-----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, JdXxGDfmkN0lxcpaia/n5ZJsIcSTYlUy7AUlT7yW3xZawP7vwfar+hgaWy2oxVKs jPZnEq+mTz0JXrdQzlck2A== 0001157523-07-002095.txt : 20070227 0001157523-07-002095.hdr.sgml : 20070227 20070227161514 ACCESSION NUMBER: 0001157523-07-002095 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070227 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070227 DATE AS OF CHANGE: 20070227 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: 07653484 BUSINESS ADDRESS: STREET 1: 100 BROOKWOOD PLACE CITY: BIRMINGHAM STATE: AL ZIP: 35209 BUSINESS PHONE: 2058774400 8-K 1 a5343027.txt PROASSURANCE CORPORATION 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): February 27, 2007 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 February 27, 2007 we filed a press release reporting the results of our operations for the quarter and twelve months ended December 31, 2006. Item 9.01 Financial Statements and Exhibits 99.1 Press release reporting results of our operations for the quarter and twelve months ended December 31, 2006, issued on February 27, 2007. The information we are furnishing under Items 2.02 and 9.01 of this Report shall not be deemed to be "filed" for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the "Exchange Act") as amended, or otherwise subject to the liability of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, 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. 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: February 27, 2007 PROASSURANCE CORPORATION By: /s/ Edward L. Rand, Jr. --------------------------------------- Edward L. Rand, Jr. Chief Financial Officer EX-99.1 2 a5343027ex991.txt EXHIBIT 99.1 Exhibit 99.1 ProAssurance Reports 2006 Year-End and Fourth Quarter Results SUMMARY ProAssurance Corporation reports 2006 Net Income of $236 million, or $6.85 per diluted share. Income from continuing operations in 2006 was $127 million, or $3.72 per diluted share. Net income per diluted share for the fourth quarter of 2006 was $1.01. Book value per share increased $9.02 to $33.61 in 2006. Premiums Written in the year were up slightly, counter to the prevailing year-over-year downtrend in the medical professional liability market. Other year-end 2006 highlights include total revenues of $738 million, strong operating cash flow of $183 million, stockholders' equity of $1.1 billion, and total assets of $4.3 billion. BIRMINGHAM, Ala.--(BUSINESS WIRE)--Feb. 27, 2007--ProAssurance Corporation's (NYSE: PRA) results for the year and quarter ended December 31, 2006 are as follows: Unaudited Consolidated Financial Summary: (in thousands, except per share data) Continuing Operations (1, 2) Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 --------- --------- --------- --------- Gross Premiums Written $126,719 $138,219 $578,983 $572,960 ========= ========= ========= ========= Net Premiums Written $122,372 $121,351 $543,376 $521,343 ========= ========= ========= ========= Net Premiums Earned $153,772 $143,347 $583,067 $543,241 ========= ========= ========= ========= Net Investment Income $41,167 $27,832 $149,789 $99,193 ========= ========= ========= ========= Net Realized Investment Gains (Losses) $(79) $(403) $(1,199) $912 ========= ========= ========= ========= Total Revenues $196,371 $171,880 $737,598 $647,950 ========= ========= ========= ========= Guaranty Fund Assessments $1,235 $(117) $2,609 $226 ========= ========= ========= ========= Interest Expense $2,999 $2,472 $11,073 $8,929 ========= ========= ========= ========= Total Expenses $146,192 $134,364 $560,771 $539,087 ========= ========= ========= ========= Tax Expense $14,389 $10,614 $49,843 $28,837 ========= ========= ========= ========= Income From Continuing Operations(1, 2) $35,790 $26,902 $126,984 $80,026 ========= ========= ========= ========= Discontinued Operations(1) Income From Discontinued Operations $- $7,816 $109,441 $33,431 ========= ========= ========= ========= Net Income Net Income $35,790 $34,718 $236,425 $113,457 ========= ========= ========= ========= (1) Results from our Personal Lines operations, net of tax, are reported as discontinued operations in all periods presented. The sale of that business was effective January 1, 2006. All other data is attributable to continuing operations from our Professional Liability business. (2) Continuing Operations reflects results from PIC Wisconsin since August 2006. Earnings Per Share Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 --------- --------- --------- --------- Weighted average number of common shares outstanding Basic 33,243 31,088 32,044 30,049 Diluted 36,111 33,986 34,925 32,908 Earnings per share (Basic) Income from Continuing Operations $1.08 $0.87 $3.96 $2.66 Income from Discontinued Operations - 0.25 3.42 1.11 --------- --------- --------- --------- Net Income per share (Basic) $1.08 $1.12 $7.38 $3.77 ========= ========= ========= ========= Earnings per share (Diluted) Income from Continuing Operations $1.01 $0.81 $3.72 $2.52 Income from Discontinued Operations - 0.23 3.13 1.02 --------- --------- --------- --------- Net Income per share (Diluted) $1.01 $1.04 $6.85 $3.54 ========= ========= ========= ========= Cash Flow Analysis Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 --------- --------- --------- --------- Cash Provided by Insurance Operations $52,569 $73,229 $288,980 $324,507 Taxes Paid on Sale of Discontinued Operations (Personal Lines) - - (54,565) - Net Purchases of Trading Portfolio Securities (4,207) (248) (51,585) (917) --------- --------- --------- --------- Net Cash Provided by Operating Activities $48,362 $72,981 $182,830 $323,590 ========= ========= ========= ========= -- Net Cash Provided by Operating Activities (Operating Cash Flow) was affected by net outflows from trading securities activity of $51.6 million and the payment of $54.6 million in taxes on the sale of our Personal Lines operations. Balance Sheet Highlights(1) December 31, 2006 December 31, 2005 ----------------- ----------------- Stockholders' Equity $1,118,547 $765,046 Total Investments (Continuing Operations) $3,492,098 $2,614,319 Total Assets (Continuing Operations) $4,342,853 $3,341,600 Policy Liabilities (Continuing Operations) $2,967,097 $2,572,008 Accumulated Other Comprehensive Income (Loss) $111 $(8,834) Goodwill (Continuing Operations) $72,213 $29,494 Book Value per Share $33.61 $24.59 (1) 2006 Balance Sheet Highlights reflect the addition of PIC Wisconsin. Key Ratios (Continuing Operations) Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 --------- --------- --------- --------- Net Loss Ratio 74.8% 74.5% 76.0% 80.7% Expense Ratio 18.3% 17.6% 18.2% 16.9% --------- --------- --------- --------- Combined Ratio 93.1% 92.1% 94.2% 97.6% ========= ========= ========= ========= Operating Ratio 66.3% 72.7% 68.5% 79.3% ========= ========= ========= ========= Return on Equity 13.0% 14.3% 13.5% 11.6% ========= ========= ========= ========= -- Gross Premiums were higher in 2006 than in 2005 because of the additional business generated by our acquisition of NCRIC, Inc. in August 2005 and from our acquisition of Physicians Insurance Company of Wisconsin (PIC Wisconsin) in August 2006. Gross Premiums Written were down in the fourth quarter, compared to last year's quarter, because of competitive overall market conditions. PIC Wisconsin did not materially contribute to premiums due to the timing of their renewals, which are weighted to the start of the first and third quarters. -- Policyholder retention for 2006 was 84% and 83% in the fourth quarter. -- Premiums on renewing policies were higher by 3% in 2006 and 1% in the fourth quarter compared to the same periods a year ago. ProAssurance continues pricing its policies at levels that are designed to maintain its margins, despite lower overall pricing in the marketplace. -- Favorable net loss reserve development totaled $36.3 million in 2006, with $13.3 million coming in the fourth quarter. This development continues to come primarily from the accident years 2002, 2003 and 2004. -- Return on Equity was 13.5% in 2006. Strong cash flow, resulting in increased investment income, along with favorable loss reserve development, drove an increase in ROE for the year. -- Book Value per Share grew by $9.02. Organic Book Value growth added $4.70 per share; the sale of ProAssurance's Personal Lines business and the purchase of PIC Wisconsin added $3.29 and $1.03 to Book Value per Share respectively. Florida Verdict Commentary We continue to pursue post-trial and appellate relief in the $217 million malpractice verdict against insureds of one of our subsidiaries in Tampa. We continue to believe, based upon our current analysis of appellate and coverage issues, potential recoveries from our insurance and reinsurance programs, potential settlement discussions, as well as our historical settlement practices, that our reserves are adequate. We are monitoring the developments with this verdict, as we do all verdicts, and will make adjustments to our reserves as necessary. Conference Call Information -- Live: Tuesday, February 27, 2007, 10:00 AM ET. Dial (800) 310-1961 or (719) 457-2692 outside North America. The call will also be webcast on our website, ProAssurance.com, and on StreetEvents.com. -- Replay: By telephone, through March 9, 2007 at (888) 203-1112 or (719) 457-0820, using access code 4017871. Via internet, through March 30, 2007 at ProAssurance.com and StreetEvents.com. -- Podcast: Available on a free subscription basis through a link on the home page of the ProAssurance website. About ProAssurance ProAssurance Corporation is the nation's fourth largest writer of medical professional liability insurance through our principal subsidiaries The Medical Assurance Company, Inc., ProNational Insurance Company, NCRIC, Inc., Physicians Insurance Company of Wisconsin, Inc., and Red Mountain Casualty Insurance Company, Inc. We also write professional liability coverage through Woodbrook Casualty Insurance, Inc. Caution Regarding Forward-Looking Statements Any statements in this News Release that are not historical facts are specifically identified as forward-looking statements. These statements are based upon our estimates and anticipation of future events and are subject to certain risks and uncertainties that could cause actual results to vary materially from the expected results described in the forward-looking statements. Forward-looking statements are identified by words such as, but not limited to, "anticipate," "believe," "estimate," "expect," "hope," "hopeful," "intend," "may," "optimistic," "potential," "preliminary," "project," "should," "will," and other analogous expressions. There are numerous important factors that could cause our actual results to differ materially from those in the forward-looking statements. Thus, sentences and phrases that we use to convey our view of future events and trends are expressly designated as forward-looking statements as are sections of this news release clearly identified as giving our outlook on future business. Forward-looking statements relating to our business include among other things: statements concerning liquidity and capital requirements, return on equity, financial ratios, net income, premiums, losses and loss reserves, premium rates and retention of current business, competition and market conditions, the expansion of product lines, the development or acquisition of business in new geographical areas, the availability of acceptable reinsurance, actions by regulators and rating agencies, court judgment, legislative actions, payment or performance of obligations under indebtedness, payment of dividends, and other matters. These forward-looking statements highlight significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events: -- general economic conditions, either nationally or in our market area, that are worse than anticipated; -- regulatory and legislative actions or decisions that adversely affect our business plans or operations; -- inflation and changes in the interest rate environment; -- performance of financial markets and/or changes in the securities markets that adversely affect the fair value of our investments or operations; -- changes in laws or government regulations affecting medical professional liability insurance; -- changes to our ratings assigned by rating agencies; -- the effects of health care changes, including managed care; -- uncertainties inherent in the estimate of loss and loss adjustment expense reserves and reinsurance, and changes in the availability, cost, quality, or collectibility of reinsurance; -- bad faith litigation which may arise from our involvement in the settlement of claims; -- post-trial motions which may produce rulings adverse to us and/or appeals we undertake that may be unsuccessful; -- significantly increased competition among insurance providers and related pricing weaknesses in some markets; -- our ability to achieve continued growth through expansion into other states or through acquisitions or business combinations; -- the expected benefits from acquisitions may not be achieved or may be delayed longer than expected due to, among other reasons, business disruption, loss of customers and employees, increased operating costs or inability to achieve cost savings, and assumption of greater than expected liabilities; -- changes in accounting policies and practices that may be adopted by our regulatory agencies and the Financial Accounting Standards Board; and -- changes in our organization, compensation and benefit plans. You should not place undue reliance on any such forward-looking statements, which speak only as of the date made. The factors listed above could affect our financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. Except as required by law or regulations, we do not undertake and specifically decline any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Our results may differ materially from those we expect and discuss in any forward-looking statements. The principal risk factors that may cause these differences are described in various documents we file with the Securities and Exchange Commission, such as our current reports on Form 8-K, and our regular reports on Forms 10-Q and 10-K, particularly in "Item 1A, Risk Factors." CONTACT: ProAssurance Corporation Frank B. O'Neil, 800-282-6242 or 205-877-4461 Sr. Vice President, Corporate Communications & Investor Relations foneil@ProAssurance.com -----END PRIVACY-ENHANCED MESSAGE-----