ProAssurance Corporation (NYSE: PRA), an industry-leading
specialty insurer with extensive expertise in medical professional
liability and a core small-cap value equity in the financials
sector, today reported net income of $16.2 million, or $0.31 per
diluted share, and operating income(1) of $18.3 million, or $0.36
per diluted share, for the three months ended December 31, 2024.
For full-year 2024, ProAssurance reported net income of $52.7
million, or $1.03 per diluted share, and operating income(1) of
$48.6 million, or $0.95 per diluted share.
Fourth Quarter 2024(2) Highlights
- Specialty P&C segment combined ratio(1) of 100.9%
demonstrates another quarter of progress from management’s ongoing
actions focused on achieving sustained profitability
- Net investment income increased 9% as we take advantage of the
current interest rate environment as the portfolio matures
- Earnings benefited from solid returns from limited partnership
investments (reported as equity in earnings of unconsolidated
subsidiaries)
- Book value per share was $23.49 at December 31, 2024, up $1.67
from $21.82 at year-end 2023 due to net income of $53 million for
2024 as well as after-tax unrealized holding gains of $26 million
from our fixed maturity portfolio; non-GAAP adjusted book value per
share(1) rose to $26.86 from $25.83
(1)
Represents a Non-GAAP financial measure
that excludes certain items that are not indicative of the
performance of our ongoing core operations, including net
investment gains and losses, foreign currency exchange rate gains
and losses, and results of non-core operations. Non-core operations
include the net results from our previous participation in Lloyd's
Syndicates operations, which is currently in run-off. See a
reconciliation of the Non-GAAP financial measure to its GAAP
counterpart under the heading “Non-GAAP Financial Measures” that
follows.
(2)
Comparisons are to the fourth quarter of
2023 unless otherwise noted.
Management Commentary & Results of Operations
“The ongoing core operations in our Specialty P&C segment
delivered a full-year combined ratio(1) of 104.0%, including net
favorable prior accident year reserve development of 5.9 points,”
said Ned Rand, President and Chief Executive Officer of
ProAssurance. He added, “This segment, which is largely made up of
our Medical Professional Liability line of business, represents
more than 75% of total earned premium. We believe we are ahead of
many in this space in achieving rate levels that put us on track to
outpace severity trends that remain challenging.
“Specialty P&C renewal premium increases of 8% this quarter
are part of the cumulative +65% premium change we have accomplished
since 2018,” Rand added. “We continue to forgo renewal and new
business opportunities that we believe do not meet our expectation
of rate adequacy in the current loss environment, although
retention for the Specialty P&C segment was a solid 84% for
2024, including 87% for our standard physicians Medical
Professional Liability book of business. In this loss environment,
we will continue to focus on our targeted healthcare market
segments with disciplined claims management and underwriting.”
Rand noted, “We are confident that the cyclical insurance
markets we have served for many years will respond to our efforts.
However, before turning our focus to growth, we believe it is
prudent to continue to shrink in some areas where market conditions
remain a headwind, which will help us reach our target for
long-term sustained profitability across all business
segments.”
CONSOLIDATED INCOME STATEMENT
HIGHLIGHTS
Selected consolidated financial data for
each period is summarized in the table below.
Three Months Ended December
31
Year Ended December 31
($ in thousands, except per share
data)
2024
2023
Change
2024
2023
Change
Revenues
Gross premiums written(1)
$
207,673
$
208,795
(0.5
%)
$
1,050,867
$
1,082,279
(2.9
%)
Net premiums written
$
188,545
$
195,016
(3.3
%)
$
953,675
$
985,994
(3.3
%)
Net premiums earned
$
241,074
$
247,329
(2.5
%)
$
968,250
$
977,397
(0.9
%)
Net investment income
36,811
33,705
9.2
%
144,538
128,419
12.6
%
Equity in earnings (loss) of
unconsolidated subsidiaries
5,820
1,341
334.0
%
22,203
6,791
226.9
%
Net investment gains (losses)(2)
(3,243
)
10,672
(130.4
%)
1,903
13,828
(86.2
%)
Other income (expense)(1)
9,638
3,913
146.3
%
13,510
10,777
25.4
%
Total revenues(1)
290,100
296,960
(2.3
%)
1,150,404
1,137,212
1.2
%
Expenses
Net losses and loss adjustment
expenses
182,410
195,248
(6.6
%)
739,435
800,494
(7.6
%)
Underwriting, policy acquisition and
operating expenses(1)
80,927
81,965
(1.3
%)
319,339
300,744
6.2
%
SPC U.S. federal income tax expense
(benefit)
724
278
160.4
%
1,766
1,629
8.4
%
SPC dividend expense (income)
1,965
3,064
(35.9
%)
4,444
6,234
(28.7
%)
Interest expense
5,339
6,672
(20.0
%)
22,342
23,150
(3.5
%)
Goodwill impairment
—
—
nm
—
44,110
nm
Total expenses(1)
271,365
287,227
(5.5
%)
1,087,326
1,176,361
(7.6
%)
Income (loss) before income taxes
18,735
9,733
92.5
%
63,078
(39,149
)
261.1
%
Income tax expense (benefit)
2,566
3,356
(23.5
%)
10,334
(545
)
1,996.1
%
Net income (loss)
$
16,169
$
6,377
153.6
%
$
52,744
$
(38,604
)
236.6
%
Non-GAAP operating income (loss)(3)
$
18,268
$
(2,765
)
760.7
%
$
48,592
$
(9,014
)
639.1
%
Weighted average number of common
shares outstanding
Basic
51,156
50,969
51,097
52,642
Diluted
51,411
51,153
51,266
52,788
Earnings (loss) per share
Net income (loss) per diluted share
$
0.31
$
0.12
$
0.19
$
1.03
$
(0.73
)
$
1.76
Non-GAAP operating income (loss) per
diluted share
$
0.36
$
(0.05
)
$
0.41
$
0.95
$
(0.17
)
$
1.12
(1)
Consolidated totals include inter-segment
eliminations. The eliminations affect individual line items only
and have no effect on net income (loss). See Note 16 of the Notes
to Consolidated Financial Statements in our December 31, 2024
report on Form 10-K for amounts by line item.
(2)
This line item typically includes both
realized and unrealized investment gains and losses, investment
impairments losses, and the change in the fair value of the
contingent consideration in relation to the NORCAL acquisition.
Detailed information regarding the components of net investment
gains (losses) are included in Note 3 of the Notes to Consolidated
Financial Statements in our December 31, 2024 report on Form
10-K.
(3)
See a reconciliation of net income (loss)
to non-GAAP operating results under the heading “Non-GAAP Financial
Measures” that follows.
The abbreviation “nm” indicates that the information or the
percentage change is not meaningful.
BALANCE SHEET HIGHLIGHTS
($ in thousands, except per share
data)
December
31, 2024
December
31, 2023
Total investments
$
4,367,427
$
4,349,781
Total assets
$
5,574,273
$
5,631,925
Total liabilities
$
4,372,524
$
4,519,945
Common shares (par value $0.01)
$
638
$
636
Retained earnings
$
1,434,725
$
1,381,981
Treasury shares
$
(469,694
)
$
(469,702
)
Shareholders’ equity
$
1,201,749
$
1,111,980
Book value per share
$
23.49
$
21.82
Non-GAAP adjusted book value per
share(1)
$
26.86
$
25.83
(1)
Adjusted book value per share is a
Non-GAAP financial measure. See a reconciliation of book value per
share to Non-GAAP adjusted book value per share under the heading
“Non-GAAP Financial Measures” that follows.
CONSOLIDATED KEY RATIOS
Three Months Ended December
31
Year Ended December 31
2024
2023
2024
2023
Current accident year net loss ratio
80.4
%
80.0
%
80.5
%
81.3
%
Effect of prior accident years’ reserve
development
(4.7
%)
(1.1
%)
(4.1
%)
0.6
%
Net loss ratio
75.7
%
78.9
%
76.4
%
81.9
%
Underwriting expense ratio
33.6
%
33.1
%
33.0
%
30.8
%
Combined ratio
109.3
%
112.0
%
109.4
%
112.7
%
Operating ratio
94.0
%
98.4
%
94.5
%
99.6
%
Return on equity(1)
5.3
%
2.4
%
4.6
%
(3.5
%)
Non-GAAP operating return on
equity(1)(2)
6.0
%
(1.0
%)
4.2
%
(0.8
%)
Combined ratio, excluding Lloyd’s
Syndicates Operations(3)
106.6
%
112.2
%
109.0
%
113.0
%
(1)
Quarterly amounts are annualized. Refer to
our December 31, 2024 report on Form 10-K under the heading
“Non-GAAP Operating ROE” in the Executive Summary of Operations
section for details on our calculation.
(2)
See a reconciliation of ROE to Non-GAAP
operating ROE under the heading “Non-GAAP Financial Measures” that
follows.
(3)
Our consolidated combined ratio as
reported for the three months and year ended December 31, 2024
includes an underwriting loss of $6.3 million and $4.7 million,
respectively, as compared to an underwriting loss of $0.2 million
and underwriting income of $0.6 million for the same respective
periods in 2023 within in our Specialty P&C segment associated
with our Lloyd's Syndicates operations, which is currently in
run-off. Further, underwriting results reflect our acceleration of
certain aviation-related losses into the fourth quarter of 2024.
Refer to our December 31, 2024 report on Form 10-K under the
heading “Losses and Loss Adjustment Expenses” in the Segment
Results - Specialty Property & Casualty section for details.
Given these underwriting results are irrelevant to our ongoing
operations and do not qualify for Discontinued Operations under
GAAP, we have excluded their impact from our calculation of the
consolidated combined ratio in the table above.
SPECIALTY P&C SEGMENT
RESULTS
Three Months Ended December
31
Year Ended December 31
($ in thousands)
2024
2023
%
Change
2024
2023
%
Change
Gross premiums written
$
161,561
$
161,770
(0.1
%)
$
807,463
$
835,430
(3.3
%)
Net premiums written
$
148,293
$
154,636
(4.1
%)
$
737,502
$
762,580
(3.3
%)
Net premiums earned
$
185,805
$
193,611
(4.0
%)
$
747,942
$
755,817
(1.0
%)
Other income (expense)
1,015
1,589
(36.1
%)
4,373
4,695
(6.9
%)
Total revenues
186,820
195,200
(4.3
%)
752,315
760,512
(1.1
%)
Net losses and loss adjustment
expenses
(143,924
)
(148,620
)
(3.2
%)
(578,486
)
(624,809
)
(7.4
%)
Underwriting, policy acquisition and
operating expenses
(49,790
)
(54,356
)
(8.4
%)
(203,207
)
(195,303
)
4.0
%
Total expenses
(193,714
)
(202,976
)
(4.6
%)
(781,693
)
(820,112
)
(4.7
%)
Segment results
$
(6,894
)
$
(7,776
)
11.3
%
$
(29,378
)
$
(59,600
)
50.7
%
SPECIALTY P&C SEGMENT KEY
RATIOS(1)
Three Months Ended December
31
Year Ended December 31
2024
2023
2024
2023
Current accident year net loss ratio
82.9
%
78.0
%
82.8
%
83.5
%
Effect of prior accident years’ reserve
development
(8.7
%)
(1.2
%)
(5.9
%)
(0.3
%)
Net loss ratio
74.2
%
76.8
%
76.9
%
83.2
%
Underwriting expense ratio
26.7
%
28.0
%
27.1
%
25.6
%
Combined ratio
100.9
%
104.8
%
104.0
%
108.8
%
(1)
Represents Non-GAAP financial measures.
See a reconciliation to their GAAP counterparts under the heading
“Non-GAAP Financial Measures” that follows.
ProAssurance is a leader in the competitive Medical Professional
Liability market, which made up over 90% of Specialty P&C
segment gross written premiums for the year ended December 31,
2024.
The combined ratio from the segment’s ongoing core operations
improved 3.9 percentage points compared to last year’s fourth
quarter, while the full-year combined ratio improved 4.8 percentage
points. We are benefiting from our continued focus on price
adequacy and disciplined underwriting as well as our ability to
target segments within healthcare where there are opportunities to
write business that we believe will meet our profitability
objectives.
- Premiums: Renewal pricing remained strong at 8% for the quarter
and 9% for the full-year while retention remained solid. New
business was below last year for the quarter and the full-year as
we focus on risk selection and pricing levels that support progress
toward our profitability targets.
- Current accident year loss ratio: Underwriting and pricing
actions taken over the past 12 months had a positive impact on both
the fourth quarter and full year 2024 current accident year loss
ratios for the Medical Professional Liability business. However, in
the fourth quarter, that progress was overshadowed by a prior year
decrease to our estimate of unallocated loss adjustment expenses, a
year-over-year change in premiums ceded to reinsurers as well as
recognition of loss severity trends in a few select
jurisdictions.
- Net loss ratio: The full-year net loss ratio improved primarily
because of the impact of 5.9 percentage points of favorable prior
accident year reserve development. Reserve development was
favorable for both the fourth quarter and full-year, largely
reflecting favorable claims-closing trends in the Medical
Professional Liability business.
- Underwriting expense ratio: The full year ratio rose 1.5
percentage points largely due to higher compensation costs.
However, the fourth-quarter underwriting expense ratio improved
over last year’s fourth quarter due to an adjustment in the prior
year quarter for full year unallocated loss adjustment expenses,
with no impact to our combined ratio.
WORKERS’ COMPENSATION INSURANCE SEGMENT
RESULTS
Three Months Ended December
31
Year Ended December 31
($ in thousands)
2024
2023
%
Change
2024
2023
%
Change
Gross premiums written
$
46,112
$
47,033
(2.0
%)
$
243,404
$
246,857
(1.4
%)
Net premiums written
$
29,559
$
28,005
5.5
%
$
166,223
$
162,285
2.4
%
Net premiums earned
$
42,918
$
38,328
12.0
%
$
167,610
$
160,034
4.7
%
Other income (expense)
403
289
39.4
%
1,887
1,854
1.8
%
Total revenues
43,321
38,617
12.2
%
169,497
161,888
4.7
%
Net losses and loss adjustment
expenses
(32,503
)
(37,508
)
(13.3
%)
(128,483
)
(139,322
)
(7.8
%)
Underwriting, policy acquisition and
operating expenses
(17,990
)
(14,139
)
27.2
%
(61,999
)
(55,061
)
12.6
%
Total expenses
(50,493
)
(51,647
)
(2.2
%)
(190,482
)
(194,383
)
(2.0
%)
Segment results
$
(7,172
)
$
(13,030
)
45.0
%
$
(20,985
)
$
(32,495
)
35.4
%
WORKERS’ COMPENSATION INSURANCE SEGMENT
KEY RATIOS
Three Months Ended December
31
Year Ended December 31
2024
2023
2024
2023
Current accident year net loss ratio
77.0
%
97.9
%
77.0
%
81.3
%
Effect of prior accident years’ reserve
development
(1.3
%)
—
%
(0.3
%)
5.8
%
Net loss ratio
75.7
%
97.9
%
76.7
%
87.1
%
Underwriting expense ratio
41.9
%
36.9
%
37.0
%
34.4
%
Combined ratio
117.6
%
134.8
%
113.7
%
121.5
%
ProAssurance is a specialty regional underwriter of workers’
compensation products and services. The Workers’ Compensation
Insurance segment combined ratio improved 17.2 percentage points
compared to the fourth quarter of 2023 and improved 7.8 percentage
points for the full year.
- Premiums: Higher audit premiums were the primary reason for the
increase in net written premiums for the quarter and year. We
continue to carefully manage our underwriting appetite due to
market conditions. Retention in the fourth quarter was 83% although
we saw improved renewal pricing. New business in our traditional
book was $3.0 million, down from $5.0 million in last year’s fourth
quarter.
- Net loss ratio: Current accident year net loss ratio of 77.0%
for the fourth quarter and full year improved 4.3 percentage points
from 81.3% for full-year 2023. We continue to observe and reflect
the higher medical loss cost trends that we initially saw in the
second half of 2023, although they have begun to moderate this
year. Fourth quarter and full year net favorable prior accident
year reserve development was $0.5 million. In 2023, the segment
strengthened reserves due to the higher than expected loss trends
observed at that time.
- Underwriting expense ratio: The segment underwriting expense
ratio rose 5.0 percentage points from the prior year fourth quarter
and 2.6 percentage points for the full year, largely due to an
adjustment in ceding commissions charged to our segregated
portfolio cells relating to prior periods as well as higher
compensation costs.
SEGREGATED PORTFOLIO CELL REINSURANCE
SEGMENT RESULTS
Three Months Ended December
31
Year Ended December 31
($ in thousands)
2024
2023
%
Change
2024
2023
%
Change
Gross premiums written
$
12,437
$
14,335
(13.2
%)
$
57,904
$
70,259
(17.6
%)
Net premiums written
$
10,693
$
12,375
(13.6
%)
$
49,950
$
61,129
(18.3
%)
Net premiums earned
$
12,351
$
15,390
(19.7
%)
$
52,698
$
61,546
(14.4
%)
Net investment income
921
664
38.7
%
3,608
2,289
57.6
%
Net investment gains (losses)
42
1,850
(97.7
%)
2,369
3,680
(35.6
%)
Other income (expense)
18
2
800.0
%
19
5
280.0
%
Net losses and loss adjustment
expenses
(5,983
)
(9,120
)
(34.4
%)
(32,466
)
(36,363
)
(10.7
%)
Underwriting, policy acquisition and
operating expenses
(3,959
)
(5,213
)
(24.1
%)
(18,063
)
(20,457
)
(11.7
%)
SPC U.S. federal income tax (expense)
benefit(1)
(724
)
(278
)
160.4
%
(1,766
)
(1,629
)
8.4
%
SPC net results
2,666
3,295
(19.1
%)
6,399
9,071
(29.5
%)
SPC dividend (expense) income (2)
(1,965
)
(3,064
)
(35.9
%)
(4,444
)
(6,234
)
(28.7
%)
Segment results (3)
$
701
$
231
203.5
%
$
1,955
$
2,837
(31.1
%)
(1)
Represents the provision for U.S. federal
income taxes for SPCs at Inova Re, which have elected to be taxed
as a U.S. corporation under Section 953(d) of the Internal Revenue
Code. U.S. federal income taxes are included in the total SPC net
results and are paid by the individual SPCs.
(2)
Represents the net (profit) loss
attributable to external cell participants.
(3)
Represents our share of the net profit
(loss) and OCI of the SPCs in which we participate.
SEGREGATED PORTFOLIO CELL REINSURANCE
SEGMENT KEY RATIOS
Three Months Ended December
31
Year Ended December 31
2024
2023
2024
2023
Current accident year net loss ratio
58.1
%
68.0
%
66.8
%
65.5
%
Effect of prior accident years’ reserve
development
(9.7
%)
(8.7
%)
(5.2
%)
(6.4
%)
Net loss ratio
48.4
%
59.3
%
61.6
%
59.1
%
Underwriting expense ratio
32.1
%
33.9
%
34.3
%
33.2
%
Combined ratio
80.5
%
93.2
%
95.9
%
92.3
%
Segregated Portfolio Cell Reinsurance segment results include
underwriting profit or loss plus investment results, net of U.S.
federal income taxes of segregated portfolio cells in which we
participate. For the fourth quarter, the segment reported a profit
of $0.7 million compared to $0.2 million in last year’s fourth
quarter. The fourth quarter of 2024 segment results improved
reflecting an increase in reported loss activity during the prior
year quarter; however, the full-year segment result was lower in
2024, reflecting an increase in severity-related claim
activity.
CORPORATE SEGMENT
Three Months Ended December
31
Year Ended December 31
($ in thousands)
2024
2023
%
Change
2024
2023
%
Change
Net investment income
$
35,890
$
33,041
8.6
%
$
140,930
$
126,130
11.7
%
Equity in earnings (loss) of
unconsolidated subsidiaries:
All other investments, primarily
investment fund LPs/LLCs
4,986
1,452
243.4
%
21,532
9,196
134.1
%
Tax credit partnerships
834
(111
)
851.4
%
671
(2,405
)
127.9
%
Total equity in earnings (loss) of
unconsolidated subsidiaries:
5,820
1,341
334.0
%
22,203
6,791
226.9
%
Net investment gains (losses)
(3,285
)
8,322
(139.5
%)
(7,206
)
5,148
(240.0
%)
Other income (expense)
9,208
2,960
211.1
%
11,489
8,307
38.3
%
Operating expenses
(10,194
)
(9,184
)
11.0
%
(40,008
)
(34,007
)
17.6
%
Interest expense
(5,339
)
(6,672
)
(20.0
%)
(22,342
)
(23,150
)
(3.5
%)
Income tax (expense) benefit
(2,566
)
(3,356
)
(23.5
%)
(10,401
)
545
2008.4
%
Segment results
$
29,534
$
26,452
11.7
%
$
94,665
$
89,764
5.5
%
Consolidated effective tax rate
13.7
%
34.5
%
16.4
%
1.4
%
The Corporate segment, which includes investment results for our
Specialty P&C and Workers’ Compensation Insurance segments,
continues to contribute meaningfully to operating results and
reported earnings of $29.5 million for the quarter.
- Net investment income: The current interest rate environment
continues to benefit our net investment income, which increased
again in the quarter, driven by higher average book yields on our
fixed maturity investments. During the quarter, we reinvested at an
average new money rate of approximately 5.8% for the consolidated
portfolio, exceeding the rate on maturing assets and our
consolidated average book yield of 3.5%.
- Equity in earnings of unconsolidated subsidiaries: Our
investments in limited partnerships, typically reported to us on a
one-quarter lag, continued to produce strong returns in the quarter
and full-year.
- Other income (expense): Reflected changes in exchange rates for
foreign currency denominated loss reserves, which are not included
in our operating results.
- Operating expenses: The year-over-year increase in expenses in
the quarter and full-year was largely due to higher
compensation-related costs.
- Net investment gains and losses: While not included in our
operating results, net investment losses in the quarter were driven
by unrealized holding losses from changes in the fair value of our
equity investments while net investment losses for the year largely
were due to credit-related impairment losses and, to a lesser
extent, net losses from the sale of certain available-for-sale
fixed maturity securities.
NON-GAAP FINANCIAL MEASURES
Non-GAAP Operating Income
(Loss)
Non-GAAP operating income (loss) is a financial measure that is
widely used to evaluate performance within the insurance sector. In
calculating Non-GAAP operating income (loss), we have excluded the
effects of the items listed in the following table that do not
reflect normal results. We believe Non-GAAP operating income (loss)
presents a useful view of the performance of our ongoing core
insurance operations; however, it should be considered in
conjunction with net income (loss) computed in accordance with
GAAP. The following table reconciles net income (loss) to Non-GAAP
operating income (loss):
RECONCILIATION OF NET INCOME (LOSS) TO
NON-GAAP OPERATING INCOME (LOSS)
Three Months Ended December
31
Year Ended December
31
($ in thousands, except per share
data)
2024
2023
2024
2023
Net income (loss)
$
16,169
$
6,377
$
52,744
$
(38,604
)
Items excluded in the calculation of
Non-GAAP operating income (loss):
Net investment (gains) losses (1)
3,243
(10,672
)
(1,903
)
(13,828
)
Net investment gains (losses) attributable
to SPCs in which no profit/loss is retained (2)
30
1,504
1,773
2,925
Transaction-related costs (3)
—
—
320
—
Goodwill impairment
—
—
—
44,110
Foreign currency exchange rate (gains)
losses (4)
(8,140
)
3,484
(6,731
)
2,993
Non-operating income (5)
—
(5,416
)
—
(6,878
)
Guaranty fund assessments
(recoupments)
(2
)
28
(873
)
57
Non-core operations (6)
6,010
(217
)
3,331
(1,683
)
Pre-tax effect of exclusions
1,141
(11,289
)
(4,083
)
27,696
Tax effect, at 21% (7)
958
2,147
(69
)
1,894
After-tax effect of exclusions
2,099
(9,142
)
(4,152
)
29,590
Non-GAAP operating income (loss)
$
18,268
$
(2,765
)
$
48,592
$
(9,014
)
Per diluted common share:
Net income (loss)
$
0.31
$
0.12
$
1.03
$
(0.73
)
Effect of exclusions
0.05
(0.17
)
(0.08
)
0.56
Non-GAAP operating income (loss) per
diluted common share
$
0.36
$
(0.05
)
$
0.95
$
(0.17
)
(1)
Net investment gains (losses) recognized
in earnings are primarily driven by changes in the value of
investments that are marked to fair value each period, the nature
and timing of which are unrelated to our normal operating results.
Net investment gains (losses) for the year ended December 31, 2024
include the $6.5 million decrease to the contingent consideration
liability during the second quarter of 2024. Net investment gains
(losses) during the quarter and year ended December 31, 2023,
include gains of $0.5 million and $5.0 million, respectively,
related to the remeasurement of the contingent consideration
liability to fair value. See further discussion around the
contingent consideration in Notes 2 and 8 of the Notes to
Consolidated Financial Statements in our December 31, 2024 report
on From 10-K.
(2)
Net investment gains (losses) on
investments related to SPCs are recognized in our Segregated
Portfolio Cell Reinsurance segment. SPC results, including any net
investment gain or loss, that are attributable to external cell
participants are reflected in the SPC dividend expense (income). To
be consistent with our exclusion of net investment gains (losses)
recognized in earnings, we are excluding the portion of net
investment gains (losses) that is included in the SPC dividend
expense (income) which is attributable to the external cell
participants.
(3)
Transaction-related costs are attributable
to actuarial consulting fees paid during the second quarter of 2024
in relation to the final determination of contingent consideration
associated with the NORCAL acquisition. We are excluding these
costs as they do not reflect normal operating results and are
unique and non-recurring in nature.
(4)
Foreign currency exchange rate movements
relate to foreign currency denominated loss reserves predominately
associated with premium assumed from an international medical
professional liability insured in our Specialty P&C segment.
Our participation in this program has grown in recent years which
has led to greater volatility in our results of operations even
with nominal movements in exchange rates given the size of the
reserve. We mitigate foreign exchange rate exposure on our
Consolidated Balance Sheet by generally matching the currency and
duration of associated investments to the corresponding loss
reserves as well as utilizing foreign currency forward contracts.
When we invest in foreign currency denominated available-for-sale
fixed maturities, in accordance with GAAP, the change in market
value due to changes in foreign currency exchange rates is
reflected as a part of OCI. Conversely, the impact of changes in
foreign currency exchange rates on loss reserves is reflected
through net income (loss) as a component of other income (expense).
Therefore, we believe foreign currency exchange rate gains (losses)
in our Consolidated Statements of Income and Comprehensive Income
in isolation are not indicative of our operating performance. To be
consistent with our exclusion of foreign currency exchange rate
gains (losses) recognized in earnings, we are excluding the
associated foreign currency forward contract. Additional
information regarding our foreign currency forward contract is
provided in Note 11 of the Notes to the Consolidated Financial
Statements in our December 31, 2024 report on From 10-K.
(5)
Non-operating income includes proceeds
associated with the sale of our remaining ownership interest in the
underwriting and operations entity associated with Syndicate 1729
to unrelated third parties recognized in other income in our
Corporate segment. We are excluding these costs as they do not
reflect normal operating results and are unique and non-recurring
in nature.
(6)
Non-core operations includes the net
results from our Lloyd's Syndicates operations from our previous
participation in Syndicate 1729 and Syndicate 6131 at Lloyd's of
London, which is currently in run off. Net investment gains
(losses) recognized in earnings associated with these investments
are included in the adjustment for consolidated net investment
gains (losses) as described in footnote 1. We are excluding these
results from our Lloyd's Syndicates operations as they are
irrelevant to our ongoing operations and do not qualify for
Discontinued Operations under GAAP.
(7)
Our statutory tax rate was applied to
these items in calculating net income (loss), excluding the 2023
goodwill impairment loss which is not tax deductible. Changes in
the contingent consideration liability are non-taxable and
therefore had no associated income tax impact. The taxes associated
with the net investment gains (losses) related to SPCs in our
Segregated Portfolio Cell Reinsurance segment are paid by the
individual SPCs and are not included in our consolidated tax
provision or net income (loss); therefore, both the net investment
gains (losses) from our Segregated Portfolio Cell Reinsurance
segment and the adjustment to exclude the portion of net investment
gains (losses) included in the SPC dividend expense (income) in the
table above are not tax effected. There are no taxes associated
with our Lloyd’s Syndicates operations in our consolidated tax
provision due to the availability of net operating losses and the
full valuation allowance recorded against the deferred tax assets.
Accordingly, both the net investment gains (losses) and the
adjustment to exclude the underwriting results and net investment
income associated with our previous participation included in
Lloyd's Syndicates operations in the table above are not tax
effected.
Non-GAAP Operating ROE
The following table is a reconciliation of ROE to Non-GAAP
operating ROE for the quarter and year ended December 31, 2024 and
2023:
Three Months Ended
December 31
Year Ended
December 31
2024
2023
2024
2023
ROE(1)
5.3
%
2.4
%
4.6
%
(3.5
%)
Effect of items excluded in the
calculation of Non-GAAP operating ROE
0.7
%
(3.4
%)
(0.4
%)
2.7
%
Non-GAAP operating ROE
6.0
%
(1.0
%)
4.2
%
(0.8
%)
(1)
Quarterly amounts are annualized. Refer to
our December 31, 2024 report on Form 10-K under the heading
“Non-GAAP Operating ROE” in the Executive Summary of Operations
section for details on our calculation.
Non-GAAP Adjusted Book Value per
Share
The following table is a reconciliation of our book value per
share to Non-GAAP adjusted book value per share at December 31,
2024 and December 31, 2023:
Book Value Per Share
Book Value Per Share at December 31,
2023
$
21.82
Less: AOCI Per Share(1)
(4.01
)
Non-GAAP Adjusted Book Value Per Share at
December 31, 2023
25.83
Increase (decrease) to Non-GAAP Adjusted
Book Value Per Share during the year ended December 31, 2024
attributable to:
Net income (loss)
1.03
Non-GAAP Adjusted Book Value Per Share
at December 31, 2024
26.86
Add: AOCI Per Share(1)
(3.37
)
Book Value Per Share at December 31,
2024
$
23.49
(1)
Primarily the impact of accumulated
unrealized investment gains (losses) on our available-for-sale
fixed maturity investments. See Note 12 of the Notes to
Consolidated Financial Statements in our December 31, 2024 report
on Form 10-K for additional information.
SPECIALTY P&C SEGMENT KEY
RATIOS
Our Specialty P&C segment results as reported for the three
months and year ended December 31, 2024 and 2023 includes the
underwriting results from our previous participation in Syndicate
1729 and Syndicate 6131 at Lloyd's of London, which is currently in
run-off. Given these underwriting results are irrelevant to our
ongoing operations and do not qualify for Discontinued Operations
under GAAP, we have excluded the impact from our calculation of
Specialty P&C segment key ratios; however, these ratios should
be considered in conjunction with ratios computed in accordance
with GAAP. The following table is a reconciliation of our Specialty
P&C segment key ratios to Non-GAAP adjusted ratios at December
31, 2024 and December 31, 2023:
Three Months Ended December
31
2024
2023
Segment As Reported
Lloyd’s Syndicates Operations
Non-GAAP Adjusted Ratios
Segment As Reported
Lloyd’s Syndicates Operations
Non-GAAP Adjusted Ratios
Current accident year net loss ratio
82.7%
0.2 pts
82.9%
77.5%
0.5 pts
78.0%
Effect of prior accident years’ reserve
development
(5.2%)
(3.5 pts)
(8.7%)
(0.7%)
(0.5 pts)
(1.2%)
Net loss ratio
77.5%
(3.3 pts)
74.2%
76.8%
— pts
76.8%
Underwriting expense ratio
26.8%
(0.1 pts)
26.7%
28.1%
(0.1 pts)
28.0%
Combined ratio
104.3%
(3.4 pts)
100.9%
104.9%
(0.1 pts)
104.8%
Year Ended December 31
2024
2023
Segment As Reported
Lloyd’s Syndicates Operations
Non-GAAP Adjusted Ratios
Segment As Reported
Lloyd’s Syndicates Operations
Non-GAAP Adjusted Ratios
Current accident year net loss ratio
82.3%
0.5 pts
82.8%
82.6%
0.9 pts
83.5%
Effect of prior accident years’ reserve
development
(5.0%)
(0.9 pts)
(5.9%)
0.1%
(0.4 pts)
(0.3%)
Net loss ratio
77.3%
(0.4 pts)
76.9%
82.7%
0.5 pts
83.2%
Underwriting expense ratio
27.2%
(0.1 pts)
27.1%
25.8%
(0.2 pts)
25.6%
Combined ratio
104.5%
(0.5 pts)
104.0%
108.5%
0.3 pts
108.8%
Conference Call Information
ProAssurance management will discuss fourth quarter and full
year 2024 results during a conference call at 10:00 a.m. ET on
Tuesday, February 25, 2025. Preregistration for the call is
available here and the dial-in numbers are (833) 470-1428 (toll
free) or (404) 975-4839, access code 927016.
Investors are encouraged to listen to the live audio webcast of
the call that can also be accessed via the Events page of the
Company’s website. A replay of the call will be available at the
same location later in the day on February 25.
About ProAssurance
ProAssurance Corporation is an industry-leading specialty
insurer with extensive expertise in medical professional liability
and products liability for medical technology and life sciences.
The Company also is a provider of workers’ compensation insurance
in the eastern U.S. ProAssurance Group is rated “A” (Excellent) by
AM Best.
For the latest on ProAssurance and its industry-leading suite of
products and services, cutting-edge risk management and practice
enhancement programs, visit our website at ProAssuranceGroup.com
with investor content available at Investor.ProAssurance.com. Our
YouTube channel regularly presents insightful videos that
communicate effective practice management, patient safety and risk
management strategies.
Caution Regarding Forward-Looking Statements
Any statements in this news release that are not historical
facts or explicitly stated as an opinion are specifically
identified as forward-looking statements. These statements are
based upon our estimates and anticipation of future events and are
subject to significant risks, assumptions and uncertainties that
could cause actual results to differ 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,” “likely,” “may,” “optimistic,” “possible,”
“potential,” “preliminary,” “project,” “should,” “will,” and other
analogous expressions.
Although it is not possible to identify all of these risks and
factors, they include, among others, the following: inadequate loss
reserves to cover the Company's actual losses; inherent uncertainty
of models resulting in actual losses that are materially different
than the Company's estimates; adverse economic factors; a decline
in the Company's financial strength rating; loss of one or more key
executives; loss of a group of agents or brokers that generate
significant portions of the Company's business; failure of any of
the loss limitations or exclusions the Company employs, or change
in other claims or coverage issues; adverse performance of the
Company's investment portfolio; adverse market conditions that
affect its excess and surplus lines insurance operations; and other
risks described in the Company's filings with the Securities and
Exchange Commission. These forward-looking statements speak only as
of the date of this release and the Company does not undertake and
specifically declines any obligation to update or revise any
forward-looking information to reflect changes in assumptions, the
occurrence of unanticipated events, or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250224077088/en/
Heather J. Wietzel • SVP, Investor Relations 800-282-6242 •
205-776-3028 • InvestorRelations@ProAssurance.com
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