Exhibit 99.1
ProAssurance Reports Results for the Second Quarter of 2006
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Aug. 8, 2006--ProAssurance
Corporation (NYSE: PRA):
SUMMARY
ProAssurance Corporation reports Net Income for the second quarter
of 2006 of $30.0 million, or $0.90 per diluted share. For the six
months ended June 30, 2006 Net Income was $167.3 million, or $4.95 per
diluted share. (Year-to-Date Net Income includes $109.4 million, or
$3.21 per diluted share related to the sale of the ProAssurance
Personal Lines business, all of which was recognized in the first
quarter.) Through the first six months of 2006, cash flow from
continuing operations was $97 million. Book value per share increased
to $29.17 at June 30, 2006. ProAssurance also reported
quarter-over-quarter growth of 3% in Gross Premiums Written due to the
Company's purchase of NCRIC, Inc. a year ago. ProAssurance believes
premiums will continue to grow with the successful completion of its
transaction with Physicians Insurance Company of Wisconsin, Inc. (PIC
Wisconsin) on August 1, 2006.
ProAssurance Corporation (NYSE: PRA) reports the following results
for the quarter and six months ended June 30, 2006.
Unaudited Consolidated Financial Summary:
(in thousands, except per share data)
Continuing Operations(1)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Gross Premiums Written $ 106,805 $ 104,037 $ 288,991 $ 267,434
========= ========= ========= =========
Net Premiums Written $ 96,381 $ 91,506 $ 268,962 $ 244,149
========= ========= ========= =========
Net Premiums Earned $ 137,420 $ 126,203 $ 279,850 $ 254,931
========= ========= ========= =========
Net Investment Income $ 35,637 $ 23,303 $ 69,999 $ 46,080
========= ========= ========= =========
Net Realized Investment
Gains (Losses) $ (754)$ 680 $ (610)$ 1,933
========= ========= ========= =========
Total Revenues $ 173,792 $ 151,367 $ 351,983 $ 305,338
========= ========= ========= =========
Guaranty Fund Assessments $ 995 $ (212) $ 1,060 $ (114)
========= ========= ========= =========
Interest Expense $ 2,632 $ 2,031 $ 5,188 $ 4,167
========= ========= ========= =========
Total Expenses $ 131,656 $ 126,661 $ 271,797 $ 261,035
========= ========= ========= =========
Tax Expense $ 12,145 $ 6,395 $ 22,360 $ 11,396
========= ========= ========= =========
Income From Continuing
Operations(1) $ 29,991 $ 18,311 $ 57,826 $ 32,907
--------- --------- --------- ---------
Discontinued Operations(1)
Income From Discontinued
Operations $ - $ 9,154 $ 109,441 $ 16,495
--------- --------- --------- ---------
Net Income
Net Income $ 29,991 $ 27,465 $ 167,267 $ 49,402
========= ========= =========== =======
(1) 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.
-- Gross Premiums Written were higher quarter-over-quarter and
year-over-year due to our acquisition of NCRIC, Inc. in August
2005.
-- Policyholder retention continued to move upward, to 88% in the
second quarter,
-- Premiums on renewing policies were higher by 5% in the quarter
and 4% higher year-to-date, compared to year-ago periods.
-- Prior accident years, primarily 2003 and 2004, continue to
show favorable claim severity results, producing favorable net
reserve development of $8.0 million in the quarter. Favorable
net reserve development stands at $12.0 million year-to-date.
Earnings Per Share:
Three Months Six Months Ended
Ended
June 30, June 30,
2006 2005 2006 2005
------- ------- ------- -------
Weighted average number of
common shares outstanding
Basic 31,195 29,386 31,175 29,302
Diluted 34,065 32,205 34,060 32,138
Earnings per share (Basic)
Income From Continuing Operations $ 0.96 $ 0.62 $ 1.86 $ 1.13
Income From Discontinued Operations - 0.31 3.51 0.56
------- ------- ------- -------
Net Income per share (Basic) $ 0.96 $ 0.93 $ 5.37 $ 1.69
======= ======= ======= =======
Earnings per share (Diluted)
Income From Continuing Operations $ 0.90 $ 0.59 $ 1.74 $ 1.07
Income From Discontinued Operations - 0.29 3.21 0.51
------- ------- ------- -------
Net Income per share (Diluted) $ 0.90 $ 0.88 $ 4.95 $ 1.58
======= ======= ======= =======
-- Net Income per Diluted Share was reduced $0.02 in the quarter
by a hurricane-related Guaranty Fund Assessment from the State
of Florida for all non-property lines of business.
Key Ratios (Continuing Operations):
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
----------------------------------------
Net Loss Ratio 75.0% 81.7% 76.6% 83.8%
Expense Ratio 18.9% 17.0% 18.7% 17.0%
----------------------------------------
Combined Ratio 93.9% 98.7% 95.3% 100.8%
========================================
Operating Ratio 68.0% 80.2% 70.3% 82.7%
========================================
Return on Equity 13.3% 11.5% 13.8% 10.3%
========================================
Cash Flow Analysis:
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
--------- --------- --------- --------
Cash Provided by Insurance
Operations $ 30,942 $ 69,295 $ 147,040 $163,084
Net Purchases of Trading
Portfolio Securities (49,992) (296) (50,294) (569)
--------- --------- --------- --------
Net Cash Provided by Operating
Activities $ (19,050)$ 68,999 $ 96,746 $162,515
========= ========= ========= ========
-- Net Cash Provided by Operating Activities (Operating Cash
Flow) was affected by a $50 million investment in a portfolio
of trading securities in the second quarter of 2006. While
this is part of our investing strategy, accounting standards
require us to show it as a deduction in Operating Cash Flow.
Excluding this investment allocation, our insurance operations
provided Cash Flow of $31 million.
Balance Sheet Highlights:
June 30, December 31,
2006 2005
---------------------------
Stockholders' Equity $ 910,003 $ 765,046
Total Investments (Continuing Operations) $ 3,074,849 $ 2,614,319
Total Assets (Continuing Operations) $ 3,802,751 $ 3,341,600
Policy Liabilities (Continuing Operations) $ 2,646,603 $ 2,572,008
Accumulated Other Comprehensive Income
(Loss) $ (37,493) $ (8,834)
Goodwill (Continuing Operations) $ 29,490 $ 29,494
Book Value per Share $ 29.17 $ 24.59
PIC Wisconsin Acquisition
The merger of PIC Wisconsin into ProAssurance was effective August
1, 2006. Integration planning has been underway for several months and
is moving forward as expected. PIC Wisconsin will operate as the
northwestern hub for our Professional Liability Group, giving us a
market leading position in Wisconsin, while strengthening our existing
business in Illinois, Iowa and Kansas. PIC Wisconsin also brings
business from Minnesota, Nebraska, South Dakota and Nevada into
ProAssurance.
Under terms of the PIC Wisconsin transaction we will be issuing
1,991,481 shares of ProAssurance stock to current PIC Wisconsin
shareholders. Each PIC Wisconsin shareholder will receive 102.75
shares of ProAssurance stock for each share of PIC Wisconsin stock
they now own. Instructions for the conversion will be mailed no later
than August 14, 2006.
Conference Call Information
-- Live: Tuesday, August 8, 2006, 10:00 AM ET. Dial (800)
262-1292 or (719) 457-2680 outside North America. The call
will also be webcast on our website, ProAssurance.com, and on
StreetEvents.com.
-- Replay: Telephone, through August 18, 2006 at (888) 203-1112
or (719) 457-0820, using access code 4826529. An internet
replay will be available through August 31, 2006 at
ProAssurance.com and Streetevents.com. A podcast replay will
be available on a free subscription basis through a link on
the home page of the ProAssurance website.
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., Physicians Insurance Company of
Wisconsin, 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"), with the exception of NCRIC, Inc. which is rated "BBB+."
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.
Forward-looking statements are identified by words such as, but not
limited to, "anticipate," "believe," "estimate," "expect," "hope,"
"hopeful," "intend," "may," "optimistic," "preliminary," "project,"
"should," "will" and other analogous expressions. 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.
Forward-looking statements relating to our business include among
other things: statements concerning liquidity and capital
requirements, return on equity, financial ratios, net income,
premiums, losses and loss reserves, premium rates and retention of
current business, competition and market conditions, the expansion of
product lines, the development or acquisition of business in new
geographical areas, the availability of acceptable reinsurance,
actions by regulators and rating agencies, payment or performance of
obligations under indebtedness, payment of dividends, and other
matters.
In addition, forward-looking statements may also relate to the
merger between ProAssurance and PIC Wisconsin, Inc. as well as the
goals, plans, objectives, intentions, expectations, financial
condition, results of operations, future performance, and business of
the combined company including, without limitation, statements
relating to the benefits of the merger, such as future financial and
operating results, cost savings, enhanced revenues, and the accretion
to reported earnings that may be realized from the merger and
statements regarding certain of ProAssurance's and/or PIC Wisconsin's
goals and expectations with respect to earnings, earnings per share,
revenue, expenses, and the growth rate in such items, as well as other
measures of economic performance.
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 anticipated;
-- regulatory and legislative actions or decisions that adversely
affect our business plans or operations;
-- price competition;
-- inflation and changes in the interest rate environment;
-- 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 health care changes, including managed 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 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; and
-- operating costs, customer loss and business disruption
following the merger, including adverse effects on
relationships with employees, may be greater than expected.
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 updated on June
2, 2006, as well as our most recent Forms 10K and 10Q.
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