Exhibit 99.1
ProAssurance Reports 2003 First Quarter Results
BIRMINGHAM, Ala.--(BUSINESS WIRE)--May 12, 2003--ProAssurance
Corporation (NYSE:PRA)
SUMMARY
ProAssurance Corporation (NYSE:PRA) reported significant increases
in Net and Operating Income for the first quarter of 2003. Net Income
rose from $0.14 to $0.22 per diluted share and Operating Income
increased from $0.11 to $0.20 per diluted share. Book Value increased
to $17.68 per diluted outstanding share at the end of the quarter.
ProAssurance's professional liability segment returned to
profitability in the quarter and the Company's personal lines segment
produced strong earnings as cash flow continued to increase.
ProAssurance Corporation (NYSE:PRA) today reported the following
results for the quarter ended March 31, 2003:
Unaudited Consolidated Financial Summary
(in thousands, except per share data)
Three Months Ended
March 31,
2003 2002
------------------
Gross Premiums Written $202,660 $181,113
======== ========
Net Premiums Written $178,936 $151,800
======== ========
Net Premiums Earned $138,196 $110,489
======== ========
Investment Income $ 17,248 $ 19,202
======== ========
Total Revenues $158,110 $130,173
======== ========
Total Expenses $150,048 $128,950
======== ========
Income before cumulative effect of accounting
change $ 6,349 $ 1,978
Cumulative effect of accounting change - 1,694
-------- --------
Net Income $ 6,349 $ 3,672
======== ========
Weighted average number of common shares
outstanding:
Basic 28,893 25,851
======== ========
Diluted 29,003 25,865
======== ========
Earnings per share (basic & diluted)
Income before cumulative effect of accounting
change $ 0.22 $ 0.08
Cumulative effect of accounting change - .06
-------- --------
Net Income per share $ 0.22 $ 0.14
======== ========
Net Cash Provided by Operating Activities $ 72,522 $ 55,079
======== ========
Net Loss Ratio 90.5% 97.0%
Expense Ratio 17.7% 19.0%
-------- --------
Combined Ratio 108.2% 116.0%
======== ========
Operating Results (Non-GAAP)
Operating Income $ 5,848 $ 2,843
======== ========
Operating Income per share $ 0.20 $ 0.11
======== ========
Operating Income is a "Non-GAAP" financial measure. ProAssurance
defines Operating Income as Net Income excluding the after-tax effects
of guaranty fund assessments, capital gains/losses and the results of
accounting changes. This definition may differ from those used by
other companies. ProAssurance's management uses Operating Income
because guaranty fund assessments and accounting changes are out of
the Company's control, and the realization of net realized investment
gains or losses is largely discretionary as to timing and therefore
could distort the comparability of results. ProAssurance uses
Operating Income as one of the measures to evaluate performance across
reporting periods and believes it is a useful tool for investors. The
following table reconciles Net Income to Operating Income:
Reconciliation of Net Income to Operating Income
(in thousands)
Three Months Ended
March 31,
2003 2002
------------------
Net Income $ 6,349 $ 3,672
Adjustments, net of tax effects
Add:
Net Realized Investment Losses - 727
Guaranty Fund Assessments 153 138
Subtract:
Net Realized Investment Gains 654 -
Cumulative effect of Accounting Change - 1,694
-------- --------
Operating Income $ 5,848 $ 2,843
Chairman A. Derrill Crowe, M.D. focused on the increase in
Operating Income as evidence that ProAssurance's disciplined approach
to professional liability pricing and underwriting is bearing fruit.
"We're pleased with the progress we've made, but more remains to be
done. Our results are improving as loss-driven price increases earn
their way to the bottom line. While our vigilance in underwriting and
adequate pricing has played a large role in these results, our
forceful approach to claims defense has also been a key factor, both
in enhancing the bottom line and delivering value for our customers,"
said Dr. Crowe. He also highlighted continued strength in the personal
lines segment. "MEEMIC's excellent results continue to drive our
profitability while our professional liability segment rebounds," he
said.
Unaudited Balance Sheet Highlights:
(in millions, except per share data)
March 31, 2003 December 31, 2002
-------------- -----------------
Stockholders' Equity $ 511 $ 505
Total Investments $ 1,817 $ 1,679
Total Assets $ 2,669 $ 2,587
Policy Liabilities $ 2,027 $ 1,933
Book Value Per Share $ 17.68 $ 17.49
Book Value Per Share
(excluding unrealized gains or
losses) $ 16.49 $ 16.26
Total Goodwill is $27.2 million. The Company's first quarter
acquisition of the outstanding minority shares of its MEEMIC Holdings
subsidiary added Goodwill of approximately $7.6 million. Goodwill from
the 2001 consolidation with Professionals Group accounts for
approximately $18.2 million.
There are approximately $34.4 million in net unrealized gains
(after tax) in ProAssurance's investment portfolio, primarily in fixed
income securities. ProAssurance did not purchase any of its common
stock during the quarter, which leaves 1.02 million shares authorized
for repurchase.
Professional Liability Segment
The companies in ProAssurance's professional liability segment are
The Medical Assurance Company, Inc., Medical Assurance of West
Virginia, Inc., ProNational Insurance Company and Red Mountain
Casualty Insurance Company, Inc. Each focuses on the delivery of
professional liability insurance to physicians and surgeons, dentists,
hospitals, and others involved in the delivery of health care.
Selected Segment Data:
(in thousands)
Three Months Ended
March 31,
2003 2002
------------------
Gross Premiums Written $158,249 $141,841
======== ========
Net Premiums Written $138,823 $114,801
======== ========
Net Premiums Earned $ 98,237 $ 75,984
======== ========
Investment Income $ 14,612 $ 16,603
======== ========
Capital Gains (Losses) $ 832 $ (1,119)
======== ========
Total Revenues $114,874 $ 92,603
======== ========
Total Expenses $113,549 $ 94,025
======== ========
Net Loss Ratio 99.8% 106.1%
Expense Ratio 15.8% 17.6%
-------- --------
Combined Ratio 115.6% 123.7%
======== ========
"We focus on bringing value to our customers while at the same
time ensuring that we maintain the financial strength for which we are
known. The recent failure of another large competitor, and the
downgrade of several others, underscores the need to maintain the
strength of our balance sheet," said Dr. Crowe. "We make a promise of
protection and service each time we issue a policy, and our
disciplined approach to business helps us make certain we can keep
those promises," he added.
Victor T. Adamo, President of ProAssurance, said the Company
modestly capitalized on expansion opportunities in the quarter and
added policyholders in existing markets, primarily because of the
regulatory problems of a southeastern competitor. "These are uncertain
times in the medical liability business, and insureds see the wisdom
of seeking out financially stable, service-oriented companies such as
ProAssurance. Our financial goals go hand-in-hand with our focus on
service and claims defense. Each helps solidify ProAssurance as a
leader in service to policyholders and returns to investors," Adamo
said.
Personal Lines Segment
MEEMIC Insurance Company (MEEMIC), the sole company in
ProAssurance's personal lines segment, principally provides auto and
homeowners' coverages, primarily for educational employees and their
families.
Selected Personal Lines Segment Data:
(in thousands)
Three Months Ended
March 31,
2003 2002
------------------
Gross Premiums Written $ 44,411 $ 39,272
======== ========
Net Premiums Written $ 40,113 $ 36,999
======== ========
Net Premiums Earned $ 39,959 $ 34,505
======== ========
Investment Income $ 2,574 $ 2,599
======== ========
Capital Gains (Losses) $ 175 $ -
======== ========
Total Revenues $ 43,174 $ 37,570
======== ========
Total Expenses $ 35,921 $ 34,156
======== ========
Net Loss Ratio 67.6% 76.9%
Expense Ratio 22.3% 22.1%
-------- --------
Combined Ratio 89.9% 99.0%
======== ========
MEEMIC improved both its top and bottom line performance in the
quarter. Gross Premiums Written increased because of policyholder
growth in the automobile and homeowners lines, as well as higher
premiums for homeowners policies. Homeowners rates increased 22% in
July 2002, and those increases are earning their way to the bottom
line.
"MEEMIC's ability to underwrite in a preferred market, and its
ability to handle claims with great efficiency, allows the Company to
charge premiums that are very competitive, while producing remarkable
returns," said Adamo. He also cited the favorable weather conditions
in the first quarter as a contributing factor in MEEMIC's outstanding
quarter. "We expect to produce good results in normal weather
quarters, and when the weather is favorable, the results are
outstanding, he said.
Conference Call Information
ProAssurance's conference call to address these results will be
held at 9:00 AM ET on Tuesday, May 13, 2003. Investors may participate
by calling (800) 547-8960 or (706) 645-9133. The call will be webcast
at www.streetevents.com and on the Investor Relations section of the
ProAssurance website, www.ProAssurance.com.
A telephone replay will be available through May 16, 2003 at (800)
642-1687 or (706) 645-9291 (access code 194490), and an internet
replay will be available through the same websites through May 30,
2003.
About ProAssurance
ProAssurance Corporation is a specialty insurer with more than
$2.6 billion in assets and more than $635 million in annualized gross
written premiums. The Company was formed by the combination of Medical
Assurance, Inc. and Professionals Group, Inc. in June 2001. As the
nation's third largest active writer of medical professional liability
insurance, ProAssurance's subsidiaries, The Medical Assurance Company,
Inc., Medical Assurance of West Virginia, Inc., ProNational Insurance
Company and Red Mountain Casualty Insurance Company, Inc. are
recognized leaders in developing solutions which serve the needs of
the evolving health care industry. ProAssurance is the tenth largest
writer of personal auto coverage in Michigan through its subsidiary,
MEEMIC Insurance Company. A. M. Best assigns a rating of "Excellent"
to ProAssurance and its subsidiaries; Standard & Poor's assigns the
Company's professional liability carriers a "Strong" rating.
Caution Regarding Forward Looking Statements
This news release contains historical information as well as
forward-looking statements that are based upon ProAssurance's
estimates and anticipation of future events that are subject to
certain risks and uncertainties that could cause actual results to
vary materially from the expected results described in the
forward-looking statements. The words "anticipate," "believe,"
"estimate," "expect," "intend," "may," "preliminary," "project,"
"should," "will," and similar expressions are intended to identify
these forward-looking statements. There are numerous important factors
that could cause actual results to differ materially from those in the
forward-looking statements. Thus, sentences and phrases that convey
the Company's view of future events and trends in the medical
professional liability insurance marketplace are expressly designated
as Forward Looking Statements. The principal risk factors that may
cause actual results to differ materially from those expressed in the
forward-looking statements are described in various documents filed by
ProAssurance Corporation with the Securities and Exchange Commission,
including Form 10K for the year ended December 31, 2002 and Form 10Q
for the most recent quarter. In view of the many uncertainties
inherent in the forward-looking statements made in this document, the
inclusion of such information should not be taken as representation by
the Company or any other person that ProAssurance's objectives or
plans will be realized. ProAssurance expressly disclaims any
obligation to update or alter its forward looking statements whether
as a result of new information, future events or otherwise, except as
required by law.
CONTACT: ProAssurance Corporation, Birmingham
Frank B. O'Neil, 800/282-6242 or 205/877-4461
foneil@ProAssurance.com