Exhibit 99.1
ProAssurance Reports First Quarter 2006 Results
BIRMINGHAM, Ala.--(BUSINESS WIRE)--May 9, 2006--ProAssurance
Corporation (NYSE: PRA):
SUMMARY
ProAssurance reports an 11.5% year-over-year increase in Gross
Premiums Written in the first quarter of 2006, driven by growth from
the Company's addition of NCRIC, Inc. ProAssurance also reports a
$4.01 increase in Book Value per Share in the first quarter, primarily
as a result of the sale of MEEMIC Insurance Company, its personal
lines business.
Income from Continuing Operations was $27.8 million, or $0.84 per
diluted share, and the MEEMIC sale resulted in $109.4 million of
Income from Discontinued Operations. Together this produced Net Income
of $137.3 million, or $4.05 per diluted share for the quarter. Cash
flow from Continuing Operations was $115.8 million, 24% higher than
the first quarter of 2005.
ProAssurance Corporation (NYSE: PRA) reported first quarter 2006
results today. The Company's Continuing Operations reflect results
from its Professional Liability insurance business. Discontinued
Operations reflect results from the Company's former Personal Lines
business, which was sold effective January 1, 2006.
Unaudited Consolidated Financial Summary:
(in thousands, except per share and ratio data)
Continuing Operations
Three Months Ended
March 31,
2006 2005
---------- ----------
Gross Premiums Written $ 182,187 $ 163,397
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Net Premiums Written $ 172,632 $ 152,643
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Net Premiums Earned $ 142,430 $ 128,728
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Net Investment Income $ 34,362 $ 22,778
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Net Realized Investment Gains $ 144 $ 1,253
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Total Revenues $ 178,191 $ 153,972
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Guaranty Fund Assessments $ 65 $ 97
========== ==========
Interest Expense $ 2,556 $ 2,136
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Total Expenses $ 140,141 $ 134,375
========== ==========
Income From Continuing Operations $ 27,835 $ 14,596
========== ==========
Net Operating Cash Flow $ 115,796 $ 93,516
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Discontinued Operations
Income From Discontinued Operations $ 109,441 $ 7,341
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Net Income
Net Income $ 137,276 $ 21,937
========== ==========
Earnings Per Share:
Three Months Ended
March 31,
2006 2005
----------- -----------
Weighted average number of
common shares outstanding
Basic 31,155 29,217
Diluted 34,050 32,070
Earnings per share (Basic)
Income From Continuing Operations $ 0.89 $ 0.50
Income From Discontinued Operations 3.51 0.25
----------- -----------
Net Income per share (Basic) $ 4.40 $ 0.75
=========== ===========
Earnings per share (Diluted)
Income From Continuing Operations $ 0.84 $ 0.48
Income From Discontinued Operations 3.21 0.23
----------- -----------
Net Income per share (Diluted) $ 4.05 $ 0.71
=========== ===========
Key Ratios (Continuing Operations):
Net Loss Ratio 78.0% 85.8%
Expense Ratio 18.6% 16.9%
----------- -----------
Combined Ratio 96.6% 102.7%
=========== ===========
Operating Ratio 72.5% 85.0%
=========== ===========
Return on Equity 13.4% 9.6%
=========== ===========
Balance Sheet Highlights:
March 31, December 31,
2006 2005
------------ ------------
Stockholders' Equity $ 892,271 $ 765,046
Total Investments (Continuing Operations) $3,104,522 $2,614,319
Total Assets (Continuing Operations) $3,852,908 $3,341,600
Policy Liabilities (Continuing Operations) $2,655,442 $2,572,008
Accumulated Other Comprehensive Income (Loss) $ (24,113) $ (8,834)
Goodwill (Continuing Operations) $ 29,494 $ 29,494
Book Value per Share $ 28.60 $ 24.59
Commentary on Results from Continuing Operations
-- Premiums and policyholder count continue to grow as a result
of the acquisition of NCRIC. Gross Written Premiums were 11.5%
higher due to the inclusion of premiums from renewing NCRIC
policyholders.
-- With our rates at what we believe to be adequate levels, our
need for additional rate increases has lessened. In the
quarter, premiums on renewing policies were 5% higher on
average.
-- Our policyholder retention edged upward to 87%, a one-point
improvement over the same quarter in 2005.
-- There was favorable net loss development of $4.0 million in
the quarter, primarily due to reductions in our estimates of
claim severity in accident years 2003 and 2004. There was no
net loss development in the comparable quarter last year.
-- ProAssurance adopted SFAS 123(R), "Share-Based Payments," in
the first quarter of 2006, resulting in an expense of $1.9
million, or $0.04 per diluted share. SFAS 123(R) expenses for
the remainder of 2006 are estimated to be $900,000 per
quarter.
Proposed Transaction with PIC Wisconsin
Our proposed transaction with Physicians Insurance Company of
Wisconsin (PIC Wisconsin) is on track for a mid-year closing. The next
step in the regulatory approval process is a change of control hearing
to be conducted by the Office of the Commissioner of Insurance of the
State of Wisconsin. If approved by the State of Wisconsin, the
transaction would then be voted on by the shareholders of PIC
Wisconsin.
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 for PIC Wisconsin 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, May 9, 2006, 10:00 AM ET. Dial (800) 289-0507
or (913) 981-5540 outside North America. The call will also be
webcast on our website, ProAssurance.com, and on
StreetEvents.com.
-- Replay: Telephone, through May 16, 2006 at (888) 203-1112 or
(719) 457-0820, access code 2801948. An internet replay will
be available through May 31, 2006 at the same websites.
About ProAssurance
ProAssurance Corporation is the nation's fourth largest writer of
medical professional liability insurance through our 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 health care;
-- 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 that 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.
Factors 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 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