Exhibit 99.1
ProAssurance Reports 2006 Year-End and Fourth Quarter Results
SUMMARY
ProAssurance Corporation reports 2006 Net Income of $236 million,
or $6.85 per diluted share. Income from continuing operations in 2006
was $127 million, or $3.72 per diluted share. Net income per diluted
share for the fourth quarter of 2006 was $1.01. Book value per share
increased $9.02 to $33.61 in 2006. Premiums Written in the year were
up slightly, counter to the prevailing year-over-year downtrend in the
medical professional liability market. Other year-end 2006 highlights
include total revenues of $738 million, strong operating cash flow of
$183 million, stockholders' equity of $1.1 billion, and total assets
of $4.3 billion.
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Feb. 27, 2007--ProAssurance
Corporation's (NYSE: PRA) results for the year and quarter ended
December 31, 2006 are as follows:
Unaudited Consolidated Financial Summary:
(in thousands, except per share data)
Continuing Operations (1, 2)
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Gross Premiums Written $126,719 $138,219 $578,983 $572,960
========= ========= ========= =========
Net Premiums Written $122,372 $121,351 $543,376 $521,343
========= ========= ========= =========
Net Premiums Earned $153,772 $143,347 $583,067 $543,241
========= ========= ========= =========
Net Investment Income $41,167 $27,832 $149,789 $99,193
========= ========= ========= =========
Net Realized Investment Gains
(Losses) $(79) $(403) $(1,199) $912
========= ========= ========= =========
Total Revenues $196,371 $171,880 $737,598 $647,950
========= ========= ========= =========
Guaranty Fund Assessments $1,235 $(117) $2,609 $226
========= ========= ========= =========
Interest Expense $2,999 $2,472 $11,073 $8,929
========= ========= ========= =========
Total Expenses $146,192 $134,364 $560,771 $539,087
========= ========= ========= =========
Tax Expense $14,389 $10,614 $49,843 $28,837
========= ========= ========= =========
Income From Continuing
Operations(1, 2) $35,790 $26,902 $126,984 $80,026
========= ========= ========= =========
Discontinued Operations(1)
Income From Discontinued
Operations $- $7,816 $109,441 $33,431
========= ========= ========= =========
Net Income
Net Income $35,790 $34,718 $236,425 $113,457
========= ========= ========= =========
(1) Results from our Personal Lines operations, net of tax, 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.
(2) Continuing Operations reflects results from PIC Wisconsin since
August 2006.
Earnings Per Share
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Weighted average number of
common shares outstanding
Basic 33,243 31,088 32,044 30,049
Diluted 36,111 33,986 34,925 32,908
Earnings per share (Basic)
Income from Continuing
Operations $1.08 $0.87 $3.96 $2.66
Income from Discontinued
Operations - 0.25 3.42 1.11
--------- --------- --------- ---------
Net Income per share (Basic) $1.08 $1.12 $7.38 $3.77
========= ========= ========= =========
Earnings per share (Diluted)
Income from Continuing
Operations $1.01 $0.81 $3.72 $2.52
Income from Discontinued
Operations - 0.23 3.13 1.02
--------- --------- --------- ---------
Net Income per share
(Diluted) $1.01 $1.04 $6.85 $3.54
========= ========= ========= =========
Cash Flow Analysis
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Cash Provided by Insurance
Operations $52,569 $73,229 $288,980 $324,507
Taxes Paid on Sale of
Discontinued Operations
(Personal Lines) - - (54,565) -
Net Purchases of Trading
Portfolio Securities (4,207) (248) (51,585) (917)
--------- --------- --------- ---------
Net Cash Provided by Operating
Activities $48,362 $72,981 $182,830 $323,590
========= ========= ========= =========
-- Net Cash Provided by Operating Activities (Operating Cash
Flow) was affected by net outflows from trading securities
activity of $51.6 million and the payment of $54.6 million in
taxes on the sale of our Personal Lines operations.
Balance Sheet Highlights(1)
December 31, 2006 December 31, 2005
----------------- -----------------
Stockholders' Equity $1,118,547 $765,046
Total Investments (Continuing
Operations) $3,492,098 $2,614,319
Total Assets (Continuing
Operations) $4,342,853 $3,341,600
Policy Liabilities (Continuing
Operations) $2,967,097 $2,572,008
Accumulated Other Comprehensive
Income (Loss) $111 $(8,834)
Goodwill (Continuing Operations) $72,213 $29,494
Book Value per Share $33.61 $24.59
(1) 2006 Balance Sheet Highlights reflect the addition of PIC
Wisconsin.
Key Ratios (Continuing Operations)
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Net Loss Ratio 74.8% 74.5% 76.0% 80.7%
Expense Ratio 18.3% 17.6% 18.2% 16.9%
--------- --------- --------- ---------
Combined Ratio 93.1% 92.1% 94.2% 97.6%
========= ========= ========= =========
Operating Ratio 66.3% 72.7% 68.5% 79.3%
========= ========= ========= =========
Return on Equity 13.0% 14.3% 13.5% 11.6%
========= ========= ========= =========
-- Gross Premiums were higher in 2006 than in 2005 because of the
additional business generated by our acquisition of NCRIC,
Inc. in August 2005 and from our acquisition of Physicians
Insurance Company of Wisconsin (PIC Wisconsin) in August 2006.
Gross Premiums Written were down in the fourth quarter,
compared to last year's quarter, because of competitive
overall market conditions. PIC Wisconsin did not materially
contribute to premiums due to the timing of their renewals,
which are weighted to the start of the first and third
quarters.
-- Policyholder retention for 2006 was 84% and 83% in the fourth
quarter.
-- Premiums on renewing policies were higher by 3% in 2006 and 1%
in the fourth quarter compared to the same periods a year ago.
ProAssurance continues pricing its policies at levels that are
designed to maintain its margins, despite lower overall
pricing in the marketplace.
-- Favorable net loss reserve development totaled $36.3 million
in 2006, with $13.3 million coming in the fourth quarter. This
development continues to come primarily from the accident
years 2002, 2003 and 2004.
-- Return on Equity was 13.5% in 2006. Strong cash flow,
resulting in increased investment income, along with favorable
loss reserve development, drove an increase in ROE for the
year.
-- Book Value per Share grew by $9.02. Organic Book Value growth
added $4.70 per share; the sale of ProAssurance's Personal
Lines business and the purchase of PIC Wisconsin added $3.29
and $1.03 to Book Value per Share respectively.
Florida Verdict Commentary
We continue to pursue post-trial and appellate relief in the $217
million malpractice verdict against insureds of one of our
subsidiaries in Tampa. We continue to believe, based upon our current
analysis of appellate and coverage issues, potential recoveries from
our insurance and reinsurance programs, potential settlement
discussions, as well as our historical settlement practices, that our
reserves are adequate. We are monitoring the developments with this
verdict, as we do all verdicts, and will make adjustments to our
reserves as necessary.
Conference Call Information
-- Live: Tuesday, February 27, 2007, 10:00 AM ET. Dial (800)
310-1961 or (719) 457-2692 outside North America. The call
will also be webcast on our website, ProAssurance.com, and on
StreetEvents.com.
-- Replay: By telephone, through March 9, 2007 at (888) 203-1112
or (719) 457-0820, using access code 4017871. Via internet,
through March 30, 2007 at ProAssurance.com and
StreetEvents.com.
-- Podcast: 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, Inc.
Caution Regarding Forward-Looking Statements
Any statements in this News Release that are not historical facts
are specifically identified as forward-looking statements. These
statements are based upon our estimates and anticipation of future
events and 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," "potential," "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, court judgment, legislative
actions, payment or performance of obligations under indebtedness,
payment of dividends, and other matters.
These forward-looking statements highlight 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;
-- 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;
-- bad faith litigation which may arise from our involvement in
the settlement of claims;
-- post-trial motions which may produce rulings adverse to us
and/or appeals we undertake that may be unsuccessful;
-- 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;
-- the expected benefits from acquisitions may not be achieved or
may be delayed longer than expected due to, among other
reasons, business disruption, loss of customers and employees,
increased operating costs or inability to achieve cost
savings, and assumption of greater than expected liabilities;
-- changes in accounting policies and practices that may be
adopted by our regulatory agencies and the Financial
Accounting Standards Board; and
-- changes in our organization, compensation and benefit plans.
You should not place undue reliance on any such forward-looking
statements, which speak only as of the date made. 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. Except as required by law or regulations, 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.
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, such as our current
reports on Form 8-K, and our regular reports on Forms 10-Q and 10-K,
particularly in "Item 1A, Risk Factors."
CONTACT: ProAssurance Corporation
Frank B. O'Neil, 800-282-6242 or 205-877-4461
Sr. Vice President,
Corporate Communications & Investor Relations
foneil@ProAssurance.com