-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vw82LAcJUsboTjseNsn6Nw1c0lSI32hWVMyGH5ZRZnQGDjzZIIh9LGPccQ9LzyQQ lumUaAvu2ZukrodsTIutsA== 0001157523-05-007228.txt : 20050809 0001157523-05-007228.hdr.sgml : 20050809 20050809095518 ACCESSION NUMBER: 0001157523-05-007228 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050809 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050809 DATE AS OF CHANGE: 20050809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROASSURANCE CORP CENTRAL INDEX KEY: 0001127703 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 631261433 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16533 FILM NUMBER: 051007824 BUSINESS ADDRESS: STREET 1: 100 BROOKWOOD PLACE CITY: BIRMINGHAM STATE: AL ZIP: 35209 BUSINESS PHONE: 2058774400 8-K 1 a4948957.txt PROASSURANCE 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 9, 2005 ProAssurance Corporation (Exact name of registrant as specified in its charter) Delaware 001-16533 63-1261433 (State of Incorporation) (Commission File No.) (IRS Employer I.D. No.) 100 Brookwood Place, Birmingham, Alabama 35209 (Address of Principal Executive Office ) (Zip code) Registrant's telephone number, including area code: (205) 877-4400 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-(c) under the Exchange Act (17CFR 240.13e-(c)) ITEM 2.02 RESULTS OF OPERATION AND FINANCIAL CONDITION On August 9, 2005 we filed a press release reporting the results of our operations for the quarter and six months ended June 30, 2005. Item 9.01 Financial Statements and Exhibits a. None b. None c. We are furnishing the following document as an Exhibit to this Current Report on Form 8-K pursuant to Item 601 of Regulation 8-K: 99.1 Press release reporting results of our operations for the quarter and six months ended June 30, 2005, issued on August 9, 2005. We are furnishing the exhbit to this Form 8-K in accordance with items 2.02. The exhibit shall not be deemed to be "filed" for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: August 9, 2005 PROASSURANCE CORPORATION By: /s/ Edward L. Rand, Jr. ---------------------------------------- Edward L. Rand, Jr. Chief Financial Officer 3 EX-99.1 2 a4948957ex991.txt PROASSURANCE EXHIBIT 99.1 Exhibit 99.1 ProAssurance Reports Results for the Second Quarter of 2005 BIRMINGHAM, Ala.--Aug. 9, 2005--ProAssurance Corporation (NYSE:PRA): SUMMARY ProAssurance Corporation (NYSE:PRA) reported Net Income of $27.5 million, or $0.88 per diluted share, for the second quarter of 2005, and Net Income of $49.4 million or $1.58 per diluted share for the six months ended June 30, 2005. ProAssurance accomplished two key goals in the quarter: reaching underwriting profitability in both insurance segments with a consolidated combined ratio of 93.5% and achieving a 17.3% Return on Equity. Cash flow from operations was $84 million in the quarter and $182 million for the first six months of the year. ProAssurance's Return on Equity was 17.3% for the quarter and 15.5% for the six months ended June 30, 2005. These results do not include the results of NCRIC Group, Inc., which ProAssurance acquired effective August 3, 2005. ProAssurance Corporation (NYSE: PRA) reports the following results for the quarter and six months ended June 30, 2005: Unaudited Consolidated Financial Summary: (in thousands, except per share and ratio data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 -------- -------- -------- -------- Gross Premiums Written $161,373 $163,756 $377,031 $382,483 ======== ======== ======== ======== Net Premiums Written $139,969 $144,253 $336,389 $339,715 ======== ======== ======== ======== Net Premiums Earned $172,121 $165,897 $346,300 $333,739 ======== ======== ======== ======== Net Investment Income $ 26,146 $ 20,683 $ 51,568 $ 40,534 ======== ======== ======== ======== Net Realized Investment Gains $ 1,454 $ 626 $ 2,396 $ 4,283 ======== ======== ======== ======== Total Revenues $201,147 $188,438 $403,337 $380,799 ======== ======== ======== ======== Guaranty Fund Assessments (Credits) $ (212) $ 249 $ (114) $ 533 ======== ======== ======== ======== Interest Expense $ 2,031 $ 1,492 $ 4,167 $ 2,635 ======== ======== ======== ======== Total Expenses $163,003 $167,638 $334,957 $338,674 ======== ======== ======== ======== Net Income $ 27,465 $ 15,804 $ 49,402 $ 31,785 ======== ======== ======== ======== Net Cash Provided by Operations $ 84,122 $ 76,874 $181,595 $171,593 ======== ======== ======== ======== Weighted average number of common shares outstanding Basic 29,386 29,158 29,302 29,138 Diluted 32,205 31,995 32,138 31,964 Earnings per share Net Income per share (basic) $ 0.93 $ 0.54 $ 1.69 $ 1.09 ======== ======== ======== ======== Net Income per share (diluted) $ 0.88 $ 0.52 $ 1.58 $ 1.04 ======== ======== ======== ======== Net Loss Ratio 76.1% 82.4% 78.0% 83.5% Expense Ratio 17.4% 17.7% 17.5% 17.2% -------- -------- -------- -------- Combined Ratio 93.5% 100.1% 95.5% 100.7% ======== ======== ======== ======== Operating Ratio 78.3% 87.6% 80.6% 88.6% ======== ======== ======== ======== Return on Equity 17.3% 11.2% 15.5% 11.6% ======== ======== ======== ======== Unaudited Balance Sheet Highlights: (in millions, except per share data) June 30, 2005 December 31, 2004 Stockholders' Equity $ 661 $ 611 Total Investments $ 2,617 $ 2,455 Total Assets $ 3,409 $ 3,239 Policy Liabilities $ 2,538 $ 2,413 Accumulated Other Comprehensive Income $ 20 $ 24 Book Value per Share $ 22.49 $ 20.92 Professional Liability Segment / Selected Data (in thousands, except ratios) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 --------- --------- --------- --------- Gross Premiums Written $104,037 $107,995 $267,434 $277,733 ========= ========= ========= ========= Net Premiums Written $90,199 $94,713 $241,542 $246,996 ========= ========= ========= ========= Net Premiums Earned $124,699 $120,604 $251,971 $244,161 ========= ========= ========= ========= Net Investment Income $22,450 $17,791 $44,362 $35,090 ========= ========= ========= ========= Net Realized Investment Gains $679 $(44) $1,875 $2,883 ========= ========= ========= ========= Total Revenues $148,644 $138,927 $300,003 $283,133 ========= ========= ========= ========= Total Expenses $122,513 $127,059 $252,689 $260,409 ========= ========= ========= ========= Current Accident Year Net Loss Ratio 86.7% 89.4% 86.7% 91.3% Prior Year Development (4.0%) - (1.9%) - --------- --------- --------- --------- Net Loss Ratio 82.7% 89.4% 84.8% 91.3% Expense Ratio 15.5% 16.0% 15.5% 15.3% --------- --------- --------- --------- Combined Ratio 98.2% 105.4% 100.3% 106.6% ========= ========= ========= ========= Operating Ratio 80.2% 90.6% 82.7% 92.2% ========= ========= ========= ========= Personal Lines Segment /Selected Data (in thousands, except ratios) Three Months Six Months Ended Ended June 30, June 30, 2005 2004 2005 2004 ------- ------- -------- -------- Gross Premiums Written $57,336 $55,761 $109,597 $104,750 ======= ======= ======== ======== Net Premiums Written $49,770 $49,450 $ 94,847 $ 92,719 ======= ======= ======== ======== Net Premiums Earned $47,422 $45,293 $ 94,329 $ 89,578 ======= ======= ======== ======== Net Investment Income $ 3,091 $ 2,791 $ 6,107 $ 5,297 ======= ======= ======== ======== Net Realized Investment Gains $ 774 $ 31 $ 463 $ 51 ======= ======= ======== ======== Total Revenues $51,897 $48,771 $102,177 $ 96,170 ======= ======= ======== ======== Total Expenses $38,459 $39,087 $ 78,101 $ 75,630 ======= ======= ======== ======== Current Accident Year Net Loss Ratio 62.1% 70.6% 64.1% 68.3% Prior Year Development (3.2%) (6.6%) (4.0%) (6.1%) ------- ------- -------- -------- Net Loss Ratio 58.9% 64.0% 60.1% 62.2% Expense Ratio 22.2% 22.3% 22.7% 22.3% ------- ------- -------- -------- Combined Ratio 81.1% 86.3% 82.8% 84.5% ======= ======= ======== ======== Operating Ratio 74.6% 80.1% 76.3% 78.6% ======= ======= ======== ======== About Our Segments In our Professional Liability segment we underwrite professional liability insurance for physicians and surgeons, dentists, hospitals, and others involved in the delivery of health care. Our principal professional liability companies are The Medical Assurance Company, ProNational Insurance Company, NCRIC, Inc., and Red Mountain Casualty Insurance Company. We also write professional liability business through Woodbrook Casualty Insurance Company, formerly Medical Assurance of West Virginia. In our Personal Lines segment, MEEMIC Insurance Company provides auto and homeowners' coverage for Michigan's educational employees and their families. Commentary Consolidated Results -- Return on Equity for the quarter was 17.3%. For the first six months of the year this key measure reached 15.5%, as our disciplined business model continues to produce outstanding results. -- We reached a major corporate goal by achieving underwriting profitability in both segments in the quarter. For the quarter our consolidated combined ratio was 93.5%; for the first six months of 2005 it was 95.5%. -- Net Income for the quarter increased by $11.7 million, or 74% over the same period last year. For the first six months of the year Net Income increased by $17.6 million, or 55% over the year-ago period. NCRIC Transaction -- Our acquisition of NCRIC Group was completed as of the close of business on August 3, 2005. Our integration of NCRIC's operations is well underway, with NCRIC, Inc. forming the new hub of our expanded Mid-Atlantic operations. Professional Liability Results -- $5.0 million of favorable net reserve development was recognized in the quarter. This is also the total Professional Liability reserve development for the year. Our interim reserve review was completed in the quarter and we remain confident that reserves are adequate. -- Our rates remain adequate, and our average renewal rate increase has been 12% so far this year. -- Our mix of business is changing gradually. Some policyholders in high premium states are choosing lower coverage limits and growth is occurring in states where premiums are generally lower because of more favorable loss experience. Thus, premiums are flat, but our risk profile is lowered and we are maintaining our margins. -- Our retention rate in the quarter was approximately 85%, but despite growing competition from low-priced competitors, we continue to add new insureds so that our overall policyholder count is relatively unchanged. -- These results do not include the premium growth that will result from our acquisition of NCRIC on August 3, 2005. Those additional premiums will be reflected in the second half of 2005. Personal Lines Results -- Premiums continued to grow in Michigan primarily because of an increase in insured value. -- We experienced favorable net reserve development of $1.5 million in the quarter; for the year favorable net reserve development has been $3.7 million. Conference Call Information -- Live: Tuesday, August 9, 2005, 10:00 AM ET. Dial (800) 319-9003 or (719) 457-2619 outside North America. The call will also be webcast on our website, ProAssurance.com, and on StreetEvents.com. -- Replay: Telephone, through August 16, 2005 at (888) 203-1112 or (719) 457-0820, access code 4279715; an internet replay will be available through August 31, 2005 at the same websites. About ProAssurance ProAssurance Corporation is a specialty insurer with more than $3.4 billion in assets and almost $790 million in gross written premiums. We are the nation's fourth largest writer of medical professional liability insurance and our principal professional liability subsidiaries are The Medical Assurance Company, Inc., ProNational Insurance Company, and NCRIC, Inc. and Red Mountain Casualty Insurance Company. We also write professional liability coverage through Woodbrook Casualty Insurance Company. We are the tenth largest writer of personal auto coverage in Michigan through our subsidiary, MEEMIC Insurance Company. A.M. Best assigns a rating of "A-" (Excellent) to ProAssurance, MEEMIC and our principal professional liability subsidiaries, except NCRIC, Inc. which is rated B++ (Very Good). Standard & Poor's assigns our principal professional liability carriers a rating of "A-" ("Strong") but has not yet issued a rating for NCRIC, Inc. Fitch assigns a rating of "A-" to The Medical Assurance Company, ProNational Insurance Company and MEEMIC Insurance Company. Caution Regarding Forward-Looking Statements This news release contains historical information as well as forward-looking statements that are based upon our estimates and anticipation of future events that are subject to certain risks and uncertainties that could cause actual results to vary materially from the expected results described in the forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "hopeful," "intend," "may," "optimistic," "preliminary," "project," "should," "will," and similar expressions are intended to identify these forward-looking statements. There are numerous important factors that could cause our actual results to differ materially from those in the forward-looking statements. Thus, sentences and phrases that we use to convey our view of future events and trends are expressly designated as Forward-Looking Statements as are sections of this news release clearly identified as giving our outlook on future business. The principal risk factors that may cause actual results to differ materially from those expressed in the forward-looking statements are described in various documents we file with the Securities and Exchange Commission, including Form 10K/A for the year ended December 31, 2004 and Form 10Q for the most recent quarter. In view of the many uncertainties inherent in the forward-looking statements made in this document, the inclusion of such information should not be taken as representation by us or any other person that our objectives or plans will be realized. We expressly disclaim any obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. CONTACT: ProAssurance Corporation Frank B. O'Neil, 800-282-6242 or 205-877-4461 foneil@ProAssurance.com -----END PRIVACY-ENHANCED MESSAGE-----