EXHIBIT 99.1
ProAssurance Reports Third Quarter and Nine-Month Results for 2007
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Nov. 6, 2007--ProAssurance
(NYSE: PRA):
SUMMARY
ProAssurance reports strong increases in Income from Continuing
Operations for the third quarter and first nine months of 2007. For
the quarter, Income from Continuing Operations was $43 million or
$1.23 per diluted share, which is an increase of 28% compared to 2006.
Year-to-date Income from Continuing Operations was $117 million or
$3.31 per diluted share, which is an increase of 22% compared to 2006.
Book Value rose to $36.67 per share and is up nine percent in 2007.
ProAssurance (NYSE: PRA) reports the following results for the
periods ending September 30, 2007:
Unaudited Consolidated Financial Summary:
- ----------------------------------------------------------------------
(in thousands, except per share data)
Continuing Operations
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
-------- --------- --------- ---------
Gross Premiums Written $149,138 $163,273 $440,186 $452,264
======== ========= ========= =========
Net Premiums Written $139,483 $152,043 $401,809 $421,004
======== ========= ========= =========
Net Premiums Earned $135,508 $149,444 $405,348 $429,295
======== ========= ========= =========
Net Investment Income $ 41,075 $ 38,699 $128,194 $107,012
======== ========= ========= =========
Net Realized Investment Gains
(Losses) $ 1,321 $ (510) $ (1,564) $ (1,120)
======== ========= ========= =========
Total Revenues $178,617 $189,245 $537,628 $541,228
======== ========= ========= =========
Guaranty Fund Assessments $ 1,025 $ 314 $ 890 $ 1,374
======== ========= ========= =========
Interest Expense $ 3,006 $ 2,886 $ 8,950 $ 8,074
======== ========= ========= =========
Total Expenses $118,553 $142,782 $374,812 $414,579
======== ========= ========= =========
Tax Expense $ 16,952 $ 13,095 $ 45,993 $ 35,455
======== ========= ========= =========
Income From Continuing
Operations(1) $ 43,112 $ 33,368 $116,823 $ 91,194
======== ========= ========= =========
Net Cash Provided by Operating
Activities $112,487 $ 92,286 $207,211 $134,468
======== ========= ========= =========
Discontinued Operations(1)
Income From Discontinued
Operations $ - $ - $ - $109,441
======== ========= ========= =========
Net Income
Net Income $ 43,112 $ 33,368 $116,823 $200,635
======== ========= ========= =========
(1) Our personal lines operations were sold effective January 1, 2006.
Income from discontinued operations consists solely of the gain
recognized on that sale, net of taxes.
Earnings Per Share
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
--------- -------- -------- --------
Weighted average number of common
shares outstanding
Basic 32,779 32,551 33,082 31,640
Diluted 35,604 35,438 35,949 34,525
Earnings per share (Basic)
Income from Continuing
Operations $ 1.32 $ 1.03 $ 3.53 $ 2.88
Income from Discontinued
Operations - - - 3.46
--------- -------- -------- --------
Net Income per share (Basic) $ 1.32 $ 1.03 $ 3.53 $ 6.34
========= ======== ======== ========
Earnings per share (Diluted)
Income from Continuing
Operations $ 1.23 $ 0.96 $ 3.31 $ 2.71
Income from Discontinued
Operations - - - 3.17
--------- -------- -------- --------
Net Income per share (Diluted) $ 1.23 $ 0.96 $ 3.31 $ 5.88
========= ======== ======== ========
Key Ratios
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
--------- -------- -------- --------
Net Loss Ratio 65.0% 76.3% 70.5% 76.5%
Expense Ratio 20.2% 17.3% 19.7% 18.2%
--------- -------- -------- --------
Combined Ratio 85.2% 93.6% 90.2% 94.7%
========= ======== ======== ========
Operating Ratio 54.9% 67.7% 58.6% 69.8%
========= ======== ======== ========
Return on Equity 14.7% 13.4% 13.4% 13.2%
========= ======== ======== ========
-- Our policyholder retention rate continues to improve
incrementally, and is at 86% for the year-to-date and in the
third quarter. So far this year we have been able to renew
policies at rates that are essentially equal to the rates on
expiring policies as rate reductions in some states offset
increases in others.
ProAssurance's Chief Executive Officer, W. Stancil Starnes, said,
"Overall loss trends continue to improve, and this is reflected in our
rate actions. While this does reduce overall premiums, we are
confident in our ability to achieve an acceptable Return on Equity on
the business we are writing today as we exercise continued
underwriting and pricing discipline and maintain our historical level
of reserving."
-- In the third quarter we recognized $25.0 million of favorable
net loss reserve development. For the year, our total
favorable development is $60.6 million. Much of this year's
favorable development is the result of our estimate of reduced
claim severity primarily in accident years 2003 through 2005.
-- We commuted reinsurance treaties in the quarter that resulted
in an after-tax benefit of approximately $1.0 million. We
continue to evaluate the possibility of commuting other
treaties if the financial terms are favorable.
-- Two one-time items increased our Expense Ratio for the
quarter. We granted our new CEO 100,000 options on July 1,
2007, the day he assumed his current position. This grant
increased our third quarter expense ratio by 1.3 points and
our year-to-date expense ratio by 0.4 points. Our Expense
Ratio was increased by 0.7 points in the quarter and 0.2
points for the year-to-date because of a $1 million Guaranty
Fund Assessment from the State of Florida. We are allowed to
recoup this assessment through a surcharge on Florida
policies.
Balance Sheet Highlights
September 30, 2007 December 31, 2006
------------------ -----------------
Stockholders' Equity $1,198,141 $1,118,547
Total Investments $3,636,695 $3,492,098
Total Assets $4,434,152 $4,342,853
Policy Liabilities $2,969,208 $2,967,097
Accumulated Other Comprehensive
Income $ (8,771) $ 111
Goodwill $ 72,213 $ 72,213
Book Value per Share $ 36.67 $ 33.61
Capital Management
As of September 30, 2007 we had repurchased approximately 764,300
shares of our stock at a total cost of $41.3 million. That left $108.7
million remaining in our securities repurchase authorization and we
will use $16 million of that amount in December to redeem trust
preferred debt we acquired in the NCRIC acquisition.
Conference Call Information
-- Live: Tuesday, November 6, 2007, 10:00 AM ET. Dial (877)
879-6203 or (719) 325-4802 outside North America. The call
will also be webcast on our website, ProAssurance.com, and on
StreetEvents.com.
-- Replay: By telephone, through November 15, 2007 at (888)
203-1112 or (719) 457-0820, using access code 7546510. Via
internet, through November 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 or through
Apple's iTunes.
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. ProAssurance is recognized as one of the top
performing insurance companies in America by virtue of its inclusion
in the Ward's 50 for 2007 and is one of the 100 largest
property-casualty insurance groups in the nation, based on Net Written
Premium.
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 judgments,
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 different 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 that affects the market value
of our investments or that make it difficult to determine the
value of our investments;
-- 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
and/or government programs;
-- 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 and/or insurance;
-- bad faith litigation which may arise from our involvement in
the settlement of claims;
-- The results of litigation, including pre-or-post-trial
motions, trials and/or appeals we undertake;
-- changes in 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
-- changes in our, organization, compensation and benefit plans;
and
-- our ability to recruit and retain senior management.
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