Exhibit 99.1
ProAssurance Reports Results for the Second Quarter of 2005
BIRMINGHAM, Ala.--Aug. 9, 2005--ProAssurance Corporation
(NYSE:PRA):
SUMMARY
ProAssurance Corporation (NYSE:PRA) reported Net Income of $27.5
million, or $0.88 per diluted share, for the second quarter of 2005,
and Net Income of $49.4 million or $1.58 per diluted share for the six
months ended June 30, 2005. ProAssurance accomplished two key goals in
the quarter: reaching underwriting profitability in both insurance
segments with a consolidated combined ratio of 93.5% and achieving a
17.3% Return on Equity. Cash flow from operations was $84 million in
the quarter and $182 million for the first six months of the year.
ProAssurance's Return on Equity was 17.3% for the quarter and 15.5%
for the six months ended June 30, 2005. These results do not include
the results of NCRIC Group, Inc., which ProAssurance acquired
effective August 3, 2005.
ProAssurance Corporation (NYSE: PRA) reports the following results
for the quarter and six months ended June 30, 2005:
Unaudited Consolidated Financial Summary:
(in thousands, except per share and ratio data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Gross Premiums Written $161,373 $163,756 $377,031 $382,483
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Net Premiums Written $139,969 $144,253 $336,389 $339,715
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Net Premiums Earned $172,121 $165,897 $346,300 $333,739
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Net Investment Income $ 26,146 $ 20,683 $ 51,568 $ 40,534
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Net Realized Investment Gains $ 1,454 $ 626 $ 2,396 $ 4,283
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Total Revenues $201,147 $188,438 $403,337 $380,799
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Guaranty Fund Assessments
(Credits) $ (212) $ 249 $ (114) $ 533
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Interest Expense $ 2,031 $ 1,492 $ 4,167 $ 2,635
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Total Expenses $163,003 $167,638 $334,957 $338,674
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Net Income $ 27,465 $ 15,804 $ 49,402 $ 31,785
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Net Cash Provided by
Operations $ 84,122 $ 76,874 $181,595 $171,593
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Weighted average number of
common shares outstanding
Basic 29,386 29,158 29,302 29,138
Diluted 32,205 31,995 32,138 31,964
Earnings per share
Net Income per share (basic) $ 0.93 $ 0.54 $ 1.69 $ 1.09
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Net Income per share
(diluted) $ 0.88 $ 0.52 $ 1.58 $ 1.04
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Net Loss Ratio 76.1% 82.4% 78.0% 83.5%
Expense Ratio 17.4% 17.7% 17.5% 17.2%
-------- -------- -------- --------
Combined Ratio 93.5% 100.1% 95.5% 100.7%
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Operating Ratio 78.3% 87.6% 80.6% 88.6%
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Return on Equity 17.3% 11.2% 15.5% 11.6%
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Unaudited Balance Sheet Highlights:
(in millions, except per share data)
June 30, 2005 December 31, 2004
Stockholders' Equity $ 661 $ 611
Total Investments $ 2,617 $ 2,455
Total Assets $ 3,409 $ 3,239
Policy Liabilities $ 2,538 $ 2,413
Accumulated Other Comprehensive
Income $ 20 $ 24
Book Value per Share $ 22.49 $ 20.92
Professional Liability Segment / Selected Data
(in thousands, except ratios)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Gross Premiums Written $104,037 $107,995 $267,434 $277,733
========= ========= ========= =========
Net Premiums Written $90,199 $94,713 $241,542 $246,996
========= ========= ========= =========
Net Premiums Earned $124,699 $120,604 $251,971 $244,161
========= ========= ========= =========
Net Investment Income $22,450 $17,791 $44,362 $35,090
========= ========= ========= =========
Net Realized Investment Gains $679 $(44) $1,875 $2,883
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Total Revenues $148,644 $138,927 $300,003 $283,133
========= ========= ========= =========
Total Expenses $122,513 $127,059 $252,689 $260,409
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Current Accident Year Net Loss
Ratio 86.7% 89.4% 86.7% 91.3%
Prior Year Development (4.0%) - (1.9%) -
--------- --------- --------- ---------
Net Loss Ratio 82.7% 89.4% 84.8% 91.3%
Expense Ratio 15.5% 16.0% 15.5% 15.3%
--------- --------- --------- ---------
Combined Ratio 98.2% 105.4% 100.3% 106.6%
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Operating Ratio 80.2% 90.6% 82.7% 92.2%
========= ========= ========= =========
Personal Lines Segment /Selected Data
(in thousands, except ratios)
Three Months Six Months Ended
Ended June 30, June 30,
2005 2004 2005 2004
------- ------- -------- --------
Gross Premiums Written $57,336 $55,761 $109,597 $104,750
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Net Premiums Written $49,770 $49,450 $ 94,847 $ 92,719
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Net Premiums Earned $47,422 $45,293 $ 94,329 $ 89,578
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Net Investment Income $ 3,091 $ 2,791 $ 6,107 $ 5,297
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Net Realized Investment Gains $ 774 $ 31 $ 463 $ 51
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Total Revenues $51,897 $48,771 $102,177 $ 96,170
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Total Expenses $38,459 $39,087 $ 78,101 $ 75,630
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Current Accident Year Net Loss
Ratio 62.1% 70.6% 64.1% 68.3%
Prior Year Development (3.2%) (6.6%) (4.0%) (6.1%)
------- ------- -------- --------
Net Loss Ratio 58.9% 64.0% 60.1% 62.2%
Expense Ratio 22.2% 22.3% 22.7% 22.3%
------- ------- -------- --------
Combined Ratio 81.1% 86.3% 82.8% 84.5%
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Operating Ratio 74.6% 80.1% 76.3% 78.6%
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About Our Segments
In our Professional Liability segment we underwrite professional
liability insurance for physicians and surgeons, dentists, hospitals,
and others involved in the delivery of health care. Our principal
professional liability companies are The Medical Assurance Company,
ProNational Insurance Company, NCRIC, Inc., and Red Mountain Casualty
Insurance Company. We also write professional liability business
through Woodbrook Casualty Insurance Company, formerly Medical
Assurance of West Virginia. In our Personal Lines segment, MEEMIC
Insurance Company provides auto and homeowners' coverage for
Michigan's educational employees and their families.
Commentary
Consolidated Results
-- Return on Equity for the quarter was 17.3%. For the first six
months of the year this key measure reached 15.5%, as our
disciplined business model continues to produce outstanding
results.
-- We reached a major corporate goal by achieving underwriting
profitability in both segments in the quarter. For the quarter
our consolidated combined ratio was 93.5%; for the first six
months of 2005 it was 95.5%.
-- Net Income for the quarter increased by $11.7 million, or 74%
over the same period last year. For the first six months of
the year Net Income increased by $17.6 million, or 55% over
the year-ago period.
NCRIC Transaction
-- Our acquisition of NCRIC Group was completed as of the close
of business on August 3, 2005. Our integration of NCRIC's
operations is well underway, with NCRIC, Inc. forming the new
hub of our expanded Mid-Atlantic operations.
Professional Liability Results
-- $5.0 million of favorable net reserve development was
recognized in the quarter. This is also the total Professional
Liability reserve development for the year. Our interim
reserve review was completed in the quarter and we remain
confident that reserves are adequate.
-- Our rates remain adequate, and our average renewal rate
increase has been 12% so far this year.
-- Our mix of business is changing gradually. Some policyholders
in high premium states are choosing lower coverage limits and
growth is occurring in states where premiums are generally
lower because of more favorable loss experience. Thus,
premiums are flat, but our risk profile is lowered and we are
maintaining our margins.
-- Our retention rate in the quarter was approximately 85%, but
despite growing competition from low-priced competitors, we
continue to add new insureds so that our overall policyholder
count is relatively unchanged.
-- These results do not include the premium growth that will
result from our acquisition of NCRIC on August 3, 2005. Those
additional premiums will be reflected in the second half of
2005.
Personal Lines Results
-- Premiums continued to grow in Michigan primarily because of an
increase in insured value.
-- We experienced favorable net reserve development of $1.5
million in the quarter; for the year favorable net reserve
development has been $3.7 million.
Conference Call Information
-- Live: Tuesday, August 9, 2005, 10:00 AM ET. Dial (800)
319-9003 or (719) 457-2619 outside North America. The call
will also be webcast on our website, ProAssurance.com, and on
StreetEvents.com.
-- Replay: Telephone, through August 16, 2005 at (888) 203-1112
or (719) 457-0820, access code 4279715; an internet replay
will be available through August 31, 2005 at the same
websites.
About ProAssurance
ProAssurance Corporation is a specialty insurer with more than
$3.4 billion in assets and almost $790 million in gross written
premiums. We are the nation's fourth largest writer of medical
professional liability insurance and our principal professional
liability subsidiaries are The Medical Assurance Company, Inc.,
ProNational Insurance Company, and NCRIC, Inc. and Red Mountain
Casualty Insurance Company. We also write professional liability
coverage through Woodbrook Casualty Insurance Company. 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,
MEEMIC and our principal professional liability subsidiaries, except
NCRIC, Inc. which is rated B++ (Very Good). Standard & Poor's assigns
our principal professional liability carriers a rating of "A-"
("Strong") but has not yet issued a rating for NCRIC, Inc. Fitch
assigns a rating of "A-" to 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 as are sections of this news release
clearly identified as giving our outlook on future business. 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/A for the year ended December
31, 2004 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