Exhibit 99.1
ProAssurance Reports Results for the Third Quarter of 2005
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Nov. 8, 2005--ProAssurance
Corporation (NYSE:PRA):
SUMMARY
ProAssurance Corporation (NYSE:PRA) reports Net Income of $29.3
million, or $0.90 per diluted share for the third quarter of 2005. For
the nine months ended September 30, 2005, Net Income was $78.7 million
or $2.49 per diluted share. ProAssurance's Return on Equity was 16.8%
in the quarter and 15.6% for the year-to-date period. Cash flow from
operations was $100.8 million in the quarter and $282.4 million for
the year-to-date. Book value per diluted share increased to $23.76 on
the strength of ProAssurance's acquisition of NCRIC.
ProAssurance Corporation (NYSE: PRA) reports the following results
for the quarter and nine months ended September 30, 2005. These
results reflect the inclusion of NCRIC since August 3, 2005.
Unaudited Consolidated Financial Summary:
(in thousands, except per share and ratio data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
-------- -------- -------- --------
Gross Premiums Written $224,559 $217,812 $601,589 $600,295
======== ======== ======== ========
Net Premiums Written $203,405 $198,370 $539,794 $538,085
======== ======== ======== ========
Net Premiums Earned $190,339 $175,346 $536,639 $509,086
======== ======== ======== ========
Net Investment Income $ 28,078 $ 22,659 $ 76,646 $ 63,192
======== ======== ======== ========
Net Realized Investment Gains
(Losses) $ (635) $ 3,063 $ 1,761 $ 7,346
======== ======== ======== ========
Total Revenues $219,321 $201,895 $622,658 $582,693
======== ======== ======== ========
Guaranty Fund Assessments $ 458 $ 171 $ 343 $ 704
======== ======== ======== ========
Interest Expense $ 2,290 $ 1,902 $ 6,457 $ 4,537
======== ======== ======== ========
Total Expenses $178,451 $176,538 $513,409 $515,212
======== ======== ======== ========
Net Income $ 29,337 $ 19,518 $ 78,739 $ 51,302
======== ======== ======== ========
Net Cash Provided by
Operations $100,764 $113,191 $282,359 $284,784
======== ======== ======== ========
Weighted average number of
common shares outstanding
Basic 30,480 29,182 29,700 29,153
Diluted 33,345 31,972 32,546 31,967
Earnings per share
Net Income per share (basic) $ 0.96 $ 0.67 $ 2.65 $ 1.76
======== ======== ======== ========
Net Income per share
(diluted) $ 0.90 $ 0.63 $ 2.49 $ 1.67
======== ======== ======== ========
Net Loss Ratio 74.9% 82.3% 76.9% 83.1%
Expense Ratio 17.6% 17.3% 17.5% 17.2%
-------- -------- -------- --------
Combined Ratio 92.5% 99.6% 94.4% 100.3%
======== ======== ======== ========
Operating Ratio 77.7% 86.7% 79.6% 87.9%
======== ======== ======== ========
Return on Equity 16.8% 13.6% 15.6% 12.0%
======== ======== ======== ========
Unaudited Balance Sheet Highlights:
(in millions, except per share data)
September 30, December 31,
2005 2004
------------- --------------
Stockholders' Equity $ 738 $ 611
Total Investments $ 2,915 $ 2,455
Total Assets $ 3,833 $ 3,239
Policy Liabilities $ 2,825 $ 2,413
Accumulated Other Comprehensive Income $ - $ 24
Book Value per Share $ 23.76 $ 20.92
Professional Liability Segment / Selected Data
(in thousands, except ratios)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
-------- -------- -------- --------
Gross Premiums Written $167,308 $160,461 $434,741 $438,194
======== ======== ======== ========
Net Premiums Written $154,893 $148,452 $396,435 $395,449
======== ======== ======== ========
Net Premiums Earned $143,586 $129,175 $395,557 $373,337
======== ======== ======== ========
Net Investment Income $ 24,255 $ 19,480 $ 68,617 $ 54,569
======== ======== ======== ========
Net Realized Investment Gains
(Losses) $ (644) $ 1,725 $ 1,231 $ 4,608
======== ======== ======== ========
Total Revenues $168,089 $150,641 $468,092 $433,774
======== ======== ======== ========
Total Expenses $139,374 $135,736 $392,064 $396,145
======== ======== ======== ========
Current Accident Year Net Loss
Ratio 85.6% 90.3% 86.3% 91.0%
Prior Year Development (3.5%) - (2.5%) -
-------- -------- -------- --------
Net Loss Ratio 82.1% 90.3% 83.8% 91.0%
Expense Ratio 15.0% 14.8% 15.3% 15.1%
-------- -------- -------- --------
Combined Ratio 97.1% 105.1% 99.1% 106.1%
======== ======== ======== ========
Operating Ratio 80.2% 90.0% 81.8% 91.5%
======== ======== ======== ========
Personal Lines Segment /Selected Data
(in thousands, except ratios)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
------- ------- -------- --------
Gross Premiums Written $57,251 $57,351 $166,848 $162,101
======= ======= ======== ========
Net Premiums Written $48,512 $49,918 $143,359 $142,636
======= ======= ======== ========
Net Premiums Earned $46,753 $46,171 $141,082 $135,749
======= ======= ======== ========
Net Investment Income $ 3,230 $ 2,645 $ 9,337 $ 7,942
======= ======= ======== ========
Net Realized Investment Gains
(Losses) $ (17) $ 14 $ 446 $ 65
======= ======= ======== ========
Total Revenues $50,613 $49,396 $152,790 $145,565
======= ======= ======== ========
Total Expenses $36,787 $38,900 $114,888 $114,530
======= ======= ======== ========
Current Accident Year Net Loss
Ratio 58.8% 67.2% 62.3% 67.9%
Prior Year Development (5.9%) (7.4%) (4.6%) (6.6%)
------- ------- -------- --------
Net Loss Ratio 52.9% 59.8% 57.7% 61.3%
Expense Ratio 25.8% 24.5% 23.7% 23.0%
------- ------- -------- --------
Combined Ratio 78.7% 84.3% 81.4% 84.3%
======= ======= ======== ========
Operating Ratio 71.8% 78.6% 74.8% 78.4%
======= ======= ======== ========
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,
Inc., 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
-- Our Return on Equity for the third quarter was 16.8%. For the
nine months ended September 30, 2005 this important measure of
our success was 15.6%.
-- Maintaining underwriting profitability in both segments is a
major goal for us. Our consolidated combined ratio was 92.5%
in the quarter and 94.4% for the nine months ended September
30, 2005.
-- Net Income in the third quarter was $29.4 million compared to
$19.5 million in the same quarter a year ago, and for the
year-to-date, Net Income was $78.7 million compared to $51.3
million for the first nine months of 2004.
Professional Liability Results
-- We recognized $5.0 million of favorable net reserve
development in the quarter. We have recognized $10.0 million
in favorable net reserve development for the year.
-- We continue to file for rate adjustments in states where loss
data points to the need for changes, although increases are
slowing as loss trends moderate. We are confident that our
rates are adequate to meet our long-term average ROE targets
of 12%-14%.
-- On average, our policies are renewing at rates that are 12.5%
higher than expiring premiums.
-- Our retention rate in the quarter was approximately 87%. We
continue to see competition from low-priced competitors, but
the number of new companies entering the business has slowed.
We continue to add new physician policyholders both through
acquisition and in existing markets, which largely offsets the
number we non-renew or lose to low-priced competitors. There
is growing competition for hospital premiums, driven primarily
by insurers attracted to the relatively large premiums per
hospital. As in all our segments, we choose not to compete for
business solely on price and the resulting reduction in our
hospital book largely accounts for the decline in professional
liability premiums year over year.
-- We continue to see our mix of business evolving as some
policyholders in high premium states elect to purchase lower
coverage limits. Additionally, we are growing our business in
states where premiums are generally lower because of more
favorable loss experience. These factors lower both our risk
profile and gross premiums, but allow us to maintain our
margins on each policy.
-- We are finalizing the participations for our current
reinsurance treaties which will be renewed with no change in
pricing or conditions. We are negotiating final terms and
conditions to bring NCRIC policies into our program on January
1, 2006, when NCRIC's existing reinsurance contracts expire.
Personal Lines Results
-- We announced on November 7th that we have signed a definitive
agreement to sell our personal lines insurance operations to
Motors Insurance Corporation, a subsidiary of GMAC Insurance
Holdings, Inc. We expect the transaction to be worth $400
million before transaction expenses, and we anticipate the
transaction will be complete in the first quarter of 2006.
-- The higher value of home and cars insured has been the primary
factor driving MEEMIC's premium increase this year. The number
of homeowners' policies sold by MEEMIC has also been a factor
in that growth.
-- We recognized $2.7 million of favorable net reserve
development in the quarter. We have recognized $6.5 million in
Personal Lines reserve development for the year.
Corporate Events
-- We completed our acquisition of NCRIC Group as of the close of
business on August 3, 2005. The integration of NCRIC is
proceeding better than expected.
-- Our group ratings have recently been affirmed at "A-" by the
major insurance rating agencies, A. M. Best, Fitch and
Standard & Poor's.
Conference Call Information
-- Live: Tuesday, November 8, 2005, 10:00 AM ET. Dial (800)
967-7143 or (719) 457-2631 outside North America. The call
will also be webcast on our website, ProAssurance.com, and on
StreetEvents.com.
-- Replay: Telephone, through November 15, 2005 at (888) 203-1112
or (719) 457-0820, access code 9874993. An internet replay
will be available through November 15, 2005 at the same
websites.
About ProAssurance
ProAssurance Corporation is a specialty insurer with more than
$3.8 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, 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, although we will exit the personal lines
business upon the expected sale of MEEMIC.
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, Inc.,
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. These
forward-looking statements are subject to significant risks,
assumptions and uncertainties, including, among other things, the
following important factors that could affect the actual outcome of
future events. Regarding the sale of our personal lines subsidiary,
MEEMIC Insurance Company and its internal agency, we would add the
following Cautions to those included in our filings with the SEC:
-- The transaction may not occur as expected or it may take
longer to accomplish than we expect;
-- governmental approvals of the transaction may not be obtained,
or adverse regulatory conditions may be imposed in connection
with governmental approvals of the transaction;
-- the sale is subject to the satisfaction or waiver of certain
conditions which are beyond the control of ProAssurance; and
-- the distribution of proceeds arising from the sale to
ProAssurance may not be approved by governmental authorities,
or such approval may be for an amount less than requested.
We urge you not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and
wish to advise readers that the factors listed above could affect our
financial performance and could cause actual results for future
periods to differ materially from any opinions or statements expressed
with respect to periods in any current statements. We do not undertake
and specifically decline any obligation to publicly release the result
of any revisions that may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or
to reflect the occurrence of anticipated or unanticipated events.
CONTACT: ProAssurance Corporation
Frank B. O'Neil, 800-282-6242 or 205-877-4461
foneil@ProAssurance.com