-----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, VekY6HbQjyHWobrM90hyiJyTlmL0wQ3HIfhSXFD8iXc2wUYv4VEG9wpm8epo6Y2Q AP6sHSoVr+lpqL/8KFokWg== 0001157523-07-008069.txt : 20070808 0001157523-07-008069.hdr.sgml : 20070808 20070808160014 ACCESSION NUMBER: 0001157523-07-008069 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070808 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070808 DATE AS OF CHANGE: 20070808 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: 071035675 BUSINESS ADDRESS: STREET 1: 100 BROOKWOOD PLACE CITY: BIRMINGHAM STATE: AL ZIP: 35209 BUSINESS PHONE: 2058774400 8-K 1 a5466880.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): August 8, 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 August 8, 2007 we filed a press release reporting the results of our operations for the quarter ended June 30, 2007. Item 9.01 Financial Statements and Exhibits 99.1 Press release reporting results of our operations for the quarter ended June 30, 2007, issued on August 8, 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: August 8, 2007 PROASSURANCE CORPORATION By: /s/ Frank B. O'Neil ------------------------- Frank B. O'Neil Senior Vice President EX-99.1 2 a5466880ex991.txt EXHIBIT 99.1 Exhibit 99.1 ProAssurance Reports 2007 Second Quarter and Six-Month Results BIRMINGHAM, Ala.--(BUSINESS WIRE)--Aug. 8, 2007--ProAssurance (NYSE: PRA): SUMMARY ProAssurance announced another quarter of strong increases in Income from Continuing Operations, up 25% over the second quarter and 27% over the six month period a year ago. Income from Continuing Operations was $37.6 million in the quarter, or $1.06 per diluted share, and $73.7 million, or $2.08 per diluted share, for the year's first six months. Net Investment Income continued to be a significant contributor to the bottom line, growing 26% for the quarter and 28% for the year-to-date. ProAssurance (NYSE: PRA) reports the following results for the periods ending June 30, 2007: Unaudited Consolidated Financial Summary: (in thousands, except per share data) Continuing Operations Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 ------------------------------------ Gross Premiums Written $105,747 $106,805 $291,049 $288,991 ==================================== Net Premiums Written $ 90,867 $ 96,381 $262,326 $268,962 ==================================== Net Premiums Earned $132,663 $137,420 $269,840 $279,850 ==================================== Net Investment Income $ 44,548 $ 35,432 $ 87,119 $ 68,313 ==================================== Net Realized Investment Gains (Losses) $ 277 $ (754)$ (2,885)$ (610) ==================================== Total Revenues $180,134 $173,792 $359,012 $351,983 ==================================== Guaranty Fund Assessments (Recoveries) $ (90)$ 995 $ (134)$ 1,060 ==================================== Interest Expense $ 2,984 $ 2,632 $ 5,944 $ 5,188 ==================================== Total Expenses $127,425 $131,656 $256,259 $271,797 ==================================== Tax Expense $ 15,088 $ 12,145 $ 29,042 $ 22,360 ==================================== Income From Continuing Operations(1) $ 37,621 $ 29,991 $ 73,111 $ 57,826 ==================================== Net Cash Provided by Operating Activities $ 7,702 $(73,614)$ 94,724 $ 42,182 ==================================== Discontinued Operations(1) Income From Discontinued Operations $ - $ - $ - $109,441 ==================================== Net Income Net Income $ 37,621 $ 29,991 $ 73,711 $167,267 ==================================== (1) Our personal lines operations were sold effective January 1, 2006. Income from discontinued operations consists solely of the gain recognized on that sale, net of taxes. Earnings Per Share Three Months Six Months Ended Ended June 30, June 30, 2007 2006 2007 2006 ------- ------- ------- ------- Weighted average number of common shares outstanding Basic 33,178 31,195 33,236 31,175 Diluted 36,093 34,065 36,125 34,060 Earnings per share (Basic) Income from Continuing Operations $ 1.13 $ 0.96 $ 2.22 $ 1.86 Income from Discontinued Operations - - - 3.51 ------- ------- ------- ------- Net Income per share (Basic) $ 1.13 $ 0.96 $ 2.22 $ 5.37 ======= ======= ======= ======= Earnings per share (Diluted) Income from Continuing Operations $ 1.06 $ 0.90 $ 2.08 $ 1.74 Income from Discontinued Operations - - - 3.21 ------- ------- ------- ------- Net Income per share (Diluted) $ 1.06 $ 0.90 $ 2.08 $ 4.95 ======= ======= ======= ======= Key Ratios Three Months Six Months Ended Ended June 30, June 30, 2007 2006 2007 2006 ----- ----- ----- ----- Net Loss Ratio 74.5% 75.0% 73.3% 76.6% Expense Ratio 19.3% 18.9% 19.4% 18.7% ----- ----- ----- ----- Combined Ratio 93.8% 93.9% 92.7% 95.3% ===== ===== ===== ===== Operating Ratio 60.2% 68.1% 60.4% 70.9% ===== ===== ===== ===== Return on Equity 13.0% 13.3% 13.0% 13.8% ===== ===== ===== ===== -- Additional premiums from PIC Wisconsin have enabled us to limit the downturn in premiums in the quarter and continue to show modest year-over-year growth. -- Price-based competition remains a factor; however, policy terms and conditions are largely holding. We have been able to renew business at prices that are, on average, equal to the premiums charged in 2006. -- For the quarter and for the year-to-date our policyholder retention in our non-PIC book was 85%; PIC's retention was 89% in the quarter and 90% for the year-to-date. We believe our overall renewal success is a vote of confidence from insureds who recognize the value that ProAssurance delivers. -- We recognized $20.0 million of favorable net loss reserve development in the quarter, bringing the total favorable development for the year to $35.6 million. The favorable development continues to stem from our estimates of reduced claim severity in accident years 2003 through 2005. ProAssurance's Chief Executive Officer, W. Stancil Starnes, said, "Our strong results in a very competitive environment show that our disciplined approach can deliver value to our shareholders while building the type of company our policyholders demand. We're evaluating every facet of our operations to ensure that we can continue to deliver superior value and service." Balance Sheet Highlights June 30, December 2007 31, 2006 ----------- ---------- Stockholders' Equity $1,154,254 $1,118,547 Total Investments $3,559,431 $3,492,098 Total Assets $4,393,908 $4,342,853 Policy Liabilities $2,973,141 $2,967,097 Accumulated Other Comprehensive Income $ (28,182) $ 111 Goodwill $ 72,213 $ 72,213 Book Value per Share $ 34.91 $ 33.61 Capital Management As of July 15, 2007 we had repurchased approximately 560,900 shares of our stock with a total cost of $30.7 million, leaving $119.3 million in our current share repurchase authorization. Conference Call Information -- Live: Wednesday, August 8, 2007, 10:00 AM ET. Dial (800) 474-8920 or (719) 457-2727 outside North America. The call will also be webcast on our website, ProAssurance.com, and on StreetEvents.com. -- Replay: By telephone, through August 17, 2007 at (888) 203-1112 or (719) 457-0820, using access code 2518460. Via internet, through August 31, 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. ProAssurance is recognized as one of the top performing insurance companies in America by virtue of its inclusion in the Ward's 50 for 2007 and is one of the 100 largest property-casualty insurance groups in the nation, based on Net Written Premium. 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 judgments, 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 and/or insurance; -- 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 -- changes in our, organization, compensation and benefit plans; and -- our ability to recruit and retain senior management. 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 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-----