fair Value | 207,337 |
Amount Which is Presented in the Balance Sheet | 207,337 |
Equities | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 211,356 |
Fair Value | 214,807 |
Amount Which is Presented in the Balance Sheet | 214,807 |
Other long-term investments | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 376,726 |
Fair Value | 519,137 |
Amount Which is Presented in the Balance Sheet | 519,137 |
Short-term investments | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Recorded Cost Basis | 217,114 |
Fair Value | 216,987 |
Amount Which is Presented in the Balance Sheet | $ 216,987 |
Schedule II - Condensed Finan_2
Schedule II - Condensed Financial Information of Registrant - Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | ||||
Fixed maturities available for sale, at fair value | $ 3,833,722 | $ 2,457,531 | ||
Short-term investments | 216,987 | 337,813 | ||
Investment in unconsolidated subsidiaries | 335,576 | 310,529 | ||
Cash and cash equivalents | 143,602 | 215,782 | ||
Other assets | 138,110 | 143,766 | ||
Total Assets | 6,191,477 | 4,654,803 | ||
Liabilities | ||||
Dividends payable | 2,698 | 2,694 | $ 16,676 | |
Other liabilities | 280,732 | 182,039 | ||
Debt less debt issuance costs | 424,986 | 284,713 | ||
Total Liabilities | 4,763,090 | 3,305,593 | ||
Shareholders’ Equity: | ||||
Common stock | 633 | 632 | ||
Total Shareholders’ Equity | 1,428,387 | 1,349,210 | 1,511,913 | $ 1,523,002 |
Total Liabilities and Shareholders' Equity | 6,191,477 | 4,654,803 | ||
Parent Company | ||||
Assets | ||||
Investment in subsidiaries, at equity | 1,605,892 | 1,383,527 | ||
Fixed maturities available for sale, at fair value | 0 | 33,824 | ||
Short-term investments | 43,270 | 115,198 | ||
Investment in unconsolidated subsidiaries | 915 | 915 | ||
Cash and cash equivalents | 18,115 | 55,469 | ||
Due from subsidiaries | 2,166 | 0 | ||
Other assets | 14,584 | 28,778 | ||
Total Assets | 1,684,942 | 1,617,711 | ||
Liabilities | ||||
Due to subsidiaries | 0 | 10,696 | ||
Dividends payable | 2,698 | 2,694 | $ 16,676 | |
Other liabilities | 4,771 | 6,361 | ||
Debt less debt issuance costs | 249,086 | 248,750 | ||
Total Liabilities | 256,555 | 268,501 | ||
Shareholders’ Equity: | ||||
Common stock | 633 | 632 | ||
Other shareholders’ equity, including unrealized gains (losses) on securities of subsidiaries | 1,427,754 | 1,348,578 | ||
Total Shareholders’ Equity | 1,428,387 | 1,349,210 | ||
Total Liabilities and Shareholders' Equity | $ 1,684,942 | $ 1,617,711 |
Schedule II - Condensed Finan_3
Schedule II - Condensed Financial Information of Registrant - Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | |||
Net investment income | $ 70,522 | $ 71,998 | $ 93,269 |
Equity in earnings (loss) of unconsolidated subsidiaries | 48,974 | (11,921) | (10,061) |
Net investment gains (losses) | 24,310 | 15,678 | 59,874 |
Other income (loss) | 8,936 | 6,470 | 9,220 |
Total revenues | 1,124,410 | 874,940 | 999,834 |
Expenses | |||
Interest expense | 19,719 | 15,503 | 16,636 |
Total expenses | 1,052,211 | 1,091,996 | 1,028,638 |
Income tax expense (benefit) | 2,483 | (41,329) | (29,808) |
Net income (loss) | 144,124 | (175,727) | 1,004 |
Other comprehensive income (loss) | (58,943) | 38,272 | 53,866 |
Comprehensive income (loss) | 85,181 | (137,455) | 54,870 |
Parent Company | |||
Revenues | |||
Net investment income | (1,470) | 331 | 2,694 |
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 | 40 |
Net investment gains (losses) | 1,159 | 2,194 | 19 |
Other income (loss) | 2,359 | 12 | 795 |
Total revenues | 2,048 | 2,537 | 3,548 |
Expenses | |||
Interest expense | 14,549 | 14,260 | 14,074 |
Other expenses | 29,094 | 21,458 | 16,653 |
Total expenses | 43,643 | 35,718 | 30,727 |
Income (loss) before income tax expense (benefit) and equity in net income (loss) of consolidated subsidiaries | (41,595) | (33,181) | (27,179) |
Income tax expense (benefit) | (9,833) | 11,404 | (28,455) |
Income (loss) before equity in net income (loss) of consolidated subsidiaries | (31,762) | (44,585) | 1,276 |
Equity in net income (loss) of consolidated subsidiaries | 175,886 | (131,142) | (272) |
Net income (loss) | 144,124 | (175,727) | 1,004 |
Other comprehensive income (loss) | (58,943) | 38,272 | 53,866 |
Comprehensive income (loss) | $ 85,181 | $ (137,455) | $ 54,870 |
Schedule II - Condensed Finan_4
Schedule II - Condensed Financial Information of Registrant - Cash Flow (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Condensed Cash Flow Statements, Captions [Line Items] | |||
Net cash provided (used) by operating activities | $ 73,970 | $ 92,343 | $ 148,166 |
Proceeds from sales or maturities of: | |||
Fixed maturities, available for sale | 1,077,379 | 801,580 | 568,572 |
Net decrease (increase) in short-term investments | 181,619 | 2,361 | (30,718) |
Contribution of capital to subsidiaries | (214,237) | (97,541) | 0 |
Other | 0 | (2,010) | (5) |
Net cash provided (used) by investing activities | (85,526) | (8,484) | 50,522 |
Financing Activities | |||
Dividends to shareholders | (10,758) | (38,664) | (93,204) |
Other | (288) | (935) | (4,115) |
Net cash provided (used) by financing activities | (60,624) | (43,446) | (103,790) |
Increase (decrease) in cash and cash equivalents | (72,180) | 40,413 | 94,898 |
Cash and cash equivalents at beginning of period | 215,782 | 175,369 | 80,471 |
Cash and cash equivalents at end of period | 143,602 | 215,782 | 175,369 |
Supplemental Disclosure of Cash Flow Information | |||
Cash paid (refunded) during the year for income taxes, net | (9,512) | (8,832) | 2,748 |
Cash paid during the year for interest | 14,502 | 14,712 | 14,294 |
Significant non-cash transactions: | |||
Dividends declared and not yet paid | 2,698 | 2,694 | 16,676 |
Operating ROU assets obtained in exchange for operating lease liabilities | 5,687 | 1,351 | 5,436 |
Parent Company | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
Net cash provided (used) by operating activities | 2,589 | (21,450) | 20,055 |
Proceeds from sales or maturities of: | |||
Fixed maturities, available for sale | 33,443 | 87,101 | 27,974 |
Net decrease (increase) in short-term investments | 71,928 | (51,206) | 12,603 |
Dividends from subsidiaries | 21,464 | 79,486 | 52,499 |
Funds (advanced) repaid for Lloyd's FAL deposit | 59,012 | 32,256 | (4,894) |
Funds (advanced) repaid under Syndicate Credit Agreement | 0 | 0 | 30,296 |
Other | (151) | (2,206) | (936) |
Net cash provided (used) by investing activities | (28,541) | 47,890 | 117,542 |
Financing Activities | |||
Subsidiary payments for common shares and share-based compensation awarded to subsidiary employees | (307) | 2,846 | 344 |
Dividends to shareholders | (10,758) | (38,664) | (93,204) |
Other | (337) | (1,109) | (4,538) |
Net cash provided (used) by financing activities | (11,402) | (36,927) | (97,398) |
Increase (decrease) in cash and cash equivalents | (37,354) | (10,487) | 40,199 |
Cash and cash equivalents at beginning of period | 55,469 | 65,956 | 25,757 |
Cash and cash equivalents at end of period | 18,115 | 55,469 | 65,956 |
Supplemental Disclosure of Cash Flow Information | |||
Cash paid (refunded) during the year for income taxes, net | (7,943) | (9,117) | 2,053 |
Cash paid during the year for interest | 14,176 | 13,888 | 13,699 |
Significant non-cash transactions: | |||
Dividends declared and not yet paid | 2,698 | 2,694 | 16,676 |
Securities transferred at fair value as dividends from subsidiaries | 0 | 34,915 | 34,897 |
Operating ROU assets obtained in exchange for operating lease liabilities | $ 412 | $ 0 | $ 0 |
Schedule III - Supplementary _2
Schedule III - Supplementary Insurance Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Net premiums earned | $ 971,668 | $ 792,715 | $ 847,532 | |
Net investment income | 70,522 | 71,998 | 93,269 | |
Losses and loss adjustment expenses incurred related to current year, net of reinsurance | 797,732 | 711,846 | 765,698 | |
Losses and loss adjustment expenses incurred related to prior year, net of reinsurance | (45,483) | (50,399) | (11,783) | |
Paid losses and loss adjustment expenses, net of reinsurance | 745,245 | 585,173 | 574,124 | |
Amortization of DPAC | 110,605 | 110,565 | 115,330 | |
Other underwriting, policy acquisition and operating expenses | 157,641 | 127,316 | 137,119 | |
Net premiums written | 882,721 | 747,701 | 842,725 | |
Deferred policy acquisition costs | 58,940 | 47,196 | 55,567 | |
Reserve for losses and loss adjustment expenses | 3,579,940 | 2,417,179 | 2,346,526 | |
Unearned premiums | 433,961 | 361,547 | 413,086 | |
Total claim losses paid | 745,245 | 585,173 | 574,124 | |
NORCAL Group | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Losses and loss adjustment expenses incurred related to current year, net of reinsurance | 6,700 | |||
Total claim losses paid | 158,300 | |||
Non-segmented items | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Other underwriting, policy acquisition and operating expenses | 24,977 | 0 | 0 | |
Inter-segment Eliminations | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Paid losses and loss adjustment expenses, net of reinsurance | 0 | (143) | (196) | |
Amortization of DPAC | 140 | (125) | (1,528) | |
Other underwriting, policy acquisition and operating expenses | (3,231) | (2,316) | (911) | |
Specialty P&C | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Net premiums earned | 695,008 | 477,365 | 499,058 | |
Losses and loss adjustment expenses incurred related to current year, net of reinsurance | 608,106 | 497,554 | 526,744 | |
Losses and loss adjustment expenses incurred related to prior year, net of reinsurance | $ 1,000 | (32,942) | (27,480) | 5,741 |
Net premiums written | 626,147 | 451,019 | 495,750 | |
Specialty P&C | NORCAL Group | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Losses and loss adjustment expenses incurred related to prior year, net of reinsurance | 7,900 | |||
Specialty P&C | Operating segments | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Paid losses and loss adjustment expenses, net of reinsurance | 538,885 | 379,656 | 382,845 | |
Amortization of DPAC | 61,662 | 53,562 | 56,605 | |
Other underwriting, policy acquisition and operating expenses | 66,047 | 56,037 | 63,705 | |
Workers' Compensation Insurance | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Net premiums earned | 164,600 | 171,772 | 189,240 | |
Losses and loss adjustment expenses incurred related to current year, net of reinsurance | 121,804 | 118,523 | 129,450 | |
Losses and loss adjustment expenses incurred related to prior year, net of reinsurance | (7,100) | (6,971) | (7,801) | |
Net premiums written | 161,865 | 164,871 | 182,233 | |
Workers' Compensation Insurance | Operating segments | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Paid losses and loss adjustment expenses, net of reinsurance | 121,302 | 118,496 | 117,848 | |
Amortization of DPAC | 15,100 | 15,895 | 17,144 | |
Other underwriting, policy acquisition and operating expenses | 37,318 | 40,554 | 40,376 | |
Segregated Portfolio Cell Reinsurance | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Net premiums earned | 63,688 | 66,352 | 78,563 | |
Net investment income | 814 | 1,084 | 1,578 | |
Losses and loss adjustment expenses incurred related to current year, net of reinsurance | 42,721 | 46,200 | 62,546 | |
Losses and loss adjustment expenses incurred related to prior year, net of reinsurance | (10,152) | (16,595) | (10,134) | |
Net premiums written | 63,042 | 64,159 | 77,639 | |
Segregated Portfolio Cell Reinsurance | Operating segments | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Paid losses and loss adjustment expenses, net of reinsurance | 37,127 | 46,267 | 37,034 | |
Amortization of DPAC | 18,730 | 19,636 | 21,717 | |
Other underwriting, policy acquisition and operating expenses | 2,905 | 1,073 | 1,484 | |
Lloyd's Syndicates | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Net premiums earned | 48,372 | 77,226 | 80,671 | |
Net investment income | 1,961 | 4,128 | 4,551 | |
Losses and loss adjustment expenses incurred related to current year, net of reinsurance | 25,101 | 49,569 | 46,958 | |
Losses and loss adjustment expenses incurred related to prior year, net of reinsurance | 4,711 | 647 | 411 | |
Net premiums written | 31,667 | 67,652 | 87,103 | |
Lloyd's Syndicates | Operating segments | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Paid losses and loss adjustment expenses, net of reinsurance | 47,931 | 40,897 | 36,593 | |
Amortization of DPAC | 14,973 | 21,597 | 21,392 | |
Other underwriting, policy acquisition and operating expenses | 2,984 | 8,539 | 13,319 | |
Corporate | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Net investment income | 67,747 | 66,786 | 87,140 | |
Corporate | Operating segments | ||||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | ||||
Other underwriting, policy acquisition and operating expenses | $ 26,641 | $ 23,429 | $ 19,146 |
Schedule IV - Reinsurance (Deta
Schedule IV - Reinsurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property and Liability | |||
Premiums earned | $ 1,020,107 | $ 862,742 | $ 926,035 |
Premiums ceded | (93,998) | (113,582) | (124,171) |
Premiums assumed | 45,559 | 43,555 | 45,668 |
Net premiums earned | $ 971,668 | $ 792,715 | $ 847,532 |
Percentage of amount assumed to net | 4.69% | 5.49% | 5.39% |