ProAssurance (PRA) 22 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Frank O’Neil	Senior Vice President, Corporate Communications and IR
Stan Starnes	Chairman and CEO
Ned Rand	President and COO
Dana Hendricks	Chief Financial Officer
Howard Friedman	President, Healthcare Professional Liability Group
Mike Boguski	President, Eastern Insurance
Kevin Shook	Executive Vice President, Eastern
Amit Kumar	Buckingham Research
Mark Hughes	SunTrust
Christopher Campbell	KBW
Marcos Holanda	Raymond James

Call transcript

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Operator

Good morning, everyone. Welcome to ProAssurance’s Conference Call to discuss the company’s Fourth Quarter and Full Year 2018 Results. These results were reported in a news release issued on February 21, 2019 and in the company’s quarterly report on Form 10-K, which was also filed on February 21st. These documents are intended to provide you with important information about the significant risks, uncertainties and other factors that are out of the company’s control and could affect ProAssurance’s business and alter expected results.

We also caution you that management expects to make statements on this call dealing with projections, estimates and expectations, and explicitly identify these as forward-looking statements, within the meaning of the U.S. subject Safe and protections. laws securities to Harbor applicable federal will only call XX, by The information expressly disclosed ProAssurance forward-looking or this of to accurate any law undertake on obligation disclaims regulation, as required content of alter as is February update and except XXXX or these part not statements. and items call. management of also ProAssurance today’s team expects during The to reference non-GAAP non-GAAP news release provides numbers these to recent of their company’s The reconciliation counterparts. GAAP a

Frank will turn O’Neil, you the I Now, for the remarks. to is to Mr. questions prepared would call remind I as that being over like recorded be after call the of and conclusion there time

Frank O’Neil

Denise. and Professional Liability Stan on Financial Presidents and you, Chairman Chief the Healthcare our and Mike our of Dana our Ned are and Starnes; Howard Hendricks. are Boguski, Rand; Thank Officer, CEO, Operations also call. the Friedman call Chief On and today President Operating Compensation Workers’ Officer,

to first are We go going to Stan.

Stan Starnes

you, Thank Frank.

but in effect XXXX as in the earnings losses said this in higher medical loss volatility which such will had environment property in than challenges, of As release, line markets, those effects our the liability in been the negative net The a has hear without and challenges, Lloyd’s professional positives and in the natural a income of given equity I call evolving investments. our on its especially so not you expected crossing quarter. to our the as not over catastrophic as our number first, mentioned I well. be seen

market. results, excellent Our competitive very is Workers’ Compensation achieving segment a Insurance despite

changes with pricing will level remarks this our After strong high we clear Medical and management announced seeing Ned. we signs we firming we are of announced yesterday. complete results Professional first Liability from some will the quarter, But the on in give business, comments higher -- We consolidated our discuss on retention. market

Ned Rand

in growth the for was the again fourth quarter a Stan. for us year. highlight and you, Topline Thank

XXXX, or For increase the total million, written successfully in operating in operations domestic XXXX, was quarter contributed or $XXX the million market. part all gross over $XX key growth million in reached that our gross year-over-year were This through over of differentiated XX.X% in which the $XX year X.X% a This with written very a of an success our premiums consolidated same almost business record $XXX a in a year. segments. million, us competitive quarter in million of products indicator premiums to are written due our to to an increase new $XXX in prior

primarily gross quarter, premiums to premiums or For and $XX in Cell which Reinsurance the in million P&C written segment, segment our timing in segment And respectively. essentially X.X% segment $XX X.X% gross our unchanged $XXX,XXX later. Insurance million million, Gross our our will Howard differences, fourth Segregated Specialty increased or due premiums written quarter-over-quarter, $XX.X Workers’ were to Compensation and Portfolio million. grew to quarter-over-quarter $X.X touch Lloyd’s on

must be was that points X with XX.X%, to current to last bottomline. consolidated two challenges was met the we fourth over the loss for The quarter. year’s net growth, due there up year this pleased that are While carry are ratio topline factors. to This quarter significant growth accident primarily

we our severity fix professional natural for and loss our property within we apply the First, will increased our shortly, detail caution in losses light expected of continuing catastrophe-related which than lines. higher the medical in liability loss greater the discuss Lloyd in segment, potential to

and to P&C market. in reserves Insurance potential by segment while premiums the written continue Workers from quarter million are benefit business returns our As retention our our ability the discipline. insurance future. growing meantime, Specialty Combined liability within loss and trends foreseeable we to we that in the medical said served we affect have operations continue before, evidence factors of strong maintaining over will for believe add In fourth increase to $XX of encouraged and segments, rational to and caution of our these highlight professional new and evaluation the Specialty our in Compensation P&C with to pricing XXXX in underwriting underwriting through our business, domestic

related providing We Dana continue to to to grow I am share value the policyholders. the going some Dana? to on quarter. ask market non-insurance real share results by in highlights our

Dana Hendricks

a reported increase which million, Thanks, on million in in lower unconsolidated net This our was our our partially from quarter-over-quarter $X.X equity in particularly an adjustments LP unconsolidated decrease class result as primarily $XX.X attributable investment quarter portfolio. of well the which led lower market, was in million to quarter of investments. million, investment XXXX, in Ned. of in reflected the we in to realized million to equity a trading net $X.X primarily reduced earnings a in from compared that equity of for The Reform. decline of a credit was investments $XX.X our quarter-over-quarter investment our balances, decline as to results our broader due earnings the income due consolidated equity allocation. investment On totaled fourth mark-to-market an a tax with of both to investment subsidiaries. as operating by bond and asset securities, tax as net deductible increase losses of losses few volatility from decline subsidiaries level, reflects muni increases Net have in earnings equity $X.X equity income the associated income, Tax as portfolio an average The offset

or the million $X.X $X.XX of $XX.X diluted markets net reversed about The since the year the million Importantly, for quarter income that of in primary loss. equity [ph] has for $X.XX per $XX the investment were share. Xst the Non-GAAP or of the loss the losses quarter net million recovery realized share. of diluted per consolidated operating the drivers was

year and we to XXst, level or not of we As our target the above the us insurance for million period in subsidiaries. matter unpledged we as the repurchasing felt did cash XX-month outside buying our shares value, about that investments brings not that use we will believe decision repurchase This shorter I when reach did management, in we a December you the contemplating held capital $XXX which remind liquid was approximately price quarter the repurchases. from book payback capital. where or best of any motion removes a

$XXX million available approximately Board our repurchase program. authorized in have We stock still

and We add see business business factors, requirements rating includes capital new potential writing in such will the opportunities as evaluate our in with mind market. to basis, imposed position the changes keeping to capital through we M&A. Frank? continue as, regulators our and agencies regular on a or Board That by

Frank O’Neil

Dana. Thank you,

Howard go to operating domestically. and on Howard, Mike for going segments are commentary you start? will our we Now to

Howard Friedman

affected Thanks, to losses, complex within the severity about trends of to Frank. The P&C with potentially we concerned Again, our remain risks. large especially segment trends, results be higher these our but we by paid market. seen broader of consideration in not continued manifest our increasing Specialty regard have severity

its XXXX. positives $XX effect there and net year, million, that to of year the compared highlight to million consider to ago million $XX the that believe the future. million was are in compared That strength development for the in $XX $XXX quarter favorable segments So I and underlying said, loss

XX.X% quarter gross were an though million the in First, the the was year over healthcare fourth in facilities increase quarter-over-quarter. the increase we written for The of in flat $XX was even premiums same largely by year, over year-over-year prior saw an premiums XXXX. gain quarter X.X% driven of

As facilities points in the trends X of important physicians year consolidation of progresses, the in for XX%, from quarter focus to last healthcare year. continue over be an X up increased in XX% to the Retention for same point healthcare and practices us. independent was over up medicine XXXX quarter, migration in based the hospital retention facilities

quarter on a we which up same healthcare In in the year, renewals, facilities in million and the new in addition of XXXX. $XXX,XXX to approximately both the period the business for ongoing increase $X quarter, generated business. business. X% controls from price succeeding quarter, the the marketplace $X building reaffirms largely that are Facilities our the This we we on in new In physician in the broker in visibility million community, and wrote fourth

business a X The topline of pricing as X% expiring the was written severity by conditions consistent to decreased that premium our renewal year, and premium first due but with flat former we to was into in However, from the physician and climb, Physician quarter expect and XX% rate the expectations quarter, quarters few the timing large quarter-over-quarter. several down increases market million have declined for XXXX. would respectively. increased of renewal of of that the policies, for retention premiums gross $X X% the million we discussed market, pricing year-over-year. primarily $X for the are of quarter of at follow. the are points our shift Physician by to beginning XX% These

believe of that a will dedication requires that the calls potential we and influences market to trends, take to our of reacts to as the emerging While ProAssurance we evaluation sheet, aspects the strength in the that cautious protecting continuing our our rise want reserves. turn we underscore loss balance which of a benefit our view in for severity,

of due by loss higher an for to for Our almost quarter loss transfer quarter and to quarter ceded therefore the the ratio for year, which year, loss the to year. reduced year XX.X% second the portfolio loss X the very less ratio. was had it points the increased so in loss The current ratio increase premiums, the in the almost for denominator loss increased in points since in a portion X low significant the by and ratio. of accident and expenses also the ratio XXX.X% increase A

signs loss is has of reflect in loss business to important to resulted severity, environment Finally, it with that our that reserves in the We establish certain selected continuing and the believe initial the portions with the ever ratios of caution higher expressed show over evaluate above. conservatism to we than success years. broader more increased

signs our segment that you to in in continue bottomline near future, assumptions that the XXXX. we reserve loss expect and meaning will affect no the is So severity trends change this these to see should

I market the the emphasize especially softer. was made greater Before over sheets and those these trends who competitors, from quality that influence it have our of to an loss balance their I equal, expense turn on market while perhaps, the growth want Frank, projected at share of a to severity have and

kind conservative rational pricing market million as added for example goes Sciences year with interest. the pudding challenges, and the Technology our of the and $XX That provide is the the in gross premiums combined continues made business. Medical development. proof XX.X%. a prime ratio which practices Frank? Life back The result of paid business, is rewards resisting As write to of to good our a temptation of are reserving and the Life possible is saying as to to our primarily business profitability Sciences bottomline, million the by of the in topline and year for favorable $XX easy Further was lieu

Frank O’Neil

Thank focus Mike, are Howard. discuss next you, segments. of you Compensation our Workers up both to

Mike Boguski

increased XXXX, partially compared an for Thank by segment in you, Insurance to to $XX.X was decrease increase net XXXX. in Workers’ the Frank. operating earned This ratio, an million a loss XX% driven The ratio. and expense increase Compensation net the offset for by $XX.X premiums in results underwriting million

and $XXX.X rights year, XX.X ceded consistent Great increase to traditional XX% for was business the transaction. alternative an million retention, of renewal $XXX results Company SPC to includes increased by compared gross Reinsurance million. driven Insurance premiums the market segment Falls production This During including to and the which written, XXXX, the strong business million,

the The XX.X% The model. to primarily to operation Compensation want ratio points accident million, million were percentage in increased an year period New XXXX, Great important $XX were hazard to to to the XXXX to reflected combined results XXXX, Compensation related of underwriting prior expense favorable million million rate to reflected compared to XXXX -- for a the an serves The XX.X%. activity the with of current million during the the combined XXXX. $X.X management the accident XXXX. loss favorable net $XX.X rates The in to XXXX pleased current patterns loss and prices closed were year year to better related million XXXX held retention of XX% solid XX% $X.X increase for Workers’ a million segment transaction, Great achieve. as reflecting increasingly XXXX, XXXX for Falls. in increase our million. earned full the Insurance in resulting at million improved ratio written XXXX. $X.X in were for nature reserve an Regional profitable amortization of increase an claim The XX.X% We short includes of continued XXXX. million ratio Order which from point net including Gross in decrease year, increase net that a Compensation XXXX, Company in business asset economic business of of our Eastern premium ratio XXXX year launched higher the prior England compared Risk added in in accident claim The where fourth $X XX.X% and unit new of in produce X compared same The loss the are decreases Specialty combined writings percentage calendar period launched renewal results underwriting Insurance which of net an intangible XX.X% in Renewal same $X.X XXXX. compensation operating the of partially of price premium claim was million, XXXX premium of $X.X effect XX.X%, items severity-related continued in quarter premiums Two including loss $XX.X X.X indicative accident X% $X.X marketplace direct increasingly net during increase that premium tail year trends to $XX.X net expense The result XXXX in X% compared Workers’ was increased business fourth is premium general expenses. ratio in in closing Office of and ratio workers’ than the quarter in Insurance related to ratio, and to XXXX the XX%. increase of competitive almost strategic in due difficult employee decreased decreases now retention initiatives approximately corporate effective for points offset in XXXX XXXX, X% calendar XXXX written the favorable Workers’ The renewal in results level in I of and of compared XXXX. of in the claims New trends. expected to fee. over and Falls compared rights years ratio by in claims XXXX development development growth in XXXX. to highlight primarily as year few the ratio loss contributed management XXXX, of in X.X XXXX in our

new to Portfolio accident the development X% $X.X segment. to from XX.X%, in claim year compared in in XXXX varying represents I’d renewal current loss XX% million, SPC’s XX.X% year expected primarily segment. expenses Compensation of Now pricing like current ratio the segments $X Reinsurance which the XXXX, a segment decrease and $XX.X Workers’ The years result is results the Cell to and the profit The net current in the and Frank? Cell writings SPC XXXX. reflects to through Insurance represent to SPC focus business segment XX.X% decreases to business. SPC in the for by in The million operating XXXX for a net include increased was written XXXX million for XXXX, were which Year-over-year, The in loss Portfolio XX.X% of premium ratio. results participate decrease of activity on Segregated of provided to programs $X.X renewal degrees. compared in loss paid in Underwriting the price P&C services of our in related million captive the XXXX. driven ratio loss Compensation large in operating than of in $X.X million SPC we net million to Reinsurance XXXX ceding year Segregated XXXX. accident ceded XXXX, This share to the Workers’ the for compared in Reinsurance from to the $XX.X XXXX XXXX. development due premium segment’s the decrease commission net includes Production decreased from XXXX claim Insurance for Specialty to the XXXX. year renewal favorable accident favorable to calendar accident better net flat ratio retention compared in XXXX, of Gross

Frank O’Neil

to for Mike. Thank back commentary some on you, Howard, you now Lloyds.

Howard Friedman

remember Sure, a reporting the we lag segments. one on Frank. are we quarter Please since have of the as inception

in an However, where as quarters known or either or such one, this of projected. material effects event

loss Normally, premiums. in quarter The due delay. quarter net reported into Hurricane exposure results reinsurance quarter. certain of reporting to aforementioned the pre-tax would to reinstatement and accelerated from have Michael net first be these additional $X.X We the were our million losses costs XXXX, of current

due connection the operating in favorable the year. our XXXX. This quarter Mid-Atlantic. the drove We the million reporting the these the eruptions with share approximately losses our total million, materiality development affected which and as estimates, million XXX.X% of states Segment estimate Hawaii adverse to property losses approximately catastrophes, of related loss year recognized in of certain of catastrophe allocated Hurricane these ratio in of be net catastrophe quarter. adverse development million brings to accident The in our quarter the $X to to the and storm for losses the which losses net the development to the XX% included in approximately for natural current related volcanic However, year a $XXX,XXX XXXX. associated for $XX quarter allocated $X.X in natural We quarter. we and was $X.X availability for fourth several with results also of have our included along into accelerated our other estimates for Florence, losses natural which pre-tax of share compared

premiums also participation due in operations January $XXX,XXX $XXX,XXX connection quarter compared were of increase our XX% effect to in as mentioned XXXX, XX% from The increase, million. Ned with albeit XXX% to in by greater to Syndicate to Syndicate a reinstatement Xst and is in premiums our in XXXX, $XX.X of the written extent, through which the arrangement XXXX catastrophe-related XXXX As primarily purpose the is Syndicate written of special the participation gross earlier, received in premiums XXXX. written Gross losses. lesser natural effective

premiums For the to $XX.X million million. gross to of Net written XX.X% increase year million, $X.X increased $XX.X over XX.X% year, premiums the quarter. increased earned an prior

produced the the to reflected accommodate written the opposed is as business is over primarily this -- in from resulting addition earlier necessary Syndicate the where earned scale the continues for in commissions in the open is growth higher to delegated premium from a by result quarters, prior in premium business earned of XX staff right in increase premiums growth operating market, Frank? towards growth. direction premium The increased months, underwriting step gross segment’s mentioned expenses. over amount to of of impact achieving As needed The expenses and written where under XX the months. authority, to reduce the

Frank O’Neil

Stan, you some I Lloyds. want about know to comments make

Stan Starnes

Frank. Thanks,

we results As in in Lloyd’s. our pre-release, disappointed are financial our at said of investment we the

in believe invest reasons are decided still we While the Lloyd’s we to valid.

We of is also results. introduced the understand volatility concerned our that and investment performance it investors the financial with are into this

an both are financial investment options and the we all undertaking volatility. a the with of reduce review of investment in the said, our of As we significance effort earnings associated to this

we will ultimate we be. yet result beginning the what cannot are this process, just project As

position what Syndicate believe the long-term and underwriting in to want for this all success. they We continue help to create

ways Our including capacity or participation be and provide. of partial reinsurance of the finding volatility include reducing of a our resolve, will we Syndicates comprehensive the all valuation range reduce will the to alternatives

final to ProAssurance in importance of not anything, for the going the will the our and recognize drag course action feet of this into we of determination not resolving investors. reaching and best our are We rush but we

we like that I discuss ask would Ned the Now afternoon. announced to yesterday Ned? management changes

Ned Rand

Thank you, Stan.

Professional indicated we retire As our activities reluctantly press business have and noted his Howard we agreed. of from in to Liability Healthcare our has release, day-to-day running desire

insight hear of It’s than many role away We are an important We have duties, a will years that forward. the his some him, wisdom. best gratitude debt Rather of service, we for to Howard? investors from in pleased organization debt, our that me and never stepping can repay. deep continue its reasons owe and play for you he Howard a of his from I addresses thought going

Howard Friedman

tell who of than get Thanks, XX other mid-May and Mike, else Ned, challenges Stan, success. now great of years day. ProAssurance also a interesting almost people grandchildren, are travel things I time support, a can, way questions. After have a do, be to enjoy to gracious, told deal my with you there’s will several wife decision. with come years I thank and Professional such and its and I many of want limited the happy contribute I meetings, am while hundred challenging the things role still to and like what there active. and personally I even satisfaction associates you interests. this our after to friendship but of been I of and I of and small are with on we continuing, many understanding want everyone. that business, cycle, them. there able tough out many and do, and in other for healthy more of have I and do all while ProAssurance it. to very hobbies, Dana, that yesterday with portion of those spoke I My of will to in your what will you great we I’d so same At XX group the ProAssurance Thanks ongoing thank call love from time ProAssurance through years supportive the my new love professionally to afternoon everyone every satisfaction something day. to at the every and Medical the and next Liability market lead a I I’d

Frank O’Neil

Howard. Thanks,

he culture and for great opportunities I of to Shook. history service them Mike Kevin result a for the assets have of As and decision, for understands the side for of has also and be evolved has ProAssurance. He create Howard’s Mike we and from Kevin of to Mike proven this Boguski that a Both able new business that ProAssurance. knows expectations everything been has value Eastern’s inside in improving will do. I sure operations insights vital and I a honor am we our part upward and that in bottomline and Eastern’s and we operational operations ensure from be his end? of am Mike remarks Workers’ Compensation Kevin out trajectory will has history. confident our that success. continue understands excellence excited launched. the any am Mike been Kevin, your as

Mike Boguski

Ned, I start. will

the role. Howard, we XXXX business $XXX partners business built years. dedication commitment Thank past benefit executives, to vast knowledge. to all First Howard Ned of segment over want deep his healthcare I I team and you, years. like and and strategic leading alongside the organization and over XXXX by from Thank in in future. Howard the the look I the accomplished to Compensation members, together end want to the SPC that congratulating all Eastern. much. the success. has consistently have forward of Workers’ of He’s battle XX valued this role. wealth the past tremendous specialists position ethic extremely for well to enthusiasm. experience, fantastic am and next experience my organization. I has topline Compensation all, million outstanding appreciation insurance experience very forward to an over want proud well-prepared He Howard startup finish role confident the trusted work a I’d businesses partner leadership in strong truly from been past over underwriting also executive level, will to brings the organization to relationship have XX new It’s congratulate this great truly lead past in talent, great that industry career. to attractive On to in our their the working lead & personal with industry am roles deserved advisor, you continue skills, so from his that a years. years. the Reinsurance promotion to Stan a five economic I and leadership Kevin to partners Property a for and of a will express actuarial on I ahead level of Shook Kevin a in his various senior the gratitude much. in at the deal grateful agency cycles. with Eastern Kevin the over the I Kevin result to so and for his XX of opportunity the institutional Workers’ extremely and thank, tested and and year Specialty ProAssurance into support, President of leadership us. delivered been challenges I friend opportunities energy and you Casualty an look Together extremely work we to Thank business a am that

Kevin Shook

is my next you as I become until Eastern’s expressing Ned in I January for been Mike, opportunity and you, I he role. new that business years me I I enthusiasm, in this collaborative look Mike. has first XXXX. Eastern would to role. new especially it has CFO like ‘XX almost and since am its continued and President founding wish begin back our future. XX overseeing Mike. President, Span second closing been Howard going have Mike’s to and would Specialty in am to to business. mentor thank operations experience P&C in gratitude will like operational the for congratulate innovation we bring to talent will financial partner. a Eastern of And by his business prepared the would dedication for when to to led the with I Workers’ vision, partners each field thank an all culture, him and the in beginning like remarks. and success. to strategic discipline I grateful turn employees Compensation also years. phase captive is to actuarial forward to Mike partners these and promoted Mike Vice well the energetic outstanding our our for dedicated SPC endeavors now over career strategic the on friend and Stan businesses Executive success and I to of was great valuable and very which the leadership it to for lead and contributions agency to Together trusted

Stan Starnes

call you, Mike changes Thank by their and more past for their ample for in our gratitude I anticipated Kevin, again Kevin. opportunity gratitude, future be on to our Frank? and will these fully ongoing noting our service contributions. comment May There conclude on and will Howard, to

Frank O’Neil

open concludes that our Denise Stan. you, you prepared the remarks, for will Thank lines questions.

Operator

come question Amit go And will Certainly, Research. this Please of first sir. [Operator ahead. Instructions] Kumar Buckingham from morning your

Amit Kumar

Thanks and help It’s on your you so years. all over great good morning. And for Thanks much learn on to news. from different retirement Howard to topics. been you the the

Howard Friedman

Amit. you, Thank

Amit Kumar

maybe then Lloyds on few then and And will I re-queue. have just a will questions I

The at was to or the I this, retire had was there desire or accelerated senses product, going let to is Lloyd’s question no me way it ask -- ask was first on your what’s by that not?

Howard Friedman

I nothing Okay. options Lloyds, with said no, we to good Lloyd’s XXX% me, long-term say, have -- those think to and with is business no, I tried ProAssurance, a as the are general reasons, look for reasons will at unfortunately. a I absolutely to think do believe and it’s to the all I do but, the in Stan not.

Amit Kumar

outside, options the strategic on wonder. of And made with release Yeah. timing press look, the me coinciding just

a know wanted we understanding Moving in time understand lot XXXX XXXX this. and spent better I Lloyd’s -- on, of to I

Property is special piece in the Specialty had the noise contingency the I this or XXXX? mostly XXXX question first is from there the business coming that from The

Ned Rand

Ned. It’s Amit. Hi,

and losses, As and impact are XXXX. we our remarks, property with losses those prepared the in said the from associated is in catastrophe coming release catastrophe

buckets of the no just that of of large property specialty and in business form XXXX, business business is As coming nice really lines you it’s essentially together XXXX. very there’s a been business In had sizable In event frequency there’s of events severity book XXXX three business past, big and losses industry back in to cat. we lot catastrophe but or with It’s coming a significant more hurricanes a and XXXX, in has as within XXXX, challenging been in casualty of quarter of those book a the includes got it property together to three years. of very been XXXX all right. individual as but reinsurance back property being a the XXXX, for two discussed XXXX it

Amit Kumar

that Lloyds question, And the million and are XXXX commitment reinsurance, any then piece? peripheral commitment, actions i.e. that on $XXX for time next then I when or staying And pretty things are guess change of this Got only I can is at some think i.e. et is again XXXX much commitment ends set no you be it. capital then sort about how that the a should contractual we six-year cetera?

Ned Rand

It’s good question, Amit.

process. I far the think committed for XXXX as following as have that we Lloyd’s though the kind of capital

a commitment XXXX to We the for syndicate have that committed. made and is capital

that affect reinsurance and we and can we will the volatility we that things there that we can independent and damp of that are have mute Now and as do that’s capital evaluate any potentially said commitment kind seen using at Stan of time. the some of

is something we we should evaluating reduce for commitment there the that that Stan Syndicate the then of XXXX well. and capital we that’s will toward is we in work providers be by commitment as evaluate where that one mentioned, things the as bringing into XXXX, capital will as other So

Amit Kumar

some when and one it and the talking today. the it sort it about in transcripts your we look time theme would I we we be and time-frame concerned. is, started talking you don’t I might use faster, at very again. we Liability when going themselves the look final at I know, only yet mean will back core, it. manifested your helpful to the, Howard when stop business that Got about the I losses know here? that Howard, actually about And cost back talking loss was I helpful. you -- you anything of the and the common on The Has Professional is any remain it. discussion yet term comparative Thanks actually these paid stop when reading when That’s initially initially changed losses haven’t from the talking were will of about This is question Medical going comment be changing from line I and it, trend. here very slower, and for

Howard Friedman

has don’t the think, Sure. when see our changed. is so we that and aspect say paid effects Well, I not, not really have I in so losses,

related hospital for severity the and see lot of settlements activity news large in related to a clients. and We physician vertex continue to general both

aberration only resources to as think we of perspective healthcare, in see the to as The that thing the in is measured I resolution is -- business and least that larger higher by know news lag available just things. for The consolidation Some those we claims are in years. before, entities, purchasing has of the system in and the target. wasn’t continuing spoke limits, probably, items driven working we lag the are say about you as I’d this a time from and terms our of through. changed limits therefore, available still coverage larger more that, judicial experience in an at It with

if think, there a we be our I So paid on that conservative losses approach we side. been an it taking have going little effect in that or we to before a is reserve will whether longer, we are can the find are on confirm

Amit Kumar

it. Got

Okay. again over once Howard for the That’s thanks And help your years. helpful. all very

Howard Friedman

Yeah.

you, to Amit. you. You Great are know Thank welcome.

Operator

Hughes next be The go Mark will question of SunTrust. from Please ahead.

Mark Hughes

Good much. you Thank very morning.

Stan Starnes

Good Mark. morning,

Mark Hughes

in congratulations as My new their that roles. everyone well

and a year, about reduced that impact the think year, I I good a barometer On facilities business. XX%, a full on around denominator am losses at the the higher Specialty going forward? assume ceded that’s we denominator, the How this year current with accident is properly accident the you current premiums, go-forward the mentioned of do in that looking basis, if P&C, guess, the I

Stan Starnes

the the full going that certainly result and better increase a fourth in in rated The premium year estimates. retrospectively the premiums barometer increase year the really I contracts had prior that reinsurance adjustment is loss adjustment think ceded quarter. forward came those the in is of from for the

prior to as in ceded resulting losses contract, losses as well farther years the most increasing had those say, words reinsurance i.e. up a increasing of down. follow of are part and the premiums respect with go through rated for retrospectively other from can in that that moving to So away And XXXX them more ceded we accrual. premium

obviously, full what it’s So activity going in estimate I see it to ratio loss those in the years the we gauge, comes. in certainly loss -- which depend year think XXXX on that of better and from

Mark Hughes

clearly, I experience was physician the up snapshot, X%, a not the and continue issues, to when ‘XXs, the -- is responding in little high the you environment? But good the but the this this little quarter retention why lower lower. think very competitors fourth a And on of but -- signs bit one still quarter other pricing to your see related about hand, in is severity are your just still

Howard Friedman

the less like in you are not in the hard things varies responding others competitors not competitive, exactly if tell whatever ignoring either terms aren’t will rationale some it certainly It that say, yet. see we or numbers it their that and we that seeing what of, is. it, being to see It’s seeing

the the reason of may you accounts on quarter not given vary well individual as from which price or change, renew. as to in quarter, rate because will mix concentrations a retention have terms business varies Our for as that in depending change quarter large may one know heavier and states of

we wrong group Our a few consolidation. we on acquiring physician in existing where situations fourth business, quarter driven to have the larger group or was results get -- opportunity larger we are of were the the there smaller where influential the group group a or by in sell ours offer and products. One or the other end part and and the on the didn’t less to

there went to do and try sometimes those and lose. We we But happens going year be after that we the that. certainly on next in year are to back to and sometimes

the or retention for So one the new numbers for happened retention that’s in and business way QX. or other what that will part the most drive

Stan Starnes

Yeah.

Howard, were little fourth the think, me skewed. of a bit that XXXX, quarter I comparison also mentioning so maybe you was a to there spike,

Howard Friedman

very we it the are very year Yeah. XX% happy about above good it a time, last is but in at the and QX average. was number

Stan Starnes

in said, and as Howard larger become will accounts just larger we more but physician And volatile. it is also what that retention number write

Howard Friedman

Yeah.

Mark Hughes

on one changing, then And loss that. now, is really while signals severity, the Comp for final and cost to you a maybe question the do the that comp in any Mike that frequency latest trend trends the been you Thank have in business, Workers’ story favorable for continuing?

Mike Boguski

great a question. It’s Mark. Hi,

a It’s be been It’s down basis, have been is from ‘XX. -- you on over stabilize the has a Our X% overall, up But X% average. starting about frequency to little XXXX. if at X.X% look the trends in frequency about it long-term bit in years. up -- to it’s averaged prior

low sensitive That’s what our also from saw -- very severity slowdown seen side, that economically segment Comp the business traditional flip on the and going on We experienced SPC a in unemployment have the the is On good rate economy this have inexperienced business. a side which year. past forward. our we workers we in the a sign a trends side, Workers’ in severity very

more the get and we stabilizes, severity economy normalized that on rate the will slowdown certainly as think we So for and side. a growth rate unemployment

that we point territories. our management other in risk mitigating are putting severity tremendous across exposures our there to the investments the think amount resources is operating important I of with

Mark Hughes

you. Thank

Mike Boguski

welcome. are You

Operator

ahead. will go question of Please from be KBW. next Campbell The Christopher

Christopher Campbell

Yeah. Hi. Good morning.

Frank O’Neil

Hi, Chris.

Christopher Campbell

I bps rate Hi. looking question pricing XX about my of down Good or sequentially Specialty bps at it just is there morning, XXX Frank. physicians happening the the first special terms quarter-over-quarter, guess within in P&C, was hardening? anything

Stan Starnes

it’s might are and and on states accounts the depending of with those to say, change. other quarterly need will -- of a it geography in Obviously and year that quarter the quarters again or the I’d less there given will are accounts, quarter concentration fourth on quarter. renewals we more No. renewed from we in -- we versus just given and so vary the results what the pricing comfortable forth really in mix had the the

Christopher Campbell

cost That makes I segment. And sense. the fix, are Specialty and higher future. the foreseeable question holding unquote like for it sounds you lot it. Got quote P&C on potential the of increases understand another that loss then, claims onto just

those just I in I XXXX. take given in not would book? like about So year mean, it guess reserves, that, higher you terms of if XXXX you guys how guess, vertex about releasing felt don’t the -- until and specs see uptick long your in if potentially and/or loss I not you tale, flow think just how the comfortable are not the lowering long not should XXXX, we of some

Howard Friedman

other. our estimate typically terms for have the not it unless year changed Historically, or initial in there something loss one modifying two the years, we accident driving was way of specs typically

sort baseline. a of So that’s historical

little at more With the have accident we for we we years at conclusion. recent longer point some that to actually a come the this even concern holding least probably before are that of severity, about at

and it a say that. I’d than could minimum be longer two So

Christopher Campbell

Got it.

that from minimum you increasing correct? specs, when Q started So loss from

Howard Friedman

view in yeah, terms of an there is really is there Unless Again, our that dramatically out different. typical accident year. that something is

I two different, dramatically seen said minimum from we haven’t when We started.

Stan Starnes

and you our Chris, just have every before understood for accident data two feel we we in paid got each years through like sure coming year, information. credible

year that kind for we from we We be every when it’s individually we we started data need look two So of accident accident year. plus years think of accident at adjusted. not years the two get and and would years

Christopher Campbell

you -- in of a lot, boosted have fix XXXX. loss Got a lot raised you the in have so it. Well, it’s a year

this that you is because starting we you So severity XXXX what to factor you of kind get the or to have year id feedback that XXXX to haven’t to into guess trying seen what’s materialize, to I does understand? seen and you ‘XX? accident haven’t see that I Is trying severities if are am fix. in your

Stan Starnes

Yeah. Chris. question, Yeah. Interesting

is to in influence ultimately any perspectively. will it pricing of environment year then blend that both we environment going think view like of perspective fix the I and a losses the loss made those kind given becomes of our

improving XXXX be we was in are would see we certainly would influence materialize that if or our in of but began that getting also the influence set pricing the the that our So, we would reserves, to where XXXX loss marketplace. significant

Christopher Campbell

us lines that special does level, just that near-term. in of anything then be color color interested little some reducing the management, of side, And just give type what would a premiums, there at was that, I in lower. I guess would or you be Great. know on are kind us the guess on of, few give high What that just could which Workers states? I imply you interesting what terms of like ProAssurance And guess you Comp looking business inorganically. something And some what could I capital the you to on dividends if Med-Mal a just bit nowadays? at are

Stan Starnes

Sure.

So annual will I prospects what on And basis part our of take our the in and an and lots we there that is around we guess lot severity the anticipate that so to a capital business opportunities our loss capital go actions we be will regularly we as marketplace Board an are position and what seeing appropriate. kind do the liability to of our management and evaluation about part we in healthcare into the the really first short, is on your grow that and particular mid of in capital into with that and capital. long-term question that with think led of decision professional and we factors the of changes we volatility with to to deploy more deem see

interesting marketplace. are niche Comp that us product companies specializations and our But out our they that we -- Work As of are players generally FICA even We professional do to expand bring footprint overlap the areas of our the to really something geographic expand don’t and concentrations the have are to that to any to our not do pediatric we need our interesting like offerings transactions us and company everywhere. unique geographic reach. because have about focus things the on with M&A we think so kind really geographic the world. healthcare Things to still know, environment, liability really we footprint, that than world geographic it’s more are

of So the do them those think will transactions selective we kind be if very in we criteria. do meet I

Christopher Campbell

answers. then Thanks year. color extra for the thanks all Good for and next luck the

Stan Starnes

Thank you.

Operator

ahead. go Marcos Holanda will question next Please from be of Raymond James. The

Marcos Holanda

questions. and taking for Hi. Good morning thanks my

Howard Friedman

Thank you, Marcos.

Marcos Holanda

if I the seeing. product, earlier management seeing back color insurer guys a of facilities and to this got about you think your went that that quality are I also come also mutuals on the more some to of us you on wanted us And the this Congratulations, coming Are new trends an you it practice month. versus wish anything they -- to best was that Med-Mal landscape give would tuned be do state physicians for or guys I now luck the morning to you after Yeah. -- are discussion. coverage competition hoping article me the -- give can are just Howard. sort Med-Mal team. great? you and these and are want the control I under reading thinking that are

Howard Friedman

Yeah. Sure.

Department are I I the think is the that hand of last into it’s referring involved landscape. the the by article Texas think being of week. of are to the one something policyholders unfortunate, you Insurance beginning on see Liability And put in Capson for Medical that and Professional it’s more the rehabilitation will a we

on but think are isolated, situation build business in a allow to very out but another, and tend some think going for companies business industry fourth obviously, If of to work their companies groups because part price regard, by They basis in I always larger And on that the of put doesn’t pretty competition small be high the you year-and-a-half specialize, so to the this book have they the over a ratios. them one of the book geographical hospitals it, down successful not time see physicians smaller expense based for have in there’s further. same is starting way of somebody younger in of are a that but of mutual number what the or push as one if price small, it’s becoming happens and that price, of can way that because these pretty the when the are range business business. to they it’s oriented approach. of market smaller shrinks the reflection to at We companies are to past plenty the They companies really look or just wide going even. think about the losing through capital the the healthcare I of relatively in is or consolidation handle been has and and of

run are ratios and running significant they subsidize are business. capital just combined expense to the well of the high companies small beginning Some these and ratios what really using to as have

that all think more whether in it. physicians So tuned to we I see of will terms and of are

absorbing guarantee be. a will they was lot Again there funds should companies. to memories insurance get a that not losing paid when this have on physician and of significant and we insolvencies little level start XX think I a being by take ago But attention it’s to may the and depending to physicians have those number it yet hospitals there. coverage, involved of years sales been that at claims while

Marcos Holanda

Comp. color. then it. just another for on And Got here Thanks that one Workers’

if point inflection pricing even in pricing, here an do think you the do or price it As economy foresee slows relates there guys to be next could you couple the that years? in down

Stan Starnes

trends core is double-digit of per decreases have and our bureaus down The biggest NCCI based at a that looking states. -- challenge dramatically, side, the frequency have as seen a result loss different frequent in pricing the the double on on we that been the basis of some come cost pressured have rates some to in -- degree and

term looking price long-term pick this long is try a what on put do a and it loss more we the more to competitive quality a out the on really be at there individual pricing So risk focused basis, account of stable to is underwriting, over value.

the a So and loss of XXXX into of XXXX from to over by decreases stay compound have tank from renewal the following despite pricing rate are have the end about away trying X.X%, we front bureaus. success just on had loss that X%, our we costs the increases lot rating significant through been cost

we also we we of high start convert XXXX. protected that pricing the our are will have business side book a well, some to hopeful in been as consistent and these So but in quality trends pricing, severity continue really more of will that into

Frank O’Neil

you have cycle also talk costs views might are? different what loss the different drives companies of where Mike, about as

Mike Boguski

multi-line or But in to -- adverse it’s in is I pressures when issues competitive folks you regional and and all up. the when the frankly, there. that some on map, when development a it mean, cycle are you of have some we competitive and see from the And also out large come the start players come will over whether see see you start not the really drive and comp types mean prices -- I standpoint market those to out basis stock degree. to

Marcos Holanda

your you Thank answers. for

Operator

And like we I Mr. questions no hand back would have comments. final for O’Neill any in you additional to conference the queue, the to

Frank O’Neil

That’s much. it Denise. Thank you very

will We talk again May. everybody in you. to Thank

Operator

sir. Thank attending you disconnect At and gentlemen, may for you, presentation. conference Ladies concluded. time the Thank has you your lines. today’s this

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