Exhibit 99.1
ProAssurance Reports 2003 Second Quarter Results
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Aug. 11, 2003--ProAssurance
Corporation (NYSE:PRA):
SUMMARY
ProAssurance (NYSE:PRA) reports significant increases in Premiums,
Income and Earnings per share for the quarter and six months that
ended June 30, 2003. For the second quarter of 2003, Net Income per
diluted share was $0.30 and Operating Income was $0.26 per diluted
share. At June 30, 2003, book value was $18.58 per outstanding share.
ProAssurance's professional liability segment continued its return to
profitability in the quarter, and its personal lines segment again
posted a combined ratio below 90%.
ProAssurance Corporation (NYSE:PRA) reports the following results
for the second quarter of 2003:
Unaudited Consolidated Financial Summary
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
------------------ ------------------
Gross Premiums Written $157,806 $123,075 $360,466 $304,188
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Net Premiums Written $138,278 $103,853 $317,214 $255,653
======== ======== ======== ========
Net Premiums Earned $147,684 $113,594 $285,880 $224,083
======== ======== ======== ========
Net Investment Income $ 17,884 $ 19,752 $ 35,092 $ 38,954
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Capital Gains (Losses) $ 1,706 $ (2,659) $ 2,713 $ (3,778)
======== ======== ======== ========
Total Revenues $169,125 $132,710 $327,235 $262,883
======== ======== ======== ========
Total Expenses $158,025 $131,309 $308,073 $260,259
======== ======== ======== ========
Income before cumulative
effect of accounting change $ 8,792 $ 1,084 $ 15,141 $ 3,062
Cumulative effect of
accounting change - - - 1,694
-------- -------- -------- --------
Net Income $ 8,792 $ 1,084 $ 15,141 $ 4,756
======== ======== ======== ========
Net Cash Provided by
Operations $ 67,477 $ 42,498 $139,999 $ 97,577
======== ======== ======== ========
Weighted average number of
common shares outstanding
Basic 28,943 25,849 28,919 25,842
Diluted 29,154 25,879 29,079 25,864
Earnings per share (basic &
diluted)
Income before cumulative
effect of accounting
change $ 0.30 $ 0.04 $ 0.52 $ 0.12
Cumulative effect of
accounting change - - - 0.06
-------- -------- -------- --------
Net Income per share $ 0.30 $ 0.04 $ 0.52 $ 0.18
======== ======== ======== ========
Net Loss Ratio 88.9% 94.2% 89.7% 95.6%
Expense Ratio 17.8% 20.7% 17.7% 19.9%
-------- -------- -------- --------
Combined Ratio 106.7% 114.9% 107.4% 115.5%
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Operating Results (Non-GAAP)
Operating Income $ 7,570 $ 3,602 $ 13,418 $ 6,445
======== ======== ======== ========
Operating Income per share $ 0.26 $ 0.14 $ 0.46 $ 0.25
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Operating Income is a "Non-GAAP" financial measure which
ProAssurance defines 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 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 Six Months Ended
June 30, June 30,
2003 2002 2003 2002
------------------ -----------------
Net Income $ 8,792 $ 1,084 $15,141 $ 4,756
Adjustments, net of tax effects:
Add:
Net Realized Investment Losses - 1,728 - 2,456
Guaranty Fund Assessments 155 790 308 927
Subtract:
Net Realized Investment Gains 1,377 - 2,031 -
Cumulative effect of
Accounting Change - - - 1,694
------- ------- ------- -------
Operating Income $ 7,570 $ 3,602 $13,418 $ 6,445
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Chairman A. Derrill Crowe, M.D. said, "We believe ProAssurance's
performance so far this year validates our focus on adequate pricing
and careful underwriting in both segments of our business. Dr. Crowe
further explained that ProAssurance's commitment to its insureds also
plays a large role in the Company's success. He said, "As we have
increased prices to realistic levels to account for more severe loss
trends, we have also raised our already high expectations for the
quality of service we provide to our policyholders. That has helped us
retain desirable insureds, while attracting new customers who value
the strength of our balance sheet and our ability to keep our
long-term promise to resolve their insurance claims."
Unaudited Balance Sheet Highlights:
(in millions, except per share data)
June 30, 2003 December 31, 2002
------------- -----------------
Stockholders' Equity $ 538 $ 505
Total Investments $ 1,894 $ 1,679
Total Assets $ 2,749 $ 2,587
Policy Liabilities $ 2,093 $ 1,933
Book Value Per Share $ 18.58 $ 17.49
Net unrealized gains (after-tax) in the investment portfolio were
$52.1 million at June 30, 2003, and $35.5 million at December 31,
2002. These net unrealized gains are primarily in fixed income
securities. Interest Expense in the quarter was $491,000, and was $1.1
million for the first two quarters of 2003.
Total Goodwill is $26.4 million. Goodwill from the 2001
consolidation with Professionals Group accounts for approximately
$18.2 million of that total, and $7.6 million is attributable to the
Company's acquisition of the outstanding minority shares of its MEEMIC
Holdings subsidiary in the first quarter of 2003. The Company did not
repurchase any shares of its common stock during the quarter; 1.02
million shares remain authorized for repurchase.
Debt Issuance
In the two weeks following the close of the second quarter,
ProAssurance sold $107.6 million of 3.9% convertible senior debentures
due 2023. The majority of the proceeds have been used to pay off the
Company's $67.5 million existing term bank financing; the remainder is
being used for general corporate purposes such as expanding the
Company's capacity to write additional professional liability
business.
Ratings
During the second quarter, A. M. Best affirmed the financial
strength of ProAssurance's insurance subsidiaries at "A-" (Excellent)
with a "Stable" outlook. Standard & Poor's affirmed its "A-" (Strong)
rating on ProAssurance and maintained its "Negative" outlook,
primarily because of concerns about the medical liability market.
ProAssurance's President, Victor T. Adamo, commented, "At a time when
many competitors have been downgraded, we believe the affirmation of
our ratings is another factor that differentiates ProAssurance in the
marketplace."
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, except ratios)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
------------------ ------------------
Gross Premiums Written $107,567 $ 78,500 $265,816 $220,341
======== ======== ======== ========
Net Premiums Written $ 91,967 $ 63,069 $230,790 $177,870
======== ======== ======== ========
Net Premiums Earned $105,167 $ 77,180 $203,404 $153,164
======== ======== ======== ========
Net Investment Income $ 15,379 $ 17,292 $ 29,991 $ 33,895
======== ======== ======== ========
Capital Gains (Losses) $ 1,780 $ (3,303) $ 2,612 $ (4,422)
======== ======== ======== ========
Total Revenues $123,691 $ 92,748 $238,565 $185,351
======== ======== ======== ========
Total Expenses $120,751 $ 99,978 $234,300 $194,003
======== ======== ======== ========
Net Loss Ratio 98.8% 110.2% 99.3% 108.2%
Expense Ratio 16.0% 19.3% 15.9% 18.5%
-------- -------- -------- --------
Combined Ratio 114.8% 129.5% 115.2% 126.7%
======== ======== ======== ========
Operating Ratio 100.2% 107.1% 100.5% 104.6%
======== ======== ======== ========
"The medical professional liability market remains challenging,
but we believe our approach remains sound. Loss trends continue to
drive our pricing higher, and we are committed to maintaining the rate
adequacy we have worked so hard to achieve. The recent failure of one
competitor and the downgrade of several others provides us with a
clear example of what can happen to companies that believe they are
doing their customers a favor by charging less than adequate
premiums," said Dr. Crowe.
"At a time when many other companies are exiting markets and
imposing moratoriums on new business, ProAssurance is able to write
new policies and address the need for new capacity in underserved
markets. We are an attractive insurer because of the integrity of our
balance sheet, but much of our success in retaining insureds and
attracting new business is also the result of the hard work and
dedication of our sales staff and the agents who represent our
companies," said Adamo.
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 Segment Data:
(in thousands, except ratios)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
------------------ ----------------
Gross Premiums Written $50,239 $44,575 $94,650 $83,847
======= ======= ======= =======
Net Premiums Written $46,311 $40,784 $86,424 $77,783
======= ======= ======= =======
Net Premiums Earned $42,517 $36,414 $82,476 $70,919
======= ======= ======= =======
Net Investment Income $ 2,458 $ 2,460 $ 5,032 $ 5,059
======= ======= ======= =======
Capital Gains (Losses) $ (74) $ 644 $ 101 $ 644
======= ======= ======= =======
Total Revenues $45,427 $39,962 $88,601 $77,532
======= ======= ======= =======
Total Expenses $36,783 $30,586 $72,704 $64,742
======= ======= ======= =======
Net Loss Ratio 64.3% 60.5% 65.9% 68.5%
Expense Ratio 22.2% 23.5% 22.3% 22.8%
------- ------- ------- -------
Combined Ratio 86.5% 84.0% 88.2% 91.3%
======= ======= ======= =======
Operating Ratio 80.7% 77.2% 82.1% 84.2%
======= ======= ======= =======
"MEEMIC's policyholder count is increasing as the Company expands
into under-represented areas in Michigan, and increases its
penetration in the parochial and higher education markets," said Dr.
Crowe. He pointed out that homeowners rates rose by 22% in July of
2002 and are now being fully earned on a larger policyholder base.
"The leveraging effect of higher rates, a preferred class of business
and a growing book of business drives the superior performance of
MEEMIC," he said.
Conference Call Information
ProAssurance's conference call to address these results will be
held at 9:00 am ET on Tuesday, August 12, 2003. Investors may
participate by calling (800) 547-8960 or (706) 645-9133. The call will
be webcast on the Investor Relations section of the ProAssurance
website, ProAssurance.com, and at www.streetevents.com. There will be
a telephone replay through August 15, 2003 at (800) 642-1687 or (706)
645-9291 (access code 1756361), and an internet replay at the same
websites.
Availability of Statutory Filings
ProAssurance is now making its consolidated and subsidiary
statutory filings available online. The statutory statements may be
accessed through the top menu within the investor relations section of
ProAssurance.com.
About ProAssurance
ProAssurance Corporation is a specialty insurer with more than
$2.7 billion in assets and more than $630 million in gross written
premiums. As the nation's fourth largest 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