Exhibit 99
ProAssurance Reports Fourth Quarter and Year-End 2003 Results
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Feb. 23, 2004--
SUMMARY
ProAssurance Corporation (NYSE: PRA) reports Net Income of $38.7
million, or $1.33 per diluted share, for 2003, more than triple 2002's
Net Income of $12.2 million. Net Income for the fourth quarter of 2003
was $13.8 million, or $0.47 per diluted share, which is almost $2
million higher than the same quarter last year. The Professional
Liability segment continues to meet the Company's profitability
expectations and intermediate goals, and Personal Lines results
continue to surpass industry averages. The Company reiterated its
comfort with current reserve levels after completion of the regular,
in-depth review at year end.
ProAssurance Corporation reports the following results for the
year and quarter ended December 31, 2003:
Unaudited Consolidated Financial Summary
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
------------------- -------------------
Gross Premiums Written $182,894 $171,093 $740,110 $636,156
======== ======== ======== ========
Net Premiums Written $171,075 $150,817 $668,909 $537,123
======== ======== ======== ========
Net Premiums Earned $172,204 $131,378 $623,514 $477,408
======== ======== ======== ========
Net Investment Income $ 20,226 $ 18,145 $ 73,619 $ 76,918
======== ======== ======== ========
Net Realized Investment Gains $ 1,843 $ 12,032 $ 5,992 $ (5,306)
======== ======== ======== ========
Total Revenues $196,216 $163,018 $709,640 $555,767
======== ======== ======== ========
Guaranty Fund Assessments
(Credits) $ (105) $ 573 $ 321 $ 2,228
======== ======== ======== ========
Total Expenses $177,519 $143,961 $659,306 $542,157
======== ======== ======== ========
Income before cumulative
effect of accounting change $ 13,827 $ 11,975 $ 38,703 $ 10,513
Cumulative effect of
accounting change - - - 1,694
-------- -------- -------- --------
Net Income (loss) $ 13,827 $ 11,975 $ 38,703 $ 12,207
======== ======== ======== ========
Net Cash Provided by
Operations $ 70,569 $ 19,824 $288,341 $176,961
======== ======== ======== ========
Weighted average number of
common shares outstanding
Basic 29,016 27,377 28,956 26,231
Diluted 29,252 27,419 29,144 26,254
Earnings per share (basic)
Income before cumulative
effect of
accounting change $ 0.48 $ 0.44 $ 1.34 $ 0.40
Cumulative effect of
accounting change - - - 0.07
-------- -------- -------- --------
Net Income per share $ 0.48 $ 0.44 $ 1.34 $ 0.47
======== ======== ======== ========
Earnings per share (diluted)
Income before cumulative
effect of
accounting change $ 0.47 $ 0.43 $ 1.33 $ 0.39
Cumulative effect of
accounting change - - - 0.07
-------- -------- -------- --------
Net Income per share $ 0.47 $ 0.43 $ 1.33 $ 0.46
======== ======== ======== ========
Net Loss Ratio 86.7% 89.7% 88.4% 93.9%
Expense Ratio 15.7% 19.3% 16.7% 19.1%
-------- -------- -------- --------
Combined Ratio 102.4% 109.0% 105.1% 113.0%
======== ======== ======== ========
Chairman A. Derrill Crowe, M.D. commented on the results, "By
achieving a consolidated combined ratio of 102.4% in the fourth
quarter we have reached the goal that we established for ourselves in
October 2002. We believe we are solidly on the road to more acceptable
levels of profitability and expect to report continued improvement
throughout 2004 and 2005."
Unaudited Balance Sheet Highlights:
(in millions, except per share data)
December 31, 2003 December 31, 2002
----------------- -----------------
Stockholders' Equity $ 546 $ 505
Total Investments $ 2,056 $ 1,679
Total Assets $ 2,879 $ 2,587
Policy Liabilities $ 2,173 $ 1,933
Book Value per Share $ 18.77 $ 17.49
There was $4.5 million of favorable reserve development in the
fourth quarter; $800,000 of that came from prior year Professional
Liability reserves, and $3.7 million stemmed from prior year Personal
Lines reserves. Total reserve development for the year 2003 was a
favorable $10.8 million, all of which came from prior year Personal
Lines reserves. For the year, favorable reserve development in
Professional Liability in the fourth quarter approximately offset a
previous addition to reserves in the second quarter of 2003.
"We are confident in the level of our reserves," said Victor T.
Adamo, ProAssurance's President. He added, "Our independent actuarial
review proved the value of our prudent reserving philosophy and gives
us confidence that our reserves are adequate, even in light of the
unfavorable loss development trends in the industry over the past few
years."
At December 31, 2003, our stockholders equity included net
unrealized gains (after-tax) in the investment portfolio of $34.4
million compared to $35.5 million at December 31, 2002. These net
unrealized gains are primarily in fixed income securities. For the
year, interest expense was $3.4 million, and was $1.2 million in the
quarter.
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. There were no share repurchases in 2003 and
none are foreseen in 2004, as the Company uses its capital to support
the writing of new business.
Professional Liability Segment
The core companies in ProAssurance's professional liability
segment are The Medical Assurance Company, ProNational Insurance
Company, and Red Mountain Casualty Insurance Company. ProAssurance
also writes professional liability business through Medical Assurance
of West Virginia. 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 Year Ended
December 31, December 31,
2003 2002 2003 2002
------------------- -------------------
Gross Premiums Written $131,981 $126,002 $543,323 $461,715
======== ======== ======== ========
Net Premiums Written $126,036 $109,806 $490,952 $376,702
======== ======== ======== ========
Net Premiums Earned $128,166 $ 91,450 $453,246 $327,645
======== ======== ======== ========
Net Investment Income $ 17,525 $ 15,543 $ 63,099 $ 66,790
======== ======== ======== ========
Net Realized Investment Gains
(Losses) $ 1,815 $ 11,869 $ 5,858 $ (6,099)
======== ======== ======== ========
Total Revenues $148,935 $119,924 $526,663 $393,296
======== ======== ======== ========
Total Expenses $139,206 $110,110 $506,006 $407,933
======== ======== ======== ========
Net Loss Ratio 94.6% 103.5% 96.9% 107.2%
Expense Ratio 14.0% 16.9% 14.7% 17.3%
-------- -------- -------- --------
Combined Ratio 108.6% 120.4% 111.6% 124.5%
======== ======== ======== ========
Operating Ratio 94.9% 103.4% 97.7% 104.1%
======== ======== ======== ========
"Professional liability results continue the comeback we've
anticipated based on our heightened underwriting discipline and close
attention to adequate pricing," said Dr. Crowe. "Since 2001 we've
non-renewed a significant number of policyholders because of their
risk profile; while others have left because of our higher pricing.
However, we've been able to balance that lost business by adding new
insureds who pass our underwriting screens. The bottom line is that
while policyholder count has been essentially flat, our premiums
increased to appropriate levels and our results improved dramatically.
Looking ahead, we believe premiums will continue to rise, although
probably not at the pace of prior years. At the same time, we expect
to begin increasing our policyholder count because of capacity-related
retrenching at other companies coupled with the significant
uncertainty regarding the financial stability of several competitors,"
he said.
Mr. Adamo noted that ProAssurance's performance has also benefited
from its clear commitment to its policyholders. He said, "Insureds are
reminded almost weekly about the perils of buying insurance from
companies that may not be able to meet their long-term commitment. Our
ability to make--and keep--that long term promise, coupled with our
willingness to aggressively defend non-meritorious claims, makes us a
preferred choice in today's marketplace. We've successfully
communicated these differences to our insureds and to our agents, who
have helped us differentiate our Company and our strength."
Crowe noted that these differences are also important to
investors. He said, "The performance of any medical liability insurer
is not a quarter-to-quarter sprint. True success is measured over
time. Our disciplined approach to this business will allow us to
recognize the results of our sound underwriting, pricing and
claims-handling decisions."
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 Year Ended
December 31, December 30,
2003 2002 2003 2002
----------------- -------------------
Gross Premiums Written $50,913 $45,091 $196,787 $174,441
======= ======= ======== ========
Net Premiums Written $45,039 $41,011 $177,957 $160,421
======= ======= ======== ========
Net Premiums Earned $44,038 $39,928 $170,268 $149,763
======= ======= ======== ========
Net Investment Income $ 2,609 $ 2,545 $ 10,253 $ 10,071
======= ======= ======== ========
Net Realized Investment Gains $ 28 $ 163 $ 134 $ 793
======= ======= ======== ========
Total Revenues $47,189 $43,037 $182,710 $162,414
======= ======= ======== ========
Total Expenses $37,161 $33,179 $149,586 $131,349
======= ======= ======== ========
Net Loss Ratio 63.6% 58.3% 65.8% 64.6%
Expense Ratio 20.8% 24.8% 22.1% 23.1%
------- ------- -------- --------
Combined Ratio 84.4% 83.1% 87.9% 87.7%
======= ======= ======== ========
Operating Ratio 78.5% 76.7% 81.9% 81.0%
======= ======= ======== ========
"MEEMIC's performance in 2003 continued a string of successful and
profitable years. The importance of MEEMIC's specialized underwriting
in a preferred market cannot be over-emphasized, and the contribution
MEEMIC makes to our bottom line certainly can't be overlooked," said
Mr. Adamo. He highlighted MEEMIC's combined ratio, which was below 90%
for the third straight year, and for the fifth year out of the past
six.
Dr. Crowe looked ahead to growth in 2004 and beyond. He said,
"MEEMIC has shown consistent growth in premium per risk, and in the
numbers of policyholders within Michigan. Even as we continue our
efforts to grow our business in underserved areas of Michigan, we're
evaluating expansion into other states in the region. We expect to
begin that expansion within the next 12-18 months."
Conference Call Information
ProAssurance will discuss these results in a conference call at
11:00 am ET on Monday, February 23, 2004. 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 March 2, 2004 at (800) 642-1687 or (706) 645-9291
(access code 5078196), and an internet replay will be available at the
same websites.
About ProAssurance
ProAssurance Corporation is a specialty insurer with almost $2.9
billion in assets and more than $740 million in gross written
premiums. As the nation's fourth largest writer of medical
professional liability insurance, ProAssurance's principal
professional liability subsidiaries, The Medical Assurance Company,
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 principal
subsidiaries; Standard & Poor's assigns the Company's principal
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