BIRMINGHAM, Ala., Aug. 3 /PRNewswire-FirstCall/ -- ProAssurance
(NYSE: PRA) reports Operating Income of $50.4 million, or $1.52 per
diluted share for the second quarter of 2009. Net Income in the
quarter was $53.9 million, or $1.62 per diluted share. For the six
months ended June 30, 2009, Operating Income was $83.5 million, or
$2.50 per diluted share and Net Income was $82.2 million, or $2.46
per diluted share. (Logo:
http://www.newscom.com/cgi-bin/prnh/20081024/PROASSURANCELOGO ) The
company reports a 27 % increase in Gross Written Premiums, compared
to the year-ago quarter, primarily due to recent acquisitions. Book
Value per share grew to $46.72 in the quarter, a nine percent
increase since year-end. Unaudited Consolidated Financial Summary
(in thousands, except per share data) Three Months Ended Six Months
Ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ---- ----
Gross Premiums Written $111,612 $88,005 $266,156 $248,272 ========
======= ======== ======== Net Premiums Written $100,542 $78,784
$242,929 $227,199 ======== ======= ======== ======== Net Premiums
Earned $127,744 $115,768 $231,634 $236,345 ======== ========
======== ======== Net Investment Income $39,697 $41,313 $74,266
$82,372 ======= ======= ======= ======= Equity in Earnings (Loss)
of Unconsolidated Subsidiaries $119 $(2) $(1,309) $(1,949) ==== ===
======= ======= Net Realized Investment Gains (Losses) $5,084
$(5,349) $(2,453) $(6,775) ====== ======= ======= ======= Total
Revenues $175,241 $153,066 $306,209 $312,692 ======== ========
======== ======== Guaranty Fund Assessments (Recoupments) $(289)
$(270) $(478) $(639) ===== ===== ===== ===== Interest Expense
$1,203 $2,292 $1,830 $4,714 ====== ====== ====== ====== Total
Expenses $98,241 $93,120 $191,962 $203,467 ======= ======= ========
======== Tax Expense $23,119 $16,628 $31,999 $30,039 =======
======= ======= ======= Net Income $53,881 $43,318 $82,248 $79,186
======= ======= ======= ======= Operating Income $50,389 $46,619
$83,532 $83,174 ======= ======= ======= ======= Net Cash Provided
by Operating Activities $4,042 $40,130 $12,074 $101,455 ======
======= ======= ======== Earnings per Share Three Months Ended Six
Months Ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ----
---- Weighted average number of common shares outstanding Basic
32,914 31,868 33,134 32,025 Diluted 33,186 34,739 33,391 34,904
Operating Income per share (Basic) $1.53 $1.46 $2.52 $2.60 =====
===== ===== ===== Operating Income per share (Diluted) $1.52 $1.36
$2.50 $2.43 ===== ===== ===== ===== Net Income per share (Basic)
$1.64 $1.36 $2.48 $2.47 ===== ===== ===== ===== Net Income per
share (Diluted) $1.62 $1.27 $2.46 $2.31 ===== ===== ===== ===== Key
Ratios Three Months Ended Six Months Ended June 30, June 30, 2009
2008 2009 2008 ---- ---- ---- ---- Current Accident Year Loss Ratio
81.4% 83.7% 82.7% 84.0% Prior Accident Year Loss Ratio (28.9%)
(27.0%) (23.9%) (21.7%) ------- ------- ------- ------- Net Loss
Ratio 52.5% 56.7% 58.8% 62.3% Expense Ratio 22.6% 21.7% 22.7% 21.7%
----- ----- ----- ----- Combined Ratio 75.1% 78.4% 81.5% 84.0%
===== ===== ===== ===== Operating Ratio 44.0% 42.7% 49.4% 49.1%
===== ===== ===== ===== Return on Equity 14.4% 13.7% 11.1% 12.6%
===== ===== ===== ===== ProAssurance's Chief Executive Officer, W.
Stancil Starnes, said, "Our results this quarter reflect the first
contributions from the addition of The PICA Group and continued
contributions from Mid-Continent General Agency. At the same time,
targeted new business initiatives allowed us to add profitable
premium in our historical medical professional liability book. Our
ability to add new business and increase the top line affirms our
growth strategy and the level of service and financial security we
provide to our insureds and agents." Non-GAAP Financial Measures
Operating Income is a "Non-GAAP" financial measure that is widely
used in our industry to evaluate the performance of underwriting
operations. Operating Income thus excludes the after-tax effects of
realized investment gains or losses, guaranty fund assessments and
the results of accounting changes, and we believe it presents a
more appropriate view of the performance of our insurance
operations. While we believe disclosure of certain Non-GAAP
information is appropriate, you should not consider this
information without also considering the information we present in
accordance with GAAP, which includes the effect of net realized
investment losses incurred during the quarter and six month period
ended June 30, 2009. The following table is a reconciliation of Net
Income to Operating Income. Reconciliation of Net Income to
Operating Income (in thousands, except per share data) Three Months
Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 ----
---- ---- ---- Net Income $53,881 $43,318 $82,248 $79,186
Adjustments, net of tax effects: Add: Net Realized Investment
Losses $- $3,477 $1,594 $4,403 Subtract: Net Realized Investment
Gains $3,304 $- $- $- Guaranty Fund Recoupments 188 176 310 415 ---
--- --- --- Operating Income $50,389 $46,619 $83,532 $83,174
======= ======= ======= ======= Per diluted common share: Net
Income $1.62 $1.27 $2.46 $2.31 Effect of adjustments $(0.10) $0.09
$0.04 $.12 ------ ----- ----- ---- Operating Income per diluted
common share $1.52 $1.36 $2.50 $2.43 ===== ===== ===== =====
Business Commentary -- The PICA Group accounted for $13.7 million
of new business in the quarter, and Mid-Continent General Agency
produced $3.6 million of new premium. -- Retention remains at 89%
for the quarter and year-to-date. -- Our premium rates on renewal
business declined four percent on average in the quarter, compared
to a seven percent average decline in last year's second quarter.
These declines reflect the overall improvement in loss trends over
the past several years, in which a decline in the frequency of
claims has offset a moderate and expected rise in severity. We
continue to believe that overall pricing in the broad market is no
longer widely deteriorating, although competition remains strong.
-- We recognized $37.0 million of favorable net loss reserve
development in the second quarter of 2009. For the year-to-date,
our favorable net loss reserve development has been $55.5 million.
The reduction in expected loss costs comes primarily from accident
years 2004 through 2007. -- Excluding the costs associated with the
PICA transaction, our operational expenses were lower in the
quarter than the same period a year ago. Investment Commentary --
Net investment income declined by four percent in the quarter,
compared to the year-ago period, and was due to lower interest
rates on our short-term investments, lower fixed-maturity yields
and smaller average balances in our cash and short-term accounts.
The addition of The PICA Group added $2.1 million to our investment
result in the quarter. -- There was a net realized investment gain
of $5.1 million in the quarter due to an increase in gains in our
trading portfolio and net proceeds from the sale of securities. The
second quarter result reduced our net realized investment loss for
the year to $2.5 million. -- We have updated the online disclosure
of our investment portfolio to provide details of our holdings
through June 30, 2009. The disclosure is available under
Supplemental Investor Information in the Investor Relations section
of our website, http://www.proassurance.com/. Balance Sheet
Highlights June 30, 2009 December 31, 2008 -------------
----------------- Stockholders' Equity $1,527,671 $1,423,585 Total
Investments $3,771,646 $3,575,942 Total Assets $4,598,409
$4,280,938 Policy Liabilities $2,882,394 $2,693,101 Accumulated
Other Comprehensive Income (Loss) $9,345 $(35,898) Goodwill
$118,982 $72,213 Book Value per Share $46.72 $42.69 Capital
Management In the second quarter we repurchased approximately
397,000 shares of our common stock at a cost of $17.4 million.
Through June 30, 2009 we have purchased approximately 840,000 of
our common shares at a total cost of $36.1 million. We have
approximately $38.3 million remaining in our Board's authorization
to repurchase our common stock or retire debt. General Updates --
ProAssurance was named to the Ward's 50 for 2009. This is the third
straight year that The Ward Group has recognized ProAssurance for
the security we provide for our insureds and the value we create
for our investors. -- A. M. Best upgraded the rating for
ProAssurance Group, which includes our subsidiaries ProAssurance
Casualty, ProAssurance Indemnity and ProAssurance Specialty, to "A"
(Excellent) in June. The ratings of ProAssurance's other insurance
subsidiaries were affirmed by Best. About ProAssurance ProAssurance
Corporation is the nation's fifth largest writer of medical
professional liability insurance, based on the 2008 writing of its
subsidiaries. ProAssurance is recognized as one of the top
performing insurance companies in America by virtue of its
inclusion in the Ward's 50 for the past three years. ProAssurance
is rated "A" by Fitch Ratings and the ProAssurance Group is rated
"A" (Excellent) by A.M. Best. Conference Call Information -- Live:
Tuesday, August 4, 2009, 10:00 am et. Investors may dial (888)
455-2265 (toll free) or (719) 325-2405. The call will also be
webcast on our website, http://www.proassurance.com/, and on
StreetEvents.com. -- Replay: By telephone, through August 21, 2009
at (888) 203-1112 or (719) 457-0820, using access code 4884753. The
replay will also be available through September 4, 2009 on our
website, http://www.proassurance.com/ and on StreetEvents.com. --
Podcast: A replay of the call, and other information about
ProAssurance, is available on a free subscription basis through a
link on the home page of the ProAssurance website or through
Apple's iTunes. Caution Regarding Forward-Looking Statements
Statements in this news release that are not historical fact or
that convey our view of future business, events or trends are
specifically identified as forward-looking statements.
Forward-looking statements are based upon our estimates and
anticipation of future events and highlight certain risks and
uncertainties that could cause actual results to vary materially
from our expected results. We expressly claim the safe harbor
provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, for any forward-looking statements in this news release.
Forward-looking statements represent our outlook only as of the
date of this news release. Except as required by law or regulation,
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. Forward-looking statements are
generally 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. When
we address topics such as 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 actions, legislative actions,
payment or performance of obligations under indebtedness, payment
of dividends, and other, similar matters, we are making
forward-looking statements. The following important factors are
among those that could affect the actual outcome of future events:
-- general economic conditions, either nationally or in our market
areas, that are different than anticipated; -- regulatory,
legislative and judicial actions or decisions could affect our
business plans or operations; -- the enactment or repeal of tort
reforms; -- formation of state-sponsored malpractice insurance
entities that could remove some physicians from the private
insurance market; -- the impact of deflation or inflation; --
changes in the interest rate environment; -- the effect that
changes in laws or government regulations affecting the U.S.
economy or financial institutions, including the Emergency Economic
Stabilization Act of 2008 and the American Recovery and
Reinvestment Act of 2009, may have on the U.S. economy and our
business; -- performance of financial markets affecting the fair
value of our investments or making it difficult to determine the
value of our investments; -- changes in accounting policies and
practices that may be adopted by our regulatory agencies and the
Financial Accounting Standards Board or the Securities and Exchange
Commission; changes in laws or government regulations affecting
medical professional liability insurance or the financial
community; -- the effects of changes in the health care delivery
system; -- uncertainties inherent in the estimate of loss and loss
adjustment expense reserves and reinsurance, and changes in the
availability, cost, quality, or collectability of
insurance/reinsurance; -- the results of litigation, including
pre-or-post-trial motions, trials and/or appeals we undertake; bad
faith litigation which may arise from our handling of any
particular claim, including failure to settle; -- the loss of
independent agents; -- changes in our organization, compensation
and benefit plans; -- our ability to retain and recruit senior
management; -- our ability to purchase reinsurance and collect
payments from our reinsurers; -- increases in guaranty fund
assessments; -- our ability to achieve continued growth through
expansion into other states or through acquisitions or business
combinations; -- changes to the ratings assigned by rating agencies
to our insurance subsidiaries, individually or as a group; --
changes in competition among insurance providers and related
pricing weaknesses in our markets; and -- the expected benefits
from completed and proposed acquisitions may not be achieved or may
be delayed longer than expected due to business disruption, loss of
customers and employees, increased operating costs or inability to
achieve cost savings, and assumption of greater than expected
liabilities, among other reasons. Additional risk factors that may
cause outcomes that differ from our expectations or projections 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." DATASOURCE: ProAssurance CONTACT: Frank B.
O'Neil, Sr. Vice President, Corporate Communications & Investor
Relations of ProAssurance, 800-282-6242, +1-205-877-4461, Web Site:
http://www.proassurance.com/
http://www.newscom.com/cgi-bin/prnh/20081024/PROASSURANCELOGO
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