Exhibit 99.1
ProAssurance Reports Results for Third Quarter 2004
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Nov. 9, 2004--ProAssurance
Corporation (NYSE:PRA): SUMMARY
ProAssurance Corporation reports Net Income of $51.3 million, or
$1.75 per diluted share for the first nine months of 2004, continuing
the Company's strong improvement in Net Income during 2004. For the
third quarter Net Income was $19.5 million, or $0.66 per diluted
share. ProAssurance's consolidated combined ratio was 99.6% for the
quarter, reinforcing management's expectation of underwriting
profitability for the year. Cash flow from operations remains a
highlight, reaching $285 million so far in 2004.
ProAssurance Corporation today reported its results for the nine
months and quarter ended September 30, 2004:
Unaudited Consolidated Financial Summary:
(in thousands, except per share and ratio data)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
------------------- -------------------
Gross Premiums Written $217,812 $196,750 $600,295 $557,216
========= ========= ========= =========
Net Premiums Written $198,370 $180,620 $538,085 $497,834
========= ========= ========= =========
Net Premiums Earned $175,346 $165,430 $509,086 $451,310
========= ========= ========= =========
Net Investment Income $ 22,659 $ 18,301 $ 63,192 $ 53,393
========= ========= ========= =========
Net Realized Investment Gains $ 3,063 $ 1,436 $ 7,346 $ 4,149
========= ========= ========= =========
Total Revenues $201,895 $186,189 $582,693 $513,424
========= ========= ========= =========
Guaranty Fund Assessments $ 171 $ (48) $ 704 $ 426
========= ========= ========= =========
Interest Expense $ 1,902 $ 1,188 $ 4,537 $ 2,257
========= ========= ========= =========
Total Expenses $176,538 $173,714 $512,212 $481,787
========= ========= ========= =========
Net Income $ 19,518 $ 9,735 $ 51,302 $ 24,876
========= ========= ========= =========
Net Cash Provided by
Operations $113,191 $ 77,773 $284,784 $217,772
========= ========= ========= =========
Weighted average number of
common shares outstanding
Basic 29,182 28,967 29,153 28,935
Diluted 29,400 29,165 29,395 29,108
Earnings per share
Net Income per share (basic) $ 0.67 $ 0.34 $ 1.76 $ 0.86
========= ========= ========= =========
Net Income per share
(diluted) $ 0.66 $ 0.33 $ 1.75 $ 0.85
========= ========= ========= =========
Net Loss Ratio 82.3% 88.1% 83.1% 89.1%
Expense Ratio 17.3% 16.0% 17.2% 17.1%
--------- --------- --------- ---------
Combined Ratio 99.6% 104.1% 100.3% 106.2%
========= ========= ========= =========
Operating Ratio 86.7% 93.0% 87.9% 94.4%
========= ========= ========= =========
This quarter marks the first time since year-end 1999 that we've
reached underwriting profitability. We've achieved this goal by
focusing on adequate pricing and disciplined underwriting, while
continuing to exceed our customers' expectations in delivering
services such as claims handling. Barring any unforeseen events, we
expect a consolidated combined ratio below 100% for 2004, and we're
optimistic that things will be better in the years ahead.
Unaudited Balance Sheet Highlights:
(in millions, except per share data)
September 30, 2004 December 31, 2003
------------------ -----------------
Stockholders' Equity $ 594 $ 546
Total Investments $ 2,376 $ 2,056
Total Assets $ 3,217 $ 2,879
Policy Liabilities $ 2,406 $ 2,173
Book Value per Share $ 20.34 $ 18.77
There was no prior-year reserve development in Professional
Liability during the quarter. There was $3.4 million of favorable net
reserve development in Personal Lines during the quarter, bringing
favorable net reserve development to $8.9 million so far in 2004, all
of which has been in the Personal Lines segment.
Our stockholders' equity included net unrealized after-tax gains
in the investment portfolio of $28.8 million, compared to $34.4
million at December 31, 2003. The increase in Net Income more than
offset a decrease in net unrealized gains since the end of 2003,
resulting in Book Value per share of $20.34 at September 30, 2004.
We have Total Goodwill of $23.7 million, with $15.5 million
related to the consolidation that formed ProAssurance in 2001, and
$7.6 million attributable to our acquisition of a subsidiary last
year.
We believe our results so far in 2004 set the stage for continued
improvement in the future, allowing us to maintain exceptional
financial strength. We are especially pleased to reiterate our
confidence in the strength of our loss reserves.
Rating Agency Actions
In the third quarter Standard & Poor's revised their outlook for
ProAssurance to "Stable" as they affirmed the "A-" rating they assign
to ProAssurance and our two key professional liability insurance
subsidiaries, The Medical Assurance Company and ProNational Insurance
Company. Earlier in the year A. M. Best affirmed its "A-" (Excellent)
rating and "Stable" outlook for ProAssurance and Fitch Ratings
initiated coverage of ProAssurance with an "A-" rating and a "Stable"
outlook.
Professional Liability Segment
Our core professional liability companies are The Medical
Assurance Company, ProNational Insurance Company, and Red Mountain
Casualty Insurance Company. We also write professional liability
business through Medical Assurance of West Virginia. Each company
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,
2004 2003 2004 2003
------------------- -------------------
Gross Premiums Written $160,461 $145,526 $438,194 $411,342
========= ========= ========= =========
Net Premiums Written $148,452 $134,126 $395,449 $364,916
========= ========= ========= =========
Net Premiums Earned $129,175 $121,676 $373,337 $325,080
========= ========= ========= =========
Net Investment Income $ 19,480 $ 15,583 $ 54,569 $ 45,574
========= ========= ========= =========
Net Realized Investment Gains $ 1,725 $ 1,431 $ 4,608 $ 4,043
========= ========= ========= =========
Total Revenues $150,641 $139,163 $433,774 $377,728
========= ========= ========= =========
Total Expenses $135,736 $132,500 $396,145 $366,800
========= ========= ========= =========
Net Loss Ratio 90.3% 95.5% 91.0% 97.9%
Expense Ratio 14.8% 13.4% 15.1% 15.0%
--------- --------- --------- ---------
Combined Ratio 105.1% 108.9% 106.1% 112.9%
========= ========= ========= =========
Operating Ratio 90.0% 96.1% 91.5% 98.9%
========= ========= ========= =========
Our results in Professional Liability are indicative of our
continued dedication to risk selection and pricing. Our year-to-date
average renewal rate increase is 20%, two points higher than we
reported through the first six months of the year and ahead of our
expectations. This is due to an average renewal rate increase of 20.0%
in the quarter. We renewed approximately 85% of expiring polices in
the quarter, with many of the non-renewals being the result of our own
underwriting actions. Our policyholder count is up slightly for the
year and we are replacing risks that don't meet our standards with new
insureds at what we believe are adequate prices. We continue to grow
in states where we are comfortable with the rates and regulation, and
we see continued opportunities for growth within our current business
footprint.
We finished the conversion to claims-made policies in the third
quarter as we converted our last occurrence policies in Michigan.
Policyholders whose occurrence policies converted to claims-made last
year are now producing the expected increase in premiums. While
claims-made policies start at lower rates than occurrence coverage for
the same risk, those rates increase as the policies mature. Those step
increases are in addition to our overall rate increases.
Personal Lines Segment
Our Personal Lines segment is comprised of MEEMIC Insurance
Company, which provides auto and homeowners' coverage for Michigan's
educational employees and their families.
Selected Segment Data:
(in thousands, except ratios)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
------------------- -------------------
Gross Premiums Written $ 57,351 $ 51,224 $162,101 $145,874
========= ========= ========= =========
Net Premiums Written $ 49,918 $ 46,494 $142,636 $132,918
========= ========= ========= =========
Net Premiums Earned $ 46,171 $ 43,754 $135,749 $126,230
========= ========= ========= =========
Net Investment Income $ 2,645 $ 2,612 $ 7,942 $ 7,644
========= ========= ========= =========
Net Realized Investment Gains $ 14 $ 5 $ 65 $ 106
========= ========= ========= =========
Total Revenues $ 49,396 $ 46,920 $145,565 $135,521
========= ========= ========= =========
Total Expenses $ 38,900 $ 39,721 $114,530 $112,425
========= ========= ========= =========
Net Loss Ratio 59.8% 67.7% 61.3% 66.5%
Expense Ratio 24.5% 23.0% 23.0% 22.5%
--------- --------- --------- ---------
Combined Ratio 84.3% 90.7% 84.3% 89.0%
========= ========= ========= =========
Operating Ratio 78.6% 84.7% 78.4% 82.9%
========= ========= ========= =========
There were no adverse weather events in the third quarter in
Michigan which was the key to a good quarter for MEEMIC. Looking
ahead, plans to expand into Wisconsin this year are on track.
Conference Call Information
We will discuss these results and our business outlook in a
conference call at 11:00 am ET on Tuesday, November 9, 2004. Investors
may participate by calling (877) 407-8289 or (201) 689-8341. The call
will be webcast on the Investor Relations section at ProAssurance.com,
and at StreetEvents.com. A telephone replay will be available through
November 16, 2004 at (877) 660-6853 or (201) 612-7415 using account
number 4400 and access code 120666. There will be an internet replay
available through November 30, 2004 at the same websites.
About ProAssurance
ProAssurance Corporation is a specialty insurer with more than
$3.2 billion in assets and over $740 million in gross written
premiums. As the nation's fourth largest writer of medical
professional liability insurance, our 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. We are the tenth largest writer
of personal auto coverage in Michigan through our subsidiary, MEEMIC
Insurance Company. A.M. Best assigns a rating of "A-" (Excellent) to
ProAssurance and our principal subsidiaries, Standard & Poor's assigns
our principal professional liability carriers a rating of "A-"
("Strong), and Fitch assigns a rating of "A-" to our subsidiaries The
Medical Assurance Company, ProNational Insurance Company and MEEMIC
Insurance Company.
Caution Regarding Forward-Looking Statements
This news release contains historical information as well as
forward-looking statements that are based upon our 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," "hopeful,"
"intend," "may," "optimistic," "preliminary," "project," "should,"
"will," and similar expressions are intended to identify these
forward-looking statements. There are numerous important factors that
could cause our actual results to differ materially from those in the
forward-looking statements. Thus, sentences and phrases that we use to
convey our view of future events and trends 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 we file
with the Securities and Exchange Commission, including Form 10K for
the year ended December 31, 2003 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 us or any
other person that our objectives or plans will be realized. We
expressly disclaim any obligation to update or alter our
forward-looking statements whether as a result of new information,
future events or otherwise, except as required by law.
CONTACT: ProAssurance Corporation
Frank B. O'Neil, 800-282-6242 or 205-877-4461
foneil@ProAssurance.com