Exhibit 99.1
ProAssurance Reports Nine Month and Third Quarter 2003 Results
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Nov. 12, 2003--ProAssurance
Corporation (NYSE:PRA):
SUMMARY
ProAssurance (NYSE:PRA) reports that premiums, income and earnings
per share were significantly higher for the quarter and nine months
that ended September 30, 2003. Net Income per diluted share was $0.33
and Operating Income was $0.30 per diluted share. Book value continued
to increase, rising to $18.56 per share. ProAssurance's professional
liability segment continued to improve on profitable results and
personal lines, while affected somewhat by the mid-summer blackout,
continues to generate industry-leading performance.
ProAssurance Corporation (NYSE: PRA) reports the following results
for the quarter and nine months ended September 30, 2003:
Unaudited Consolidated Financial Summary
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
------------------ -------------------
Gross Premiums Written $196,750 $160,875 $557,216 $465,063
======== ======== ======== ========
Net Premiums Written $180,620 $130,653 $497,834 $386,306
======== ======== ======== ========
Net Premiums Earned $165,430 $121,947 $451,310 $346,030
======== ======== ======== ========
Net Investment Income $ 18,301 $ 19,819 $ 53,393 $ 58,773
======== ======== ======== ========
Net Realized Investment Gains
(Losses) $ 1,436 $(13,560) $ 4,149 $(17,338)
======== ======== ======== ========
Total Revenues $186,189 $129,866 $513,424 $392,749
======== ======== ======== ========
Total Expenses $173,714 $137,937 $481,787 $398,196
======== ======== ======== ========
Income (Loss) before
cumulative effect
of accounting change $ 9,735 $ (4,524) $ 24,876 $ (1,462)
Cumulative effect of
accounting change - - - 1,694
-------- -------- -------- --------
Net Income (loss) $ 9,735 $ (4,524) $ 24,876 $ 232
======== ======== ======== ========
Net Cash Provided by
Operations $ 77,773 $ 59,560 $217,772 $157,137
======== ======== ======== ========
Weighted average number of
common shares outstanding
Basic 28,967 25,851 28,935 25,845
Diluted 29,165 25,851 29,108 25,862
Earnings per share (basic)
Income before cumulative
effect of accounting
change $ 0.34 $ (0.18) $ 0.86 $ (0.06)
Cumulative effect of
accounting change - - - 0.07
-------- -------- -------- --------
Net Income per share $ 0.34 $ (0.18) $ 0.86 $ 0.01
======== ======== -------- ========
Earnings per share (diluted)
Income before cumulative
effect of accounting
change $ 0.33 $ (0.18) $ 0.85 $ (0.06)
Cumulative effect of
accounting change - - - 0.06
-------- -------- -------- --------
Net Income per share $ 0.33 $ (0.18) $ 0.85 $ 0.00
======== ======== ======== ========
Net Loss Ratio 88.1% 95.0% 89.1% 95.4%
Expense Ratio 16.0% 17.5% 17.1% 19.0%
-------- -------- -------- --------
Combined Ratio 104.1% 112.5% 106.2% 114.4%
======== ======== ======== ========
Operating Results (Non-GAAP)
Operating Income $ 8,771 $ 4,438 $ 22,189 $ 10,883
======== ======== ======== ========
Operating Income per diluted
share $ 0.30 $ 0.17 $ 0.76 $ 0.42
======== ======== ======== ========
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 Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
------------------ -----------------
Net Income (Loss) $9,735 $(4,524) $24,876 $ 232
Adjustments, net of tax effects:
Add:
Net Realized Investment
Losses - 8,813 - 11,269
Guaranty Fund Assessments - 149 277 1,076
Subtract:
Net Realized Investment
Gains 933 - 2,964 -
Cumulative Effect of
Accounting Change - - - 1,694
Guaranty Fund Assessments 31 - - -
------ ------ ------- -------
Operating Income $8,771 $4,438 $22,189 $10,883
====== ====== ======= =======
Chairman A. Derrill Crowe, M.D. said, "Our results in the third
quarter, and for the year-to-date, are indicative of the progress we
are making toward our fourth quarter consolidated combined ratio goal
of 102% to 103%. We expect that progress to continue as we move into
2004 and beyond as the clear leader in financial strength, customer
service and investor confidence."
Unaudited Balance Sheet Highlights:
(in millions, except per share data)
September 30, 2003 December 31, 2002
------------------ -----------------
Stockholders' Equity $ 538 $ 505
Total Investments $2,008 $1,679
Total Assets $2,897 $2,587
Policy Liabilities $2,181 $1,933
Book Value Per Share $18.56 $17.49
In the third quarter, there was $3.6 million positive reserve
development in personal lines; there was no prior period reserve
development in professional liability. For the nine months, there has
been $7.1 million of favorable development in personal lines, offset
by a $750,000 addition to professional liability in the second
quarter.
Net unrealized gains (after-tax) in the investment portfolio were
$41.7 million at September 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 $1.2 million, and was
$2.3 million for the first three quarters of 2003.
Total Goodwill is $26.4 million; approximately $18.2 million of
that total is related to the consolidation with Professionals Group,
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.
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 Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
------------------ ------------------
Gross Premiums Written $145,526 $115,372 $411,342 $335,713
======== ======== ======== ========
Net Premiums Written $134,126 $ 89,026 $364,916 $266,896
======== ======== ======== ========
Net Premiums Earned $121,676 $ 83,031 $325,080 $236,195
======== ======== ======== ========
Net Investment Income $ 15,583 $ 17,352 $ 45,574 $ 51,247
======== ======== ======== ========
Net Realized Investment Gains
(Losses) $ 1,431 $(13,547) $ 4,043 $(17,969)
======== ======== ======== ========
Total Revenues $139,163 $ 88,021 $377,728 $273,372
======== ======== ======== ========
Total Expenses $132,500 $103,820 $366,800 $297,823
======== ======== ======== ========
Net Loss Ratio 95.5% 109.6% 97.9% 108.7%
Expense Ratio 13.4% 15.4% 15.0% 17.4%
-------- -------- -------- --------
Combined Ratio 108.9% 125.0% 112.9% 126.1%
======== ======== ======== ========
Operating Ratio 96.1% 104.1% 98.9% 104.4%
======== ======== ======== ========
"We continue to be pleased with the progress we are making in
returning the professional liability segment to more acceptable levels
of profitability, but we remain aware of the turbulent nature of the
medical professional liability market, especially in the area of
losses and reserving. Along with our determination to maintain
financial discipline through adequate pricing and reserving, our
thorough underwriting and effective claims management is proving to be
best for the long-term interests of our policyholders and shareholders
alike," said Dr. Crowe.
ProAssurance's President, Victor T. Adamo, pointed out that
ProAssurance's financial strength and customer commitment remains a
key feature in the Company's success. He said, "ProAssurance, with its
demonstrated track-record of financial stability and industry
expertise, continues to benefit from the turmoil in the marketplace as
competitors come under financial stress after years of under-pricing.
And, as established companies such as St. Paul and Farmer's leave the
business, our demonstrated ability to serve the market in the
long-term becomes increasingly important to the healthcare community."
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 Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
---------------- ------------------
Gross Premiums Written $51,224 $45,503 $145,874 $129,350
======= ======= ======== ========
Net Premiums Written $46,494 $41,627 $132,918 $119,410
======= ======= ======== ========
Net Premiums Earned $43,754 $38,916 $126,230 $109,835
======= ======= ======== ========
Net Investment Income $ 2,612 $ 2,467 $ 7,644 $ 7,526
======= ======= ======== ========
Net Realized Investment Gains
(Losses) $ 5 $ (13) $ 106 $ 631
======= ======= ======== ========
Total Revenues $46,920 $41,845 $135,521 $119,377
======= ======= ======== ========
Total Expenses $39,721 $33,428 $112,425 $ 98,170
======= ======= ======== ========
Net Loss Ratio 67.7% 63.8% 66.5% 66.9%
Expense Ratio 23.0% 22.1% 22.5% 22.5%
------- ------- -------- --------
Combined Ratio 90.7% 85.9% 89.0% 89.4%
======= ======= ======== ========
Operating Ratio 84.7% 79.6% 82.9% 82.5%
======= ======= ======== ========
"MEEMIC's results in the quarter were affected by losses,
primarily due to fire, that resulted from the mid-summer blackout in
the Midwest. This is an example of the unpredictable nature of the
personal lines business on a quarter-to-quarter basis, but the overall
results at MEEMIC continue to be among the best in the industry. While
the combined ratio did tick up, investors should not lose sight of
MEEMIC's extraordinary profitability and its continued growth in
premium and policyholder count," said Dr. Crowe.
Conference Call Information
ProAssurance will discuss these results in a conference call at
9:00 AM ET on Thursday, November 13, 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 StreetEvents.com. There will be a telephone
replay through November 20, 2003 at (800) 642-1687 or (706) 645-9291
(access code 3263788), and an internet replay at the same websites.
Expected Exercise of Options
ProAssurance employees and directors are currently under a
temporary stock trading blackout pending release of this earnings
report. After that blackout period expires, and after insurance
regulatory approvals are obtained, Dr. Crowe expects to exercise
approximately 300,000 options. Dr. Crowe has told the Company he
expects to hold the shares that he will realize in that exercise, but
investors are cautioned that Dr. Crowe may sell existing shares to
fund the tax liability generated by the exercise. The Company believes
other officers may exercise options in the coming weeks to increase
their ProAssurance share holdings.
Availability of Statutory Filings
ProAssurance is now making its yearly and quarterly 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
$2.8 billion in assets and more than $650 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