Exhibit 99.1
ProAssurance Reports Fourth Quarter and Year-End 2005 Results
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Feb. 28, 2006--
SUMMARY
ProAssurance Corporation (NYSE: PRA) reports Net Income of $34.7 million,
or $1.04 per diluted share for the fourth quarter of 2005. This includes $7.8
million or $0.23 per diluted share from discontinued operations related to the
sale of the ProAssurance Personal Lines business. Net income from continuing
operations for the quarter was $26.9 million or $0.81 per diluted share. For the
full year 2005, ProAssurance's Net Income was $113.5 million or $3.54 per
diluted share, including $33.4 million or $1.02 per diluted share from
discontinued operations. For the full year net income from continuing operations
was $80.0 million or $2.52 per diluted share. Operating cash flow from
continuing operations was $73.0 million in the quarter and $323.6 million for
the year-to-date. Book value per share increased to $24.59.
ProAssurance Corporation (NYSE: PRA) today reported results for the quarter
and year ended December 31, 2005. Results from Personal Lines are reported as
discontinued operations in all periods presented. The sale of that business was
effective January 1, 2006. All other data is attributable to continuing
operations from our Professional Liability business.
Unaudited Consolidated Financial Summary:
- ----------------------------------------
(in thousands, except per share and ratio data)
Continuing Operations
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Gross Premiums Written $ 138,219 $ 135,399 $ 572,960 $ 573,592
========== ========== ========== ==========
Net Premiums Written $ 121,351 $ 133,761 $ 521,343 $ 535,028
========== ========== ========== ==========
Net Premiums Earned $ 143,347 $ 141,027 $ 543,241 $ 519,897
========== ========== ========== ==========
Net Investment Income $ 27,339 $ 21,097 $ 97,649 $ 76,346
========== ========== ========== ==========
Net Realized Investment
Gains (Losses) $ (403) $ 291 $ 912 $ 7,572
========== ========== ========== ==========
Total Revenues $ 171,107 $ 162,495 $ 645,312 $ 605,156
========= ========= ========= =========
Guaranty Fund Assessments $ (117) $ 67 $ 226 $ 396
========= ========= ========= =========
Interest Expense $ 2,472 $ 1,977 $ 8,929 $ 6,515
========== ========== ========== ==========
Total Expenses $ 133,591 $ 145,119 $ 536,449 $ 551,335
========== ========== ========== ==========
Income From Continuing
Operations $ 26,902 $ 12,754 $ 80,026 $ 43,043
---------- ---------- ---------- ----------
Net Operating Cash Flow $ 72,982 $ 77,312 $ 323,590 $ 336,287
========== ========== ========== ==========
Discontinued Operations
Income From Discontinued
Operations $ 7,816 $ 8,755 $ 33,431 $ 29,768
---------- ---------- ---------- ----------
Net Income
Net Income $ 34,718 $ 21,509 $ 113,457 $ 72,811
========== ========== ========== ==========
Earnings Per Share:
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Weighted average number of
common shares outstanding
Basic 31,088 29,196 30,049 29,164
Diluted 33,986 32,036 32,908 31,984
Earnings per share (Basic)
Income From Continuing
Operations $ 0.87 $ 0.44 $ 2.66 $ 1.48
Income From Discontinued
Operations 0.25 0.30 1.11 1.02
---------- ---------- ---------- ----------
Net Income per share
(Basic) $ 1.12 $ 0.74 $ 3.77 $ 2.50
========== ========== ========== ==========
Earnings per share (Diluted)
Income From Continuing
Operations $ 0.81 $ 0.42 $ 2.52 $ 1.44
Income From Discontinued
Operations 0.23 0.27 1.02 0.93
---------- ---------- ---------- ----------
Net Income per share
(Diluted) $ 1.04 $ 0.69 $ 3.54 $ 2.37
========== ========== ========== ==========
Key Ratios (Continuing Operations):
Net Loss Ratio 74.5% 85.6% 80.7% 88.6%
Expense Ratio 17.0% 15.9% 16.4% 16.2%
---------- ---------- ---------- ----------
Combined Ratio 91.5% 101.5% 97.1% 104.8%
========== ========== ========== ==========
Operating Ratio 72.4% 86.5% 79.1% 90.1%
========== ========== ========== ==========
Return on Equity 14.3% 8.5% 11.6% 7.4%
========== ========== ========== ==========
Balance Sheet Highlights:
December 31, December 31,
2005 2004
------------ ------------
Stockholders' Equity $ 765,046 $ 611,019
Total Investments (Continuing Operations) $ 2,630,942 $ 2,162,147
Total Assets (Continuing Operations) $ 3,341,600 $ 2,743,295
Policy Liabilities (Continuing Operations) $ 2,572,008 $ 2,134,634
Accumulated Other Comprehensive Income
(Loss) $ (8,834) $ 24,397
Goodwill (Continuing Operations) $ 29,550 $ 7,504
Book Value per Share $ 24.59 $ 20.92
Commentary on Results from Continuing Operations
-- Favorable net reserve development from prior accident years was $13.0
million in the quarter and $23.0 million for 2005.
-- In 2005 our policies renewed at rates that were, on average, 11%
higher than expiring.
-- Policyholder retention for the year was 85%, which met our
expectations in the 2005 pricing environment given our philosophy of
continuous re-underwriting and dedication to rate adequacy.
-- Policyholder count increased by approximately seven percent
year-over-year primarily due to the acquisition of NCRIC, as well as
new business in targeted growth states.
-- Our reinsurance program renewed with no change in pricing or
conditions on October 1, 2005. NCRIC's reinsurance contracts expired
January 1, 2006 and NCRIC was brought into our existing reinsurance
program on that date.
Proposed Transaction with PIC Wisconsin
We are progressing as expected in our proposed transaction with Physicians
Insurance Company of Wisconsin (PIC Wisconsin). We have filed our request for
approval with the Office of the Commissioner of Insurance of the State of
Wisconsin and are awaiting a hearing date on that request. We received early
termination of the Hart-Scott-Rodino waiting period in January. We filed our
Registration Statement (Commission File 333-131874) for the proposed transaction
on February 15, 2006.
The Registration Statement includes a proxy statement/prospectus and other
relevant documents concerning the proposed transaction. Shareholders of PIC
Wisconsin are urged to read the Registration Statement and any other relevant
documents filed with the SEC, as well as any amendments or supplements to those
documents, as they will contain important information. Shareholders of PIC
Wisconsin and other interested investors may obtain a free copy of the proxy
statement/prospectus, as well as other filings containing information about
ProAssurance and PIC Wisconsin, at the SEC's Internet site (www.sec.gov). Those
documents are also available without charge from Frank B. O'Neil, Senior Vice
President, Corporate Communications, ProAssurance Corporation, 100 Brookwood
Place, Birmingham, Alabama 35209, telephone (205) 877-4461, or from the investor
relations section of our website (www.ProAssurance.com).
Conference Call Information
-- Live: Tuesday, February 28, 2006, 10:00 AM ET. Dial (800) 946-0712 or
(719) 457-2641 outside North America. The call will also be webcast on
our website, ProAssurance.com, and on StreetEvents.com.
-- Replay: Telephone, through March 7, 2006 at (888) 203-1112 or (719)
457-0820, access code 7318724. An internet replay will be available
through March 30, 2006 at the same websites.
About ProAssurance
ProAssurance Corporation is the nation's fourth largest writer of medical
professional liability insurance through its principal subsidiaries The Medical
Assurance Company, Inc., ProNational Insurance Company, NCRIC, Inc., and Red
Mountain Casualty Insurance Company, Inc. We also write professional liability
coverage through Woodbrook Casualty Insurance Company, Inc.
A.M. Best assigns a rating of "A-" (Excellent) to the ProAssurance Group
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 ProAssurance.
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," "hope," "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. 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:
-- General economic conditions, either nationally or in our market area,
that are worse than expected;
-- regulatory and legislative actions or decisions that adversely affect
our business plans or operations;
-- price competition;
-- inflation and changes in the interest rate environment the performance
of financial markets and/or changes in the securities markets that
adversely affect the fair value of our investments or operations;
-- changes in laws or government regulations affecting medical
professional liability insurance;
-- changes to our ratings assigned by rating agencies;
-- the effects of managed healthcare;
-- uncertainties inherent in the estimate of loss and loss adjustment
expense reserves and reinsurance; and changes in the availability,
cost, quality, or collectibility of reinsurance;
-- significantly increased competition among insurance providers and
related pricing weaknesses in some markets.
-- our ability to achieve continued growth through expansion into other
states or through acquisitions or business combinations;
-- changes in accounting policies and practices, as may be adopted by our
regulatory agencies and the Financial Accounting Standards Board;
-- changes in our organization, compensation and benefit plans; and
-- any other factors listed or discussed in the reports we file with the
Securities and Exchange Commission under the Securities Exchange Act
of 1934.
Relating to the proposed transaction with PIC Wisconsin:
-- The business of ProAssurance and PIC Wisconsin may not be combined
successfully, or such combination may take longer to accomplish than
expected;
-- the cost savings from the merger may not be fully realized or may take
longer to realize than expected;
-- operating costs, customer loss and business disruption following the
merger, including adverse effects on relationships with employees, may
be greater than expected;
-- governmental approvals of the merger may not be obtained, or adverse
regulatory conditions may be imposed in connection with governmental
approvals of the merger; and
-- the stockholders of PIC Wisconsin may fail to approve the merger.
Our results may differ materially from those we expect and discuss in any
forward-looking statements. The principal risk factors that may cause these
differences are described in various documents we file with the Securities and
Exchange Commission, including the Registration Statement filed on February 15,
2006 and our Form 10K to be filed for the year ended December 31, 2005.
We wish to caution readers 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 future
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
www.ProAssurance.com