10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2012 or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission file number 0-16533

ProAssurance Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware	63-1261433
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)
100 Brookwood Place, Birmingham, AL	35209
(Address of Principal Executive Offices)	(Zip Code)
(205) 877-4400
(Registrant’s Telephone Number, Including Area Code)	(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter), during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 26, 2012, there were 30,663,443 shares of the registrant’s common stock outstanding.

FORWARD-LOOKING STATEMENTS

Any statements in this Form 10-Q 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”, “preliminary”, “potential”, “project”, “should”, “will” and other analogous expressions. There are numerous 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 Form 10-Q that are 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, investment valuation and performance, 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 matters.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following factors that could affect the actual outcome of future events:

• general economic conditions, either nationally or in our market areas, that are different than anticipated;

• our ability to maintain our dividend payments;

• regulatory, legislative and judicial actions or decisions that could affect our business plans or operations;

• the enactment or repeal of tort reforms;

• formation or dissolution of state-sponsored medical professional liability insurance entities that could remove or add sizable groups of physicians from or to the private insurance market;

• the impact of deflation or inflation;

• changes in the interest rate environment;

• changes in U.S. laws or government regulations regarding financial markets or market activity that may affect the U.S. economy and our business;

• changes in the ability of the U.S. government to meet its obligations that may affect 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, the Securities and Exchange Commission, or the Public Company Accounting Oversight Board;

• changes in laws or government regulations affecting medical professional liability insurance or the financial community;

• the effects of changes in the healthcare delivery system, including but not limited to the Patient Protection and Affordable Care Act;

• consolidation of healthcare providers and entities that are more likely to self insure and not purchase medical professional liability insurance;

• 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;

2

• the results of litigation, including pre- or post-trial motions, trials and/or appeals we undertake;

• allegation of bad faith which may arise from our handling of any particular claim, including failure to settle;

• 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 recoveries from our reinsurers;

• assessments from guaranty funds;

• 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;

• provisions in our charter documents, Delaware law and state insurance law may impede attempts to replace or remove management or may impede a takeover;

• state insurance restrictions may prohibit assets held by our insurance subsidiaries, including cash and investment securities, from being used for general corporate purposes;

• taxing authorities can take exception to our tax positions and cause us to incur significant amounts of defense costs and, if our defense is not successful, additional tax costs, including interest and penalties;

• insurance market conditions may alter the effectiveness of our current business strategy and impact our revenues; and

• 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, employees and key agents, increased operating costs or inability to achieve cost savings, and assumption of greater than expected liabilities, among other reasons.

Additional risks that could adversely affect the proposed mergers of Medmarc Insurance Group (Medmarc) and Independent Nevada Doctors Insurance Exchange (IND) into ProAssurance, include but are not limited to, the following:

• the businesses of ProAssurance and Medmarc or ProAssurance and IND may not be combined successfully, or such combination may take longer to accomplish than expected;

• the cost savings from either transaction may not be fully realized or may take longer to realize than expected;

• operating costs, customer loss and business disruption following either or both transactions, including adverse effects on relationships with employees, may be greater than expected;

• governmental approvals of either or both transactions may not be obtained or adverse regulatory conditions may be imposed in connection with governmental approvals of either or both mergers;

• there may be restrictions on our ability to achieve continued growth through expansion into other states or through acquisitions or business combinations;

• the board of directors of Medmarc or the Subscriber Advisory Committee (SAC) of IND may withdraw their recommendation and support a competing acquisition proposal; and

• those eligible to vote on either merger may fail to approve the respective transaction.

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 “Item 1A, Risk Factors” in our Form 10-K and other documents we file with the Securities and Exchange Commission, such as our current reports on Form 8-K, and our regular reports on Form 10-Q.

3

We caution readers not to place undue reliance on any such forward-looking statements, which are based upon conditions existing only as of the date made, and advise readers that these factors 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.

4

ProAssurance Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share data)

	June 30 2012			December 31 2011
Assets
Investments
Fixed maturities, available for sale, at fair value; amortized cost, $3,373,804 and $3,465,720, respectively	$	3,589,274		$	3,665,763
Equity securities, available for sale, at fair value; cost, $0 and $6, respectively		—			25
Equity securities, trading, at fair value; cost, $147,628 and $101,078, respectively		154,588			103,133
Short-term investments		167,914			119,421
Business owned life insurance		53,571			52,651
Investment in unconsolidated subsidiaries		113,342			111,324
Other investments		21,842			38,224
Total Investments		4,100,531			4,090,541
Cash and cash equivalents		132,190			130,400
Premiums receivable		112,333			120,220
Receivable from reinsurers on paid losses and loss adjustment expenses		15,464			4,175
Receivable from reinsurers on unpaid losses and loss adjustment expenses		239,225			247,658
Prepaid reinsurance premiums		17,287			12,568
Deferred policy acquisition costs		25,129			26,626
Deferred taxes		22,587			30,989
Real estate, net		40,900			40,432
Intangible assets		51,333			53,703
Goodwill		159,625			159,625
Other assets		79,155			81,941
Total Assets	$	4,995,759		$	4,998,878
Liabilities and Shareholders’ Equity
Liabilities
Policy liabilities and accruals
Reserve for losses and loss adjustment expenses	$	2,193,042		$	2,247,772
Unearned premiums		238,291			251,155
Reinsurance premiums payable		81,967			82,039
Total Policy Liabilities		2,513,300			2,580,966
Other liabilities		154,547			203,772
Long-term debt, $34,992 and $35,507, at amortized cost, respectively; $14,777 and $14,180 at fair value, respectively		49,769			49,687
Total Liabilities		2,717,616			2,834,425
Shareholders’ Equity
Common shares, par value $0.01 per share, 100,000,000 shares authorized, 34,661,113 and 34,551,494 shares issued, respectively		347			346
Additional paid-in capital		543,531			538,625
Accumulated other comprehensive income (loss), net of deferred tax expense (benefit) of $75,414 and $70,022, respectively		140,051			130,037
Retained earnings		1,798,622			1,699,853
		2,482,551			2,368,861
Treasury shares, at cost, 3,997,951 shares		(204,408	)		(204,408	)
Total Shareholders’ Equity		2,278,143			2,164,453
Total Liabilities and Shareholders’ Equity	$	4,995,759		$	4,998,878

5

ProAssurance Corporation and Subsidiaries

Condensed Consolidated Statements of Changes in Capital (Unaudited)

(In thousands)

	Total			Accumulated Other Comprehensive Income (Loss)		Retained Earnings			Other Capital Accounts
Balance at December 31, 2011	$	2,164,453		$	130,037	$	1,699,853		$	334,563
Net income		114,098			—		114,098			—
Dividends to shareholders		(15,329	)		—		(15,329	)		—
Change in net unrealized gains (losses) on investments, after tax, net of reclassification adjustments		10,014			10,014		—			—
Common shares issued for compensation and net effect of restricted and performance shares issued and stock options exercised		(165	)		—		—			(165	)
Share-based compensation		5,072			—		—			5,072
Balance at June 30, 2012	$	2,278,143		$	140,051	$	1,798,622		$	339,470
	Total			Accumulated Other Comprehensive Income (Loss)		Retained Earnings			Other Capital Accounts
Balance at December 31, 2010	$	1,855,863		$	79,124	$	1,428,026		$	348,713
Net income		102,790			—		102,790			—
Change in net unrealized gains (losses) on investments, after tax, net of reclassification adjustments		19,933			19,933		—			—
Common shares reacquired		(15,437	)		—		—			(15,437	)
Common shares issued for compensation and net effect of performance shares issued and stock options exercised		(499	)		—		—			(499	)
Share-based compensation		3,714			—		—			3,714
Balance at June 30, 2011	$	1,966,364		$	99,057	$	1,530,816		$	336,491

6

ProAssurance Corporation and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)

(In thousands, except per share data)

	Three Months Ended June 30						Six Months Ended June 30
	2012			2011			2012			2011
Revenues
Net premiums earned	$	131,266		$	137,063		$	267,925		$	269,140
Net investment income		34,510			36,297			68,003			72,457
Equity in earnings (loss) of unconsolidated subsidiaries		(2,227	)		(2,416	)		(4,293	)		(3,780	)
Net realized investment gains (losses):
Other-than-temporary impairment (OTTI) losses		(218	)		(1,065	)		(1,424	)		(2,902	)
Portion of OTTI losses recognized in (reclassified from) other comprehensive income before taxes		(201	)		(113	)		(201	)		(681	)
Net impairment losses recognized in earnings		(419	)		(1,178	)		(1,625	)		(3,583	)
Other net realized investment gains (losses)		(1,129	)		3,378			10,755			9,907
Total net realized investment gains (losses)		(1,548	)		2,200			9,130			6,324
Other income		1,868			1,685			3,675			4,273
Total revenues		163,869			174,829			344,440			348,414
Expenses
Losses and loss adjustment expenses		55,132			69,394			133,437			146,493
Reinsurance recoveries		(7,048	)		(5,041	)		(15,154	)		(11,717	)
Net losses and loss adjustment expenses		48,084			64,353			118,283			134,776
Underwriting, policy acquisition and operating expenses		35,405			32,871			69,803			68,578
Interest expense		826			918			1,651			1,713
Total expenses		84,315			98,142			189,737			205,067
Income before income taxes		79,554			76,687			154,703			143,347
Provision for income taxes
Current expense (benefit)		20,614			21,769			37,595			26,829
Deferred expense (benefit)		487			(178	)		3,010			13,728
Total income tax expense (benefit)		21,101			21,591			40,605			40,557
Net income	$	58,453		$	55,096		$	114,098		$	102,790
Other comprehensive income, after tax, net of reclassification adjustments (see Note 9)		7,002			24,224			10,014			19,933
Comprehensive income	$	65,455		$	79,320		$	124,112		$	122,723
Earnings per share:
Basic	$	1.91		$	1.80		$	3.73		$	3.36
Diluted	$	1.89		$	1.79		$	3.69		$	3.33
Weighted average number of common shares outstanding:
Basic		30,658			30,583			30,624			30,600
Diluted		30,916			30,856			30,884			30,855
Cash dividends declared per common share	$	0.25		$	—		$	0.50		$	—

7

ProAssurance Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Six Months Ended June 30
	2012			2011
Operating Activities
Net income	$	114,098		$	102,790
Depreciation and amortization		20,402			17,954
Net realized investment (gains) losses		(9,130	)		(6,324	)
Share-based compensation		5,072			3,714
Deferred income taxes		3,010			13,728
Other		(2,936	)		226
Changes in assets and liabilities:
Premiums receivable		7,887			1,219
Other assets		364			(1,549	)
Reserve for losses and loss adjustment expenses		(54,730	)		(11,836	)
Unearned premiums		(12,864	)		(6,814	)
Reinsurance related assets and liabilities		(7,647	)		(12,795	)
Other liabilities		(30,821	)		(47,261	)
Net cash provided by operating activities		32,705			53,052
Investing Activities
Purchases of:
Fixed maturities, available for sale		(347,146	)		(452,833	)
Equity securities, trading		(53,001	)		(31,325	)
Other investments		(158	)		(429	)
Funding of tax credit limited partnerships		(23,470	)		(17,232	)
(Investments in) distributions from unconsolidated subsidiaries, net		582			—
Proceeds from sale or maturities of:
Fixed maturities, available for sale		432,667			449,364
Equity securities, available for sale		—			3,704
Equity securities, trading		22,921			33,908
Other investments		565			432
Net sales or maturities (purchases) of short-term investments		(48,654	)		39,537
Unsettled security transactions, net		6,712			1,228
Cash received (paid) for other assets		(4,620	)		(11,428	)
Net cash provided (used) by investing activities		(13,602	)		14,926
Financing Activities
Repurchase of common stock		—			(14,993	)
Dividends to shareholders		(15,270	)		—
Other		(2,043	)		(2,610	)
Net cash provided (used) by financing activities		(17,313	)		(17,603	)
Increase (decrease) in cash and cash equivalents		1,790			50,375
Cash and cash equivalents at beginning of period		130,400			50,851
Cash and cash equivalents at end of period	$	132,190		$	101,226

8

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of ProAssurance Corporation and its consolidated subsidiaries (ProAssurance or PRA). The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting of normal recurring adjustments, have been included. ProAssurance’s results for the three- and six-month periods ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes contained in ProAssurance’s December 31, 2011 report on Form 10-K. In connection with its preparation of the Condensed Consolidated Financial Statements, ProAssurance evaluated events that occurred subsequent to June 30, 2012 for recognition or disclosure in its financial statements and notes to financial statements.

Accounting Changes Not Yet Adopted

Disclosures About Offsetting Assets and Liabilities

Effective for fiscal years beginning on or after January 1, 2013, the Financial Accounting Standards Board (FASB) revised guidance related to disclosures about certain assets and liabilities in an entity’s financial statements. The guidance requires disclosures related to the net and gross positions of certain financial instruments and transactions that are either eligible for offset in accordance with existing GAAP guidance or subject to an agreement that requires such offset. The guidance must be applied retrospectively for all prior periods presented. ProAssurance plans to adopt the guidance beginning January 1, 2013. Adoption of this guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position.

Accounting Changes

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

Effective for fiscal years beginning after December 15, 2011, the FASB revised guidance regarding the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral. The guidance permits deferral of qualifying costs only when associated with successful contract acquisitions. Internal selling agent and underwriter salary and benefit costs allocated to unsuccessful contracts, as well as advertising costs, are excluded. The guidance must be applied prospectively, but may be applied retrospectively for all prior periods. ProAssurance prospectively adopted the guidance on January 1, 2012. Adoption of this guidance had no material effect on ProAssurance’s results of operations or financial position.

Fair Value Measurements

Effective for interim and annual reporting periods beginning after December 15, 2011, the FASB revised guidance related to fair value measurements and disclosures, all of which are to be applied prospectively. The new guidance increases disclosure requirements regarding valuation methods used to determine fair value measurements categorized as Level 3, as well as the sensitivity to change of those measurements, and requires additional disclosures regarding the consideration given to highest and best use in fair value measurements of nonfinancial assets. The guidance also requires that when fair value measurements of items not carried at fair value are disclosed, the fair value measurements are to be categorized by level of the fair value hierarchy. Additionally, the guidance also clarifies or revises certain

9

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

1. Basis of Presentation (continued)

fair value measurement principles related to the valuation of financial instruments managed within a portfolio, the valuation of instruments classified as a part of shareholders’ equity, the appropriate application of the highest and best use valuation premise, and the consideration of premium and discounts in a fair value measurement. ProAssurance adopted the guidance on January 1, 2012. Adoption of this guidance had no material effect on ProAssurance’s results of operations or financial position.

2. Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level hierarchy has been established for valuing assets and liabilities based on how transparent (observable) the inputs are that are used to determine fair value, with the inputs considered most observable categorized as Level 1 and those that are the least observable categorized as Level 3. Hierarchy levels are defined as follows:

Level 1: quoted (unadjusted) market prices in active markets for identical assets and liabilities. For ProAssurance, Level 1 inputs are generally quotes for debt or equity securities actively traded in exchange or over-the-counter markets.

Level 2: market data obtained from sources independent of the reporting entity (observable inputs). For ProAssurance, Level 2 inputs generally include quoted prices in markets that are not active, quoted prices for similar assets or liabilities, and results from pricing models that use observable inputs such as interest rates and yield curves that are generally available at commonly quoted intervals.

Level 3: the reporting entity’s own assumptions about market participant assumptions based on the best information available in the circumstances (non-observable inputs). For ProAssurance, Level 3 inputs are used in situations where little or no Level 1 or 2 inputs are available or are inappropriate given the particular circumstances. Level 3 inputs include results from pricing models for which some or all of the inputs are not observable, discounted cash flow methodologies, single non-binding broker quotes and adjustments to externally quoted prices that are based on management judgment or estimation.

The following tables present information about assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011 and indicate the fair value hierarchy of the valuation techniques utilized to determine such value. For some assets, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When this is the case, the asset is categorized based on the level of the most significant input to the fair value measurement. Assessments of the significance of a particular input to the fair value measurement requires judgment and consideration of factors specific to the assets being valued.

10

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, including financial instruments for which ProAssurance has elected fair value accounting, are as follows:

	June 30, 2012
	Fair Value Measurements Using						Total
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Fixed maturities, available for sale
U.S. Treasury obligations	$	—	$	231,776	$	—	$	231,776
U.S. Agency obligations		—		71,008		—		71,008
State and municipal bonds		—		1,204,052		7,175		1,211,227
Corporate debt, multiple observable inputs		—		1,424,234		—		1,424,234
Corporate debt, limited observable inputs:
Private placement senior notes		—		—		599		599
Other corporate debt, NRSRO ratings available		—		—		8,787		8,787
Other corporate debt, NRSRO ratings not available		—		—		1,124		1,124
Residential mortgage-backed securities		—		476,937		—		476,937
Commercial mortgage-backed securities		—		74,240		—		74,240
Other asset-backed securities		—		87,547		1,795		89,342
Equity securities
Financial		54,086		—		—		54,086
Utilities/Energy		23,938		—		—		23,938
Consumer oriented		39,176		—		—		39,176
Technology		9,718		—		—		9,718
Industrial		14,555		—		—		14,555
All other		13,115		—		—		13,115
Short-term investments		134,945		32,969		—		167,914
Financial instruments carried at fair value, classified as a part of:
Investment in unconsolidated subsidiaries		—		—		24,028		24,028
Total assets	$	289,533	$	3,602,763	$	43,508	$	3,935,804
Liabilities:
2019 Note payable		—		—		14,777		14,777
Interest rate swap agreement		—		—		4,734		4,734
Total liabilities	$	—	$	—	$	19,511	$	19,511

11

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

	December 31, 2011
	Fair Value Measurements Using						Total
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Fixed maturities, available for sale
U.S. Treasury obligations	$	—	$	283,865	$	—	$	283,865
U.S. Agency obligations		—		68,104		—		68,104
State and municipal bonds		—		1,221,187		7,200		1,228,387
Corporate debt, multiple observable inputs		—		1,359,866		—		1,359,866
Corporate debt, limited observable inputs:
Private placement senior notes		—		—		612		612
Other corporate debt, NRSRO ratings available		—		—		6,310		6,310
Other corporate debt, NRSRO ratings not available		—		—		1,160		1,160
Residential mortgage-backed securities		—		542,551		—		542,551
Commercial mortgage-backed securities		—		81,188		—		81,188
Other asset-backed securities		—		93,720		—		93,720
Equity securities
Financial		25,281		—		—		25,281
Utilities/Energy		18,748		—		—		18,748
Consumer oriented		29,711		—		—		29,711
Technology		7,556		—		—		7,556
Industrial		9,185		—		—		9,185
All other		12,677		—		—		12,677
Short-term investments		111,359		8,062		—		119,421
Financial instruments carried at fair value, classified as a part of:
Investment in unconsolidated subsidiaries		—		—		23,841		23,841
Other investments		—		—		15,873		15,873
Total assets	$	214,517	$	3,658,543	$	54,996	$	3,928,056
Liabilities:
2019 Note payable		—		—		14,180		14,180
Interest rate swap agreement		—		—		4,659		4,659
Total liabilities	$	—	$	—	$	18,839	$	18,839

The fair values for securities included in the Level 2 category, with the few exceptions described below, have been developed by third party, nationally recognized pricing services. These services use complex methodologies to determine values for securities and subject the values they develop to quality control reviews. Management reviews service-provided values for reasonableness by comparing data among pricing services and to available market and trade data. Values that appear inconsistent are further reviewed for appropriateness. If a value does not appear reasonable, the valuation is discussed with the service that provided the value and would be adjusted, if necessary. No such adjustments have been necessary in 2012 or 2011.

12

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

Level 2 Valuations

Below is a summary description of the valuation methodologies primarily used by the pricing services for securities in the Level 2 category, by security type:

U.S. Treasury obligations are valued based on quoted prices for identical assets, or, in markets that are not active, quotes for similar assets, taking into consideration adjustments for variations in contractual cash flows and yields to maturity.

U.S. Agency obligations are valued using pricing models that consider current and historical market data, normal trading conventions, credit ratings, and the particular structure and characteristics of the security being valued, such as yield to maturity, redemption options, and contractual cash flows. Adjustments to model inputs or model results are included in the valuation process when necessary to reflect recent events, such as regulatory, government or corporate actions or significant economic, industry or geographic events that would affect the security’s fair value.

State and municipal bonds are valued using a series of matrices that consider credit ratings, the structure of the security, the sector in which the security falls, yields, and contractual cash flows. Valuations are further adjusted, when necessary, to reflect recent events such as significant economic or geographic events or ratings changes that would affect the security’s fair value.

Corporate debt with multiple observable inputs consists primarily of corporate bonds, but also includes a small number of bank loans. The methodology used to value Level 2 corporate bonds is the same as the methodology previously described for U.S. agency obligations. Bank loans are valued by an outside vendor based upon a widely distributed, loan-specific listing of average bid and ask prices published daily by an investment industry group. The publisher of the listing derives the averages from data received from multiple market-makers for bank loans.

Residential and commercial mortgage backed securities. Agency pass-through securities are valued by a matrix, considering the issuer type, coupon rate and longest cash flows outstanding. The matrix is developed daily based on available market information. Agency and non-agency collateralized mortgage obligations are both valued using models that consider the structure of the security, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Evaluations of Alt-A and subprime mortgages include a review of collateral performance data, which is generally updated monthly.

Other asset-backed securities are valued using models that consider the structure of the security, monthly payment information, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Spreads and prepayment speeds consider collateral type.

Short-term investments included in the Level 2 category are commercial paper and certificates of deposit maturing within one year, carried at cost which approximates the fair value of the security due to the short term to maturity.

13

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

Level 3 Valuations

Below is a summary description of the valuation processes and methodologies used as well as quantitative information regarding securities in the Level 3 category.

Level 3 Valuation Processes

• Level 3 securities are priced by the Company’s Vice President of Investments, who reports to the Chief Financial Officer.

• Level 3 valuations are computed quarterly. Prices are evaluated quarterly against prior period prices and the expected change in price.

• The Company’s Level 3 valuations are not overly sensitive to changes in the unobservable inputs used. The securities noted in the disclosure are primarily investment grade debt where comparable market inputs are commonly available for evaluating the securities in question.

Level 3 Valuation Methodologies

State and municipal bonds consists of auction rate municipal bonds valued internally using published quotes for similar securities or by using a model based on discounted cash flows using yields currently available on fixed rate securities with a similar term and collateral, adjusted to consider the effect of a floating rate and a premium for illiquidity. All are rated A- or better.

Corporate debt with limited observable inputs consists of private placement senior notes guaranteed by large regional banks and corporate bonds. Valuations are determined using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities having like terms and payment features that are of comparable credit quality. Assessments of credit quality are based on NRSRO ratings, if available, or are subjectively determined by management if not available. At June 30, 2012, the average NRSRO rating of rated securities is BBB.

Investments in unconsolidated subsidiaries and Other investments consist of limited partnership (LP) and limited liability company (LLC) interests valued using the net asset value (NAV) provided by the LP/LLC, which approximates the fair value of the interest. Such interests include the following:

	Fair Value				Unfunded Commitments
(In thousands)	June 30,       2012		December 31, 2011		June 30, 2012
Investment in unconsolidated subsidiaries:
LP primarily invested in long/short equities (1)	$	17,107	$	17,123	None
LP primarily invested in non-public equities (2)		6,921		6,718	3,500
		24,028		23,841
Other investments:
LLC primarily invested in private equity and debt (3)		—		15,873	None
	$	24,028	$	39,714

(1) The LP holds both long and short U.S. and North American equities, and targets absolute returns using a strategy designed to take advantage of event-driven market opportunities. Redemptions are allowed with a notice requirement of up to 45 days and are paid within 30 days of the redemption date, unless the redemption request is for 90% or more of the requestor’s capital balance. Redemptions at the 90% and above level will be paid at 90%, with the remainder paid after the LP’s annual audit.

(2) The LP is structured to provide capital appreciation through diversified investments in private equity, including investments in buyout, venture capital, mezzanine debt, distressed debt and other private equity-oriented LPs. Redemptions are not allowed, except by special permission of the LP. Income and capital are to be periodically distributed at the discretion of the LP over an anticipated time frame that spans 3 to 5 years.

14

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

(3) The LLC converted into a publicly traded investment fund during the second quarter of 2012. Prior to conversion, the LLC was structured to provide income through diversified investments in private equity, including mezzanine debt, distressed debt, syndicated bank loans and other private equity-oriented investments.

Liabilities (the 2019 Note payable and the Interest rate swap agreement) are valued using the present value of expected underlying cash flows of the instrument, discounted at rates available on the valuation date for similar instruments issued by entities with a similar credit standing to ProAssurance.

Quantitative Information Regarding Level 3 Valuations

Quantitative Information about Level 3 Fair Value Measurements
(in millions)	Fair Value at June 30, 2012		Valuation Technique	Unobservable Input	Range (Weighted Average)
Assets:
State and municipal bonds	$	7.2	Market Comparable Securities	Comparability Adjustment	0% - 10% (5%)
			Discounted Cash Flows	Comparability Adjustment	0% - 10% (5%)
Corporate debt with limited observable inputs	$	10.5	Market Comparable Securities	Comparability Adjustment	0% - 5% (2.5%)
			Discounted Cash Flows	Comparability Adjustment	0% - 5% (2.5%)
Liabilities:
2019 Note payable, Interest rate swap agreement	$	19.5	Discounted Cash Flows	Comparability Adjustment	0% - 5% (2.5%)

The significant unobservable inputs used in the fair value measurement of the entity’s corporate bonds are the valuations of comparable securities with similar issuer, credit quality and maturity. Changes in the availability of comparable securities could result in changes in the fair value measurements.

15

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

The following tables (the Level 3 Tables) present summary information regarding changes in the fair value of assets and liabilities measured at fair value using Level 3 inputs, including financial instruments for which ProAssurance has elected fair value accounting.

	June 30, 2012
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds		Corporate Debt			Asset- backed Securities		Investment in Unconsolidated Subsidiaries			Other Investments			Total
Balance March 31, 2012	$	7,175	$	8,689		$	—	$	24,430		$	15,742		$	56,036
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—		—			—		180			—			180
Net realized investment gains (losses)		—		—			—		—			—			—
Included in other comprehensive income		—		(28	)		—		—			—			(28	)
Purchases		—		1,937			1,795		—			—			3,732
Sales		—		(88	)		—		(582	)		—			(670	)
Transfers in		—		—			—		—			—			—
Transfers out		—		—			—		—			(15,742	)		(15,742	)
Balance June 30, 2012	$	7,175	$	10,510		$	1,795	$	24,028		$	—		$	43,508
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—	$	—		$	—	$	180		$	—		$	180

	June 30, 2012
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds			Corporate Debt			Asset- backed Securities		Investment in Unconsolidated Subsidiaries			Other Investments			Total
Balance December 31, 2011	$	7,200		$	8,082		$	—	$	23,841		$	15,873		$	54,996
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—			—			—		770			—			770
Net realized investment gains (losses)		—			—			—		—			(131	)		(131	)
Included in other comprehensive income		—			578			—		—			—			578
Purchases		—			1,937			1,795		—			—			3,732
Sales		(25	)		(87	)		—		(583	)		—			(695	)
Transfers in		—			—			—		—			—			—
Transfers out		—			—			—		—			(15,742	)		(15,742	)
Balance June 30, 2012	$	7,175		$	10,510		$	1,795	$	24,028		$	—		$	43,508
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—		$	—		$	—	$	770		$	—		$	770

16

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

	June 30, 2011
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds			Corporate Debt			Asset- backed Securities		Investment in Unconsolidated Subsidiaries			Other Investments		Total
Balance March 31, 2011	$	7,450		$	16,880		$	—	$	25,662		$	—	$	49,992
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—			—			—		(535	)		—		(535	)
Net realized investment gains (losses)		—			—			—		—			—		—
Included in other comprehensive income		—			(534	)		—		—			—		(534	)
Purchases		—			—			1,684		—			—		1,684
Sales		(125	)		(3,311	)		—		—			—		(3,436	)
Transfers in		—			—			—		—			—		—
Transfers out		—			(5,205	)		—		—			—		(5,205	)
Balance June 30, 2011	$	7,325		$	7,830		$	1,684	$	25,127		$	—	$	41,966
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—		$	—		$	—	$	(535	)	$	—	$	(535	)

	June 30, 2011
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds			Corporate Debt			Asset- backed Securities			Investment in Unconsolidated Subsidiaries		Other Investments		Total
Balance December 31, 2010	$	7,550		$	21,229		$	2,220		$	25,112	$	—	$	56,111
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—			—			—			15		—		15
Net realized investment gains (losses)		—			—			314			—		—		314
Included in other comprehensive income		—			(714	)		(15	)		—		—		(729	)
Purchases		—			—			1,684			—		—		1,684
Sales		(225	)		(8,505	)		(1,921	)		—		—		(10,651	)
Transfers in		—			3,447			—			—		—		3,447
Transfers out		—			(7,627	)		(598	)		—		—		(8,225	)
Balance June 30, 2011	$	7,325		$	7,830		$	1,684		$	25,127	$	—	$	41,966
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—		$	—		$	—		$	15	$	—	$	15

17

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

Transfers

There were no transfers between the Level 1 and Level 2 categories during the three and six months ended June 30, 2012 or 2011.

The transfer reported in the Level 3 Tables for the three- and six-month periods of 2012 relates to an interest in an LLC that was valued at the beginning of both periods using the NAV of the LLC. The LLC converted into a publicly traded investment fund during the second quarter of 2012. The interest in the converted fund was valued using Level 1 inputs at June 30, 2012.

The transfers shown during the three and six months ended June 30, 2011 relate to securities held for which there was little market activity for identical or nearly identical securities during the period and represent transfers to or from Level 2. Such securities are valued using multiple observable inputs when those inputs are available; otherwise the securities are valued using limited observable inputs.

	June 30, 2012
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance March 31, 2012	$	14,962		$	4,415	$	19,377
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		(99	)		319		220
Settlements		(86	)		—		(86	)
Balance June 30, 2012	$	14,777		$	4,734	$	19,511
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	(99	)	$	319	$	220

	June 30, 2012
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance December 31, 2011	$	14,180		$	4,659	$	18,839
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		769			75		844
Settlements		(172	)		—		(172	)
Balance June 30, 2012	$	14,777		$	4,734	$	19,511
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	769		$	75	$	844

18

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

	June 30, 2011
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance March 31, 2011	$	15,555		$	3,415	$	18,970
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		389			437		826
Settlements		(81	)		—		(81	)
Balance June 30, 2011	$	15,863		$	3,852	$	19,715
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	389		$	437	$	826
	June 30, 2011
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance December 31, 2010	$	15,616		$	3,658	$	19,274
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		408			194		602
Settlements		(161	)		—		(161	)
Balance June 30, 2011	$	15,863		$	3,852	$	19,715
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	408		$	194	$	602

Fair Value Option Elections

The 2019 Note Payable (the Note) and a related interest rate swap agreement (the Swap) are measured at fair value on a recurring basis, with changes in the fair value of each liability recorded in net realized gains (losses). ProAssurance assumed both liabilities as part of a previous acquisition. The fair value option was elected for the Note and the Swap because valuation at fair value better reflects the economics of the related liabilities and eliminates the inconsistency that would otherwise result from carrying the Note on an amortized cost basis and the Swap at fair value. As discussed in Note 8, ProAssurance repaid both the Note and the Swap in July 2012.

19

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

2. Fair Value Measurement (continued)

Financial Instruments Not Measured At Fair Value

The following table provides the estimated fair value of our financial instruments that are not carried at fair value. All fair values provided fall within the Level 3 fair value category.

	June 30, 2012				December 31, 2011
(In thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets:
Other Investments	$	21,842	$	28,568	$	22,351	$	28,226
Investment in Unconsolidated Subsidiaries		89,314		99,279		87,483		96,443
BOLI		53,571		53,571		52,651		52,651
Other Assets		10,906		10,850		9,636		9,636
Financial liabilities:
Trust Preferred Securities	$	22,992	$	22,992	$	22,992	$	22,992
Surplus Notes due May 2034		12,000		12,000		12,000		12,000
Note Payable due February 2012		—		—		515		519
Other Liabilities		14,224		14,110		15,076		14,946

Other Investments listed in the table above include interests in certain investment fund LPs/LLCs accounted for using the cost method, investments in Federal Home Loan Bank (FHLB) common stock carried at cost, and an annuity investment carried at amortized cost. The estimated fair value of the LP/LLC interests is based on the NAV provided by the LP/LLC managers. The estimated fair value of the FHLB common stock is based on the amount ProAssurance would receive if its membership were cancelled, as the membership cannot be sold. The fair value of the annuity is the present value of the expected future cash flows discounted using a rate available in active markets for similarly structured instruments.

Investment in Unconsolidated Subsidiaries consists of investments in tax credit partnerships and a non-controlling interest in a limited liability company. Fair values of investments in tax credit partnerships are based on the present value of the cash flows expected to be generated by the partnerships discounted at rates for investments with similar risk structures and repayment periods. The fair value of the LLC interest is estimated as the proceeds ProAssurance would receive upon liquidation of the LLC.

The fair value of the BOLI is the cash surrender value associated with the policies on the valuation date.

Other Assets and Other Liabilities primarily consist of related investment assets and liabilities associated with funded deferred compensation agreements. Other Liabilities also includes certain contractual liabilities related to prior business combinations. Fair values of the funded deferred compensation assets and liabilities are based on the NAVs of the underlying securities. The fair values of the business combination liabilities are based on the present value of the expected cash flows, discounted at ProAssurance’s assumed incremental borrowing rate on the valuation date for unsecured liabilities with similar repayment structures.

The fair value of the long-term debt is the present value of expected underlying cash flows of the debt, discounted at rates available on the valuation date for similar debt issued by entities with a similar credit standing to ProAssurance or, if issued by an insurance subsidiary, the subsidiary issuing the debt.

20

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

3. Investments

The amortized cost and estimated fair value of available-for-sale fixed maturities and equity securities are as follows:

	June 30, 2012
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed maturities
U.S. Treasury obligations	$	216,909	$	14,884	$	(17	)	$	231,776
U.S. Agency obligations		65,635		5,386		(13	)		71,008
State and municipal bonds		1,126,525		84,871		(169	)		1,211,227
Corporate debt		1,356,759		80,898		(2,913	)		1,434,744
Residential mortgage-backed securities		451,226		27,688		(1,977	)*		476,937
Commercial mortgage-backed securities		68,707		5,591		(58	)		74,240
Other asset-backed securities		88,043		1,302		(3	)		89,342
	$	3,373,804	$	220,620	$	(5,150	)	$	3,589,274
	December 31, 2011
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed maturities
U.S. Treasury obligations	$	267,120	$	16,748	$	(3	)	$	283,865
U.S. Agency obligations		62,520		5,584		—			68,104
State and municipal bonds		1,145,025		83,568		(206	)		1,228,387
Corporate debt		1,307,504		68,105		(7,661	)		1,367,948
Residential mortgage-backed securities		514,412		30,270		(2,131	)*		542,551
Commercial mortgage-backed securities		76,366		4,881		(59	)		81,188
Other asset-backed securities		92,773		978		(31	)		93,720
		3,465,720		210,134		(10,091	)		3,665,763
Equity securities		6		19		—			25
	$	3,465,726	$	210,153	$	(10,091	)	$	3,665,788

* Includes other-than-temporary impairments recognized in accumulated other comprehensive income of $3.1 million at June 30, 2012 and $3.3 million at December 31, 2011.

21

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

3. Investments (continued)

The recorded cost basis and estimated fair value of available-for-sale fixed maturities at June 30, 2012, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. ProAssurance uses the call date as the contractual maturity for pre-refunded state and municipal bonds which are 100% backed by U.S. Treasury obligations.

(In thousands)	Amortized Cost		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total Fair Value
Fixed maturities, available for sale
U.S. Treasury obligations	$	216,909	$	35,562	$	118,492	$	73,654	$	4,068	$	231,776
U.S. Agency obligations		65,635		5,700		52,293		12,758		257		71,008
State and municipal bonds		1,126,525		29,760		371,190		541,666		268,611		1,211,227
Corporate debt		1,356,759		74,089		685,847		633,546		41,262		1,434,744
Residential mortgage-backed securities		451,226										476,937
Commercial mortgage-backed securities		68,707										74,240
Other asset-backed securities		88,043										89,342
	$	3,373,804									$	3,589,274

Excluding investments in bonds and notes of the U.S. Government, a U.S. Government agency or pre-refunded state and municipal bonds which are 100% backed by U.S. Treasury obligations, no investment in any entity or its affiliates exceeds 10% of shareholders’ equity at June 30, 2012.

At June 30, 2012, ProAssurance has available-for-sale securities with a fair value of $21.8 million on deposit with various state insurance departments to meet regulatory requirements. ProAssurance also has available-for-sale securities with a fair value of $25.4 million that are pledged as collateral security for the 2019 Note Payable (see Note 8).

Business Owned Life Insurance (BOLI)

ProAssurance holds BOLI policies on management employees that are carried at the current cash surrender value of the policies (original cost $35 million). The primary purpose of the program is to offset future employee benefit expenses through earnings on the cash value of the policies. ProAssurance is the owner and principal beneficiary of these policies.

Other Investments

ProAssurance has Other Investments comprised of the following:

(In millions)	June 30,     2012		December 31, 2011
Investment in LLC, at NAV	$	—	$	15.9
Investments in LPs/LLCs, at cost		15.9		16.2
FHLB capital stock, at cost		4.3		4.4
Other, principally an annuity, at amortized cost		1.6		1.7
	$	21.8	$	38.2

FHLB capital stock is not marketable, but may be liquidated by terminating membership in the FHLB. The liquidation process can take up to five years.

22

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

3. Investments (continued)

Unconsolidated Subsidiaries

ProAssurance holds investments in unconsolidated subsidiaries, accounted for under the equity method. The investments include the following:

	Carrying Value				Unfunded Commitments June 30, 2012		Percentage Ownership June 30, 2012
(In millions)	June 30,     2012		December 31, 2011
Investment LPs/LLCs:
Tax credit partnerships	$	89.3	$	86.8	$	32.7	<20%
Long/Short equity fund		17.1		17.1		—	<20%
Non-public equity fund		6.9		6.7		3.5	<20%
Business LLC		—		0.7		—	See below
	$	113.3	$	111.3	$	36.2

Tax credit partnerships interests held by ProAssurance generate investment returns by providing tax benefits to fund investors in the form of project operating losses and tax credits. The related properties are principally low income housing projects.

The Long/Short equity fund LP targets absolute returns using a strategy designed to take advantage of event-driven market opportunities.

The Non-public equity fund LP holds diversified private equities and is structured to provide capital appreciation.

The Business LLC interest is a convertible preferred interest in a service-related business that began business operations in 2011. The preferred interest can be converted into a non-controlling common interest in May 2015, but conversion is not required. As of June 30, 2012 the carrying value of the interest is zero due to the recognition of losses incurred to-date by the LLC.

Investments Held in a Loss Position

The following tables provide summarized information with respect to investments held in an unrealized loss position at June 30, 2012 and December 31, 2011, including the length of time the investment has been held in a continuous unrealized loss position.

	June 30, 2012
	Total					Less than 12 months					More than 12 months
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Loss			Value		Loss			Value		Loss
Fixed maturities, available for sale
U.S. Treasury obligations	$	6,763	$	(17	)	$	6,763	$	(17	)	$	—	$	—
U.S. Agency obligations		2,975		(13	)		2,975		(13	)		—		—
State and municipal bonds		20,884		(169	)		18,715		(108	)		2,169		(61	)
Corporate debt		121,495		(2,913	)		98,390		(1,770	)		23,105		(1,143	)
Residential mortgage-backed securities		40,159		(1,977	)		29,651		(738	)		10,508		(1,239	)
Commercial mortgage-backed securities		1,113		(58	)		—		—			1,113		(58	)
Other asset-backed securities		4,836		(3	)		4,765		(3	)		71		—
	$	198,225	$	(5,150	)	$	161,259	$	(2,649	)	$	36,966	$	(2,501	)
Other investments
Investments in LPs/LLCs carried at cost	$	5,656	$	(875	)	$	4,928	$	(663	)	$	728	$	(212	)

23

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

3. Investments (continued)

	December 31, 2011
	Total					Less than 12 months					More than 12 months
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Loss			Value		Loss			Value		Loss
Fixed maturities, available for sale
U.S. Treasury obligations	$	8,379	$	(3	)	$	8,379	$	(3	)	$	—	$	—
State and municipal bonds		9,743		(206	)		7,143		(10	)		2,600		(196	)
Corporate debt		205,605		(7,661	)		194,057		(6,691	)		11,548		(970	)
Residential mortgage-backed securities		49,525		(2,131	)		38,146		(488	)		11,379		(1,643	)
Commercial mortgage-backed securities		4,086		(59	)		3,143		(2	)		943		(57	)
Other asset-backed securities		19,031		(31	)		19,031		(31	)		—		—
	$	296,369	$	(10,091	)	$	269,899	$	(7,225	)	$	26,470	$	(2,866	)
Other investments
Investments in LPs/LLCs carried at cost	$	4,198	$	(984	)	$	3,815	$	(856	)	$	383	$	(128	)

As of June 30, 2012, there are 179 debt securities (6.9% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 163 issuers. The single greatest unrealized loss position is approximately $0.8 million; the second greatest unrealized loss position is approximately $0.5 million. The securities were evaluated for impairment as of June 30, 2012.

As of December 31, 2011, there were 251 debt securities (9.6% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 224 issuers. The single greatest unrealized loss position approximated $1.2 million; the second greatest unrealized loss position approximated $1.0 million. The securities were evaluated for impairment as of December 31, 2011.

Each quarter, ProAssurance performs a detailed analysis for the purpose of assessing whether any of the securities it holds in an unrealized loss position have suffered an other-than-temporary impairment in value. A detailed discussion of the factors considered in the assessment is included in Note 1 of the Notes to Consolidated Financial Statements included in ProAssurance’s December 31, 2011 Form 10-K.

At June 30, 2012, fixed maturity securities held in an unrealized loss position, excluding asset-backed securities, have paid all scheduled contractual payments and are expected to continue doing so. Expected future cash flows of asset-backed securities held in an unrealized loss position equaled or exceeded the current amortized cost basis of the security; such future cash flows were estimated using the most recently available six-month historical performance data for the collateral (loans) underlying the security or, if historical data was not available, sector based assumptions.

Net Investment Income

Net investment income by investment category is as follows:

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Fixed maturities	$	34,093		$	36,682		$	67,363		$	72,634
Equities		1,608			186			2,649			416
Short-term investments		38			17			57			73
Other invested assets		39			575			441			1,564
Business owned life insurance		461			472			918			936
		36,239			37,932			71,428			75,623
Investment expenses		(1,729	)		(1,635	)		(3,425	)		(3,166	)
Net investment income	$	34,510		$	36,297		$	68,003		$	72,457

24

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

3. Investments (continued)

Net Realized Investment Gains (Losses)

Net realized investment gains (losses) are comprised of the following:

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Total other-than-temporary impairment losses:
Residential mortgage-backed securities	$	(218	)	$	(319	)	$	(463	)	$	(769	)
Corporate debt		—			—			(830	)		—
Other investments		—			(746	)		(131	)		(2,133	)
Portion recognized in (reclassified from) Other Comprehensive Income:
Residential mortgage-backed securities		(201	)		(113	)		(201	)		(681	)
Net impairment losses recognized in earnings		(419	)		(1,178	)		(1,625	)		(3,583	)
Gross realized gains, available-for-sale securities		2,262			5,664			6,150			10,292
Gross realized (losses), available-for-sale securities		(89	)		(1,113	)		(183	)		(1,357	)
Net realized gains (losses), trading securities		(50	)		223			727			2,915
Change in unrealized holding gains (losses), trading securities		(3,032	)		(570	)		4,905			(1,341	)
Decrease (increase) in the fair value of liabilities carried at fair value		(220	)		(826	)		(844	)		(602	)
Net realized investment gains (losses)	$	(1,548	)	$	2,200		$	9,130		$	6,324

ProAssurance recognized credit-related impairments in earnings of $0.4 million and $0.7 million during the 2012 three- and six-month periods, respectively, and $0.4 million and $1.5 million for the same respective periods of 2011, related to certain residential mortgage-backed securities because the expected future cash flows from the securities were less than the carrying value.

ProAssurance recognized credit-related impairments of $0.8 million related to a corporate debt security during the first quarter of 2012 due to deterioration of the credit standing of the issuer.

ProAssurance recognized impairments of $0.1 million during the first quarter of 2012 and $0.7 million and $2.1 million for the 2011 three- and six-month periods, respectively, related to an interest in an LLC accounted for using the cost method. The LLC announced in 2011 a plan to convert to a publicly traded investment fund, and OTTI was recognized in subsequent periods in order to carry the interest at the NAV reported by the fund. The conversion occurred during the second quarter of 2012.

The following table presents a roll forward of cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the other-than-temporary impairment has been recorded in Other Comprehensive Income.

	Three Months Ended June 30				Six Months Ended  June 30
(In thousands)	2012		2011		2012		2011
Balance beginning of period	$	5,937	$	5,334	$	5,870	$	4,446
Additional credit losses recognized during the period, related to securities for which OTTI has been previously recognized		201		394		268		1,282
Balance June 30	$	6,138	$	5,728	$	6,138	$	5,728

Other information regarding sales and purchases of available-for-sale securities are as follows:

	Three Months Ended June 30				Six Months Ended  June 30
(In millions)	2012		2011		2012		2011
Proceeds from sales (exclusive of maturities and paydowns)	$	99.8	$	141.4	$	305.9	$	310.9
Purchases	$	99.5	$	200.7	$	347.1	$	452.7

25

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

4. Income Taxes

ProAssurance estimates its annual effective tax rate at the end of each quarterly reporting period which is used to record the provision for income taxes in the interim financial statements. The provision for income taxes is different from that which would be obtained by applying the statutory Federal income tax rate to income before taxes primarily because a portion of ProAssurance’s investment income is tax-exempt.

The Internal Revenue Service has begun but has not completed an examination of the 2009 and 2010 returns. Except for the 2006 tax year, the statutes of limitation are closed for all years prior to 2008. The statute for the 2006 tax year has been extended from May 31, 2012 to September 15, 2013.

ProAssurance’s liability for unrecognized tax benefits, exclusive of accrued interest, is $23.7 million at June 30, 2012 and $18.6 million at December 31, 2011 with the increase in the provision being entirely attributable to unrecognized benefits associated with tax positions taken in a prior year. Unrecognized tax benefits at June 30, 2012 and December 31, 2011, if recognized, would not affect the effective tax rate but would accelerate the payment of tax. As with any uncertain tax position, there is a possibility that the ultimate deduction recognized could differ from the provision ProAssurance has established.

5. Deferred Policy Acquisition Costs

Policy acquisition costs, most significantly commissions, premium taxes, and underwriting salaries, that are primarily and directly related to the successful production of new and renewal insurance contracts are capitalized as policy acquisition costs and amortized to expense as the related premium revenues are earned.

As of January 1, 2012, policy acquisition costs related to unsuccessful contracts are expensed immediately as a result of the revised FASB guidance as discussed in Note 1. ProAssurance adopted the revised guidance on a prospective basis. Under prior guidance, policy acquisition costs capitalized during the three and six months ended June 30, 2012 would have been $13.2 million and $30.3 million, respectively, as compared to $12.1 million and $28.1 million, respectively, capitalized under the current guidance.

Amortization of deferred policy acquisition costs is $14.5 million and $29.6 million for the three and six months ended June 30, 2012, respectively, and $14.6 million and $29.0 million for the three and six months ended June 30, 2011, respectively.

26

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

6. Reserve for Losses and Loss Adjustment Expenses

The reserve for losses is established based on estimates of individual claims and actuarially determined estimates of future losses based on ProAssurance’s past loss experience, available industry data and projections as to future claims frequency, severity, inflationary trends and settlement patterns. Estimating reserves, and particularly liability reserves, is a complex process. Claims may be resolved over an extended period of time, often five years or more, and may be subject to litigation. Estimating losses for liability claims requires ProAssurance to make and revise judgments and assessments regarding multiple uncertainties over an extended period of time. As a result, reserve estimates may vary significantly from the eventual outcome. The assumptions used in establishing ProAssurance’s reserves are regularly reviewed and updated by management as new data becomes available. Changes to estimates of previously established reserves are included in earnings in the period in which the estimate is changed.

ProAssurance recognized favorable net loss development of $60.1 million and $107.5 million related to previously established reserves for the three and six months ended June 30, 2012, respectively. The favorable net loss development reflects reductions in the Company’s estimates of claims severity, principally for the 2004 through 2009 accident years.

For the three and six months ended June 30, 2011, ProAssurance recognized favorable net loss development of $50.2 million and $90.2 million, respectively, to reflect reductions in estimated claim severity principally for accident years 2004 through 2009.

7. Commitments and Contingencies

ProAssurance is involved in various legal actions related to insurance policies and claims handling including, but not limited to, claims asserted by policyholders. These types of legal actions arise in the Company’s ordinary course of business and, in accordance with GAAP for insurance entities, are considered as a part of the Company’s loss reserving process, which is described in detail under “Accounting Policies – Losses and Loss Adjustment Expenses” in Note 1 of the Notes to the Consolidated Financial Statements in ProAssurance’s 2011 Form 10-K.

ProAssurance has commitments to fund approximately $33 million in capital contributions to tax credit partnerships as of June 30, 2012. Funding of the commitments is primarily expected to occur in 2012 and 2013; additional information regarding tax credit partnership investments is provided in Note 3. ProAssurance has also entered into agreements with several LPs/LLCs, totaling approximately $51 million at June 30, 2012, to be funded within the next five years as requested by the partnership.

On June 26, 2012, ProAssurance entered into an agreement to acquire Medmarc Mutual Insurance Company (Medmarc) through a sponsored demutualization which will provide eligible Medmarc members with cash payments of $146.2 million and future policy credits of $7.5 million. The transaction is subject to customary conditions, including regulatory and Medmarc eligible members’ approval. The transaction is expected to close in early January 2013.

27

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

8. Long-term Debt

ProAssurance’s outstanding long-term debt consists of the following:

	(In thousands)
	June 30 2012		December 31 2011
Trust Preferred Securities due 2034, unsecured. Bears interest at a variable rate of LIBOR plus 3.85%, adjusted quarterly, set at 4.3% at June 30, 2012.	$	22,992	$	22,992
Surplus Notes due May 2034, unsecured. Bears interest at a variable rate of LIBOR plus 3.85%, adjusted quarterly, set at 4.3% at June 30, 2012.		12,000		12,000
Note Payable due February 2019 (the 2019 Note Payable), carried at fair value, principal of $16.9 million at June 30, 2012 and $17.1 million at December 31, 2011. Secured by available-for-sale securities having a fair value at June 30, 2012 of approximately $25.4 million. Bears interest at a variable rate of LIBOR plus 0.7%. See information below regarding the associated interest rate swap.		14,777		14,180
Note Payable due February 2012. Note was repaid on due date.		—		515
Revolving Credit Agreement, expires in 2014, maximum outstanding borrowing of $150 million, interest rate set at the time funds are borrowed. No borrowings have occurred during the periods shown.		—		—
	$	49,769	$	49,687

Prior to June 30, 2012, ProAssurance obtained required insurance department approvals and notified trustees of its intention to fully redeem the Trust Preferred Securities due 2034 and Surplus Notes due May 2034, for $35.0 million in cash, in August 2012. No gain or loss will be recognized related to the redemption.

2019 Note Payable and Related Interest Rate Swap

As discussed in Note 2 to the Condensed Consolidated Financial Statements, the 2019 Note Payable (the Note) is carried at fair value at both June 30, 2012 and December 31, 2011. Prior to July 2012, see below, a related interest rate swap (the Swap) effectively fixed the interest rate related to the Note at 6.6% and required a monthly exchange of the difference between the fixed Swap rate and the stated variable rate of the Note, referenced against the then outstanding principal balance of the Note. The liability associated with the Swap is carried at fair value at June 30, 2012 and at December 31, 2011, $4.7 million at each date, and is classified as a part of Other Liabilities

In July 2012, ProAssurance repaid without penalty the outstanding principal on the 2019 Note Payable of $16.9 million and terminated the Swap for a cash settlement of $5.1 million. An aggregate loss on the extinguishment of the Note and the Swap of approximately $2.5 million will be recognized in the third quarter of 2012.

Covenant Compliance

ProAssurance is currently in compliance with all covenants.

Additional Information

For additional information regarding the terms of ProAssurance’s outstanding long-term debt, see Note 10 of the Notes to the Consolidated Financial Statements included in ProAssurance’s December 31, 2011 Form 10-K.

28

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

9. Shareholders’ Equity

At June 30, 2012 and December 31, 2011, ProAssurance had 100 million shares of authorized common stock and 50 million shares of authorized preferred stock. The Board of Directors of ProAssurance Corporation (the Board) has the authority to determine provisions for the issuance of preferred shares, including the number of shares to be issued, the designations, powers, preferences and rights, and the qualifications, limitations or restrictions of such shares. To date, the Board has not approved the issuance of preferred stock.

During 2011 the Board of Directors of ProAssurance instituted a cash dividend policy. ProAssurance declared cash dividends of $0.25 per share in both the first and second quarters of 2012; the first quarter dividend totaled $7.7 million and was paid in April 2012; the second quarter dividend totaled $7.7 million and was paid in July 2012. The liability for unpaid dividends is included in Other Liabilities. Any decision to pay future cash dividends is subject to the Board’s final determination after a comprehensive review of financial performance, future expectations and other factors deemed relevant by the Board.

At June 30, 2012, approximately $153.5 million of Board authorizations for the repayment of debt or repurchase of common shares remain available for use, of which $16.9 million was used in July 2012 to repay the 2019 Note Payable. During the 2012 second quarter, Board authorizations totaling $35.0 million were used to notify debt trustees of ProAssurance’s intention to repay debt in August 2012 (see Note 8 for further discussion).

ProAssurance did not repurchase any common shares during the three and six months ended June 30, 2012. ProAssurance repurchased approximately 259,000 common shares, having a total cost of $15.4 million, during the six months ended June 30, 2011, including approximately 6,900 forfeited employer match shares (cost basis of $0.4 million) reacquired due to the termination of the ProAssurance Corporation Stock Ownership Plan.

Share-based compensation expense is $2.9 million and $5.1 million for the three and six months ended June 30, 2012, respectively, and $2.0 million and $3.7 million for the three and six months ended June 30, 2011, respectively. Related tax benefits are $1.0 million and $1.8 million for the three and six months ended June 30, 2012, respectively, and $0.7 million and $1.3 million for the three and six months ended June 30, 2011, respectively.

ProAssurance awarded approximately 25,000 restricted share units and 100,000 (target) performance share units to employees in February 2012. The fair value of each unit awarded was estimated at $89.28, equal to the market value of a ProAssurance common share on the date of grant. All awards are charged to expense as an increase to equity over the service period (generally the vesting period) associated with the award. Restricted share units and performance share units vest in their entirety at the end of a three-year period following the grant date based on a continuous service requirement and, for performance share units, achievement of a performance objective. Partial vesting is permitted for retirees. A ProAssurance common share is issued for each unit once vesting requirements are met, except that units sufficient to satisfy required tax withholdings are paid in cash. The number of common shares issued for performance share units varies from 75% to 125% of base awards depending upon the degree to which stated performance objectives are achieved. ProAssurance issued approximately 17,000 and 50,000 common shares, respectively, to employees in February 2012 related to restricted share units and performance share units granted in 2009. Shares issued for performance share units were awarded at the maximum level (125%).

ProAssurance issued approximately 19,000 and 20,000 common shares to employees in February 2012 and February 2011, respectively, as bonus compensation, as approved by the Compensation Committee of the Board. The shares issued were valued at fair value (the market price of a ProAssurance common share on the date of award).

29

ProAssurance Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

9. Shareholders’ Equity (continued)

Other Comprehensive Income

For all periods presented, other comprehensive income is comprised of unrealized gains and losses, including non-credit impairment losses, arising during the period related to available-for-sale securities less reclassification adjustments for gains (losses) from available-for-sale securities recognized in current period net income (net of tax). Accumulated other comprehensive income is comprised entirely of unrealized gains and losses from available for sale securities, net of tax.

Reclassification adjustments related to available-for-sale securities for the three and six months ended June 30, 2012 and 2011 are as follows:

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Net realized investment gains (losses) included in the calculation of net income	$	1,754		$	4,119		$	4,473		$	7,485
Tax effect (at 35%)		(614	)		(1,442	)		(1,566	)		(2,620	)
Net realized investment gains (losses) reclassified from other comprehensive income	$	1,140		$	2,677		$	2,907		$	4,865

10. Variable Interest Entities

ProAssurance holds passive interests in a number of LPs/LLCs that are considered to be Variable Interest Entities (VIEs) under GAAP guidance. ProAssurance has not consolidated these entities because it has either very limited or no power to control the activities that most significantly affect the economic performance of these entities and is not the primary beneficiary of any of the entities. ProAssurance’s involvement with each entity is limited to its direct ownership interest in the entity. ProAssurance has no arrangements or agreements of significance with any of the entities to provide other financial support to or on behalf of the entity. At June 30, 2012 ProAssurance’s maximum loss exposure relative to these investments is limited to the carrying value of ProAssurance’s investment in the entity.

The entities consist of 1) investments in LPs/LLCs formed for the purpose of achieving diversified equity and debt returns and 2) a limited liability interest in a development stage business operation classified as Other Investments (carrying value of $15.9 million and $32.1 million at June 30, 2012 and December 31, 2011, respectively) and Investment in Unconsolidated Subsidiaries (carrying value of $24.0 million and $24.5 million at June 30, 2012 and December 31, 2011, respectively).

11. Earnings Per Share

Diluted weighted average shares is calculated as basic weighted average shares plus the effect, calculated using the treasury stock method, of assuming that dilutive stock options have been exercised and that performance share awards and restricted stock units have vested.

Stock options are not dilutive when the option exercise price exceeds the average price of a common share during the period or when the result from assuming an option is exercised is a net decrease to outstanding shares. All outstanding options were dilutive for the three- and six-month periods ended June 30, 2012 and 2011.

30

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes to those statements which accompany this report as well as our 2011 Form 10-K. A glossary of insurance terms and phrases is available on the investor section of our website. Throughout the discussion, references to ProAssurance, “PRA”, “Company”, “we”, “us” and “our” refer to ProAssurance Corporation and its consolidated subsidiaries. The discussion contains certain forward-looking information that involves risks and uncertainties. As discussed under “Forward-Looking Statements”, our actual financial condition and operating results could differ significantly from these forward-looking statements.

Critical Accounting Estimates

Our Condensed Consolidated Financial Statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP). Preparation of these financial statements requires us to make estimates and assumptions that affect the amounts we report on those statements. We evaluate these estimates and assumptions on an ongoing basis based on current and historical developments, market conditions, industry trends and other information that we believe to be reasonable under the circumstances. There can be no assurance that actual results will conform to our estimates and assumptions; reported results of operations may be materially affected by changes in these estimates and assumptions.

Management considers the following accounting estimates to be critical because they involve significant judgment by management and the effect of those judgments could result in a material effect on our financial statements.

Reserve for Losses and Loss Adjustment Expenses

The largest component of our liabilities is our reserve for losses and loss adjustment expenses (reserve for losses or reserve), and the largest component of expense for our operations is incurred losses and loss adjustment expenses (also referred to as “loss and loss adjustment expenses”, “incurred losses”, “losses incurred” and “losses”). Incurred losses reported in any period reflect our estimate of losses incurred related to the premiums earned in that period as well as any changes to our estimates of the reserve established for losses of prior periods.

The estimation of professional liability losses is inherently difficult and is the subject of significant judgment on the part of management. Loss costs, even for claims with similar characteristics, can vary significantly depending upon many factors, including but not limited to: the nature of the claim and the personal situation of the claimant or the claimant’s family, the outcome of jury trials, the legislative and judicial climate where the insured event occurred, general economic conditions and, for Medical Professional Liability (MPL) claims, the trend of healthcare costs. Professional liability claims are typically resolved over an extended period of time, often five years or more. The combination of changing conditions and the extended time required for claim resolution results in a loss cost estimation process that requires actuarial skill and the application of significant judgment, and such estimates require periodic revision.

Our reserves are established by management after taking into consideration a variety of factors including premium rates, claims frequency, historical paid and incurred loss development trends, the effect of inflation, general economic trends, the legal and political environment and the conclusions reached by our internal and consulting actuaries. We update and review the data underlying the estimation of our reserve for losses each reporting period and make adjustments to loss estimation assumptions that we believe best reflect emerging data. Both our internal and consulting actuaries perform an in-depth review of our reserve for losses on at least a semi-annual basis using the loss and exposure data of our insurance subsidiaries. We engage consulting actuaries to review our data and provide us with their observations regarding our data and the adequacy of our established reserve, believing that the consulting actuaries provide an independent view of our loss data as well as a broader perspective on industry loss trends.

31

Initial Reserve Estimates

In establishing our initial reserves for a given accident year, due to the lack of available data for both open and closed claims for that accident year, we rely heavily on the loss assumptions that are used in our pricing models. Loss assumptions used in our pricing models are based on our analysis of our actual and projected claims data, adjusted for perceived differences between the current legal and economic environment and that of the periods associated with the claims data. In recent years, our analysis of claims has indicated reductions in average loss costs, and we have reflected those reductions in our pricing loss assumptions. Our average pricing for 2012 is approximately 16 percentage points below our average pricing in 2006 (exclusive of our podiatry and chiropractic lines acquired in 2009), principally reflecting expected reductions in loss costs.

Historically, and at present, in establishing our initial reserves we utilize loss ratios that are approximately 8 to 10 percentage points above the loss ratios incorporated within the pricing targets for that accident year. We believe this reflects expected loss costs but also considers the inherent risks associated with our rate development process and the historic volatility of professional liability losses (the industry has experienced accident year loss ratios as high as 163% and as low as 57% over the past 30 years) and produces a reasonable best estimate of the reserves required to cover actual ultimate unpaid losses. In the current environment this equates to an initial loss ratio of approximately 85% on our physician business as compared to an average loss ratio of approximately 75% assumed in our pricing.

The Effect of Changing Severity

Severity is defined as the average cost of resolving claims. The severity trend assumption (the expected annual percentage change in severity) is a key assumption for our pricing models. Our current pricing model assumes an average severity trend of 3% to 4% in most states and lines of business. If the severity trend were to be higher by 1 percentage point, the impact would be an increase in our expected loss ratio of 3.2 percentage points. An increase in the severity trend of 3 percentage points would result in a 10.1 percentage point increase in our expected loss ratio. Due to the long-tailed nature of MPL claims and the previously discussed historical volatility of loss costs, selection of a severity trend assumption is a subjective process that is inherently likely to prove inaccurate over time. Given this long tail and the previously discussed historical volatility of loss costs, we are generally cautious in making changes to our severity assumptions and actuarial estimations.

Recent changes in frequency have also complicated the selection of an appropriate severity trend. Both our internal and consulting actuaries have observed fluctuating but generally lower claims frequency that cannot be attributed to any single factor. We believe that much of the reduction in the number of claims is the result of a decline in the filing of frivolous lawsuits that have historically been dismissed or otherwise result in no payment of indemnity on the part of our insureds. With fewer frivolous claims being filed we expect that the claims that are filed have the potential for greater average losses, or greater severity. As a result, we cannot be certain as to the impact this decline will ultimately have on the average cost of claims. Based on a weighted average of payments, resolution of 85% of claims for a given accident year requires more than eight years (based on a weighted average of payments). Due to this long tail, it will be several years before we are able to determine if the decline in frequency has indeed resulted in a related increase in severity.

Additionally, given the length of time required for resolution of our claims, we are cautious in giving full credibility to claims data indicating emerging trends. Numerical data both within our own information and in the broader MPL marketplace may in the short term indicate development of a trend, whether positive or negative, that mitigates or reverses over the longer term as claims mature and additional data becomes available. Our current severity trend assumption gives recognition to both the indications from our recent claims data and the known volatility associated with the long tail claims environment in which we operate.

32

Loss Development

We re-evaluate our previously established reserves each period based on our most recently available claims data and available industry trend information. Changes to previously established reserve estimates are recognized in the current period if management’s best estimate of ultimate losses differs from the estimate previously established. While management considers a variety of variables in determining its best estimate, in general, as claims age, our methodologies for estimating reserves give more weight to actual loss costs which, as a whole, continue to indicate that ultimate loss costs will be lower than our previous estimates. The development recognized in the first six months of both 2012 and 2011 is primarily attributable to the favorable resolution of claims during the period and an evaluation of established case reserves and paid claims data that indicates that the actual severity associated with the remaining claims will be lower than we had previously estimated. The Critical Accounting Estimates discussion in our 2011 Form 10K includes a more detailed discussion of the methodologies used to evaluate our reserves, beginning on page 30.

Reinsurance

We use insurance and reinsurance (collectively, “reinsurance”) to provide capacity to write larger limits of liability, to provide protection against losses in excess of policy limits, and to stabilize underwriting results in years in which higher losses occur. The purchase of reinsurance does not relieve us from the ultimate risk on our policies, but it does provide reimbursement for certain losses we pay.

We evaluate each of our ceded reinsurance contracts at inception to confirm that there is sufficient risk transfer to allow the contract to be accounted for as reinsurance under current accounting guidance. At June 30, 2012, all ceded contracts are accounted for as risk transferring contracts.

Our receivable from reinsurers on unpaid losses and loss adjustment expenses represents our estimate of the amount of our reserve for losses that will be recoverable under our reinsurance programs. We base our estimate of funds recoverable upon our expectation of ultimate losses and the portion of those losses that we estimate to be allocable to reinsurers based upon the terms of our reinsurance agreements. Our assessment of the collectability of the recorded amounts receivable from reinsurers considers the payment history of the reinsurer, publicly available financial and rating agency data, our interpretation of the underlying contracts and policies, and responses by reinsurers.

Given the uncertainty inherent in our estimates of losses and related amounts recoverable from reinsurers, these estimates may vary significantly from the ultimate outcome.

Under the terms of certain of our reinsurance agreements, the amount of premium that we cede to our reinsurers is based in part on the losses we recover under the agreements. Therefore we make an estimate of premiums ceded under these reinsurance agreements subject to certain maximums and minimums.

Any adjustments to our estimates of either balances recoverable under our reinsurance agreements or premiums owed under our agreements are reflected in then-current operations. Due to the size of our reinsurance balances, an adjustment to these estimates could have a material effect on our results of operations for the period in which the adjustment is made.

We make a determination of the amount of insurance risk we choose to retain based upon numerous factors, including our risk tolerance and the capital we have to support it, the price and availability of reinsurance, volume of business, level of experience with a particular set of claims and our analysis of the potential underwriting results. We purchase reinsurance from a number of companies to mitigate concentrations of credit risk. We utilize a reinsurance broker to assist us in the placement of our reinsurance program and in the analysis of the credit quality of our reinsurers. The determination of which reinsurers we choose to do business with is based upon an evaluation of the then-current financial strength, rating and stability of prospective reinsurers. However, the financial strength of our reinsurers and their corresponding ability to pay us may change in the future due to forces or events we cannot control or anticipate.

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We have not experienced significant collection difficulties due to the financial condition of any reinsurer as of June 30, 2012; however, periodically, reinsurers may dispute our claim for reimbursement from them based upon their interpretation of the terms of our agreements. We have established appropriate reserves for any balances that we believe may not be ultimately collected. Should future events lead us to believe that any reinsurer will not meet its obligations to us, adjustments to the amounts recoverable would be reflected in the results of current operations. Such an adjustment has the potential to be material to the results of operations in the period in which it is recorded; however, we would not expect such an adjustment to have a material effect on our capital position or our liquidity.

Investment Valuations

We record the majority of our investments at fair value as shown in the table below. The distribution of our investments based on GAAP fair value hierarchies (levels) is as follows:

	Distribution by GAAP Fair Value Hierarchy									June 30, 2012
	Level 1			Level 2			Level 3			Total Investments
Fair value		7	%		88	%		1	%		96	%
Investments not at fair value											4	%
Total Investments											100	%

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All of our fixed maturity and equity security investments are carried at fair value. Our short-term securities are carried at amortized cost, which approximates fair value.

Because of the number of securities we own and the complexity and cost of developing accurate fair values, we utilize multiple independent pricing services to assist us in establishing the fair value of individual securities. The pricing services provide fair values based on exchange traded prices, if available. If an exchange traded price is not available, the pricing services, if possible, provide a fair value that is based on multiple broker/dealer quotes or that has been developed using pricing models. Pricing models vary by asset class and utilize currently available market data for securities comparable to ours to estimate the fair value for our security. The pricing services scrutinize market data for consistency with other relevant market information before including the data in the pricing models. The pricing services disclose the types of pricing models used and the inputs used for each asset class. Determining fair values using these pricing models requires the use of judgment to identify appropriate comparable securities and to choose a valuation methodology that is appropriate for the asset class and available data.

The pricing services provide a single value per instrument quoted. We review the values provided for reasonableness each quarter by comparing market yields generated by the supplied value versus market yields observed in the market place. In addition, we compare provided information for consistency with our other pricing services, known market data and information from our own trades, considering both values and valuation trends. We also compare yields indicated by the provided values to appropriate benchmark yields and review for values that are unchanged or that reflect an unanticipated variation as compared to prior period values. We also review weekly trades versus the prices supplied by our vendors. If a supplied value appears unreasonable, we discuss the valuation in question with the pricing service and make adjustments if deemed necessary. To date, we have not adjusted any values supplied by the pricing services.

The pricing services do not provide a fair value unless an exchange traded price or multiple observable inputs are available. As a result, the pricing services may provide a fair value for a security in some periods but not others, depending upon the level of recent market activity for the security or comparable securities.

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Level 1 Investments

As of June 30, 2012, fair values for our equity and a portion of our short-term securities have been determined using exchange traded prices. There is little judgment involved when fair value is determined using an exchange traded price. In accordance with GAAP, for disclosure purposes we classify securities valued using an exchange traded price as Level 1 securities.

Level 2 Investments

With the exception of certain government bonds, most fixed income securities do not trade daily, and thus exchange traded prices are generally not available for these securities. However, market information (often referred to as observable inputs or market data, including but not limited to, last reported trade, non-binding broker quotes, bids, benchmark yield curves, issuer spreads, two sided markets, benchmark securities, offers and recent data regarding assumed prepayment speeds, cash flow and loan performance data) is available for most of our fixed income securities. We determine fair value for a large portion of our fixed income securities using available market information. In accordance with GAAP, for disclosure purposes we classify securities valued based on multiple market observable inputs as Level 2 securities.

Level 3 Investments

When a pricing service does not provide a value for one of our fixed maturity securities, management estimates fair value using either a single non-binding broker quote or pricing models that utilize market based assumptions which have limited observable inputs. The process involves significant judgment in selecting the appropriate data and modeling techniques to use in the valuation process. For disclosure purposes we classify fixed maturity securities valued using limited observable inputs as Level 3 securities.

We also classify as Level 3 our investment interests carried at fair value, based on the NAV provided to us. All investments valued in this manner are LP interests that hold debt and equity securities. Interests valued using a fund-provided NAV at June 30, 2012 total $24.0 million, or 1% of total investments, and are classified as part of our Investment in Unconsolidated Subsidiaries.

Investments Not at Fair Value

Certain of our investments, in accordance with GAAP for the type of investment, are not carried at fair value. Investments not carried at fair value have a carrying value at June 30, 2012 of approximately $164.7 million, which represents 4% of total investments, and are valued as shown in the following table. Additional information about these investments is provided in Note 2 of the Notes to Condensed Consolidated Financial Statements.

(In Millions)	Carrying Value		GAAP Measurement Method
Other investments:
Interests in LPs	$	15.9	Cost
Federal Home Loan Bank (FHLB) capital stock		4.3	Cost
Other		1.6	Cost
Total other investments	$	21.8
Investment in unconsolidated subsidiaries:
Interests in tax credit partnerships	$	89.3	Equity
Interest in a business LLC		—	Equity
Total investment in unconsolidated subsidiaries	$	89.3
Business owned life insurance	$	53.6	Cash surrender value
Total investments not at fair value	$	164.7

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Investment Impairments

We evaluate our investments on at least a quarterly basis for declines in fair value that represent OTTI. In all instances we consider an impairment to be an OTTI if we intend to sell the security or if we believe we will be required to sell the security before we fully recover the amortized cost basis of the security. Otherwise, we consider various factors in our evaluation, depending upon the type of security, as discussed below.

For debt securities, we consider whether we expect to fully recover the amortized cost basis of the security, based upon consideration of some or all of the following:

• third party research and credit rating reports;

• the current credit standing of the issuer, including credit rating downgrades;

• the extent to which the decline in fair value is attributable to credit risk specifically associated with an investment or its issuer;

• our internal assessments and those of our external portfolio managers regarding specific circumstances surrounding an investment, which can cause us to believe the investment is more or less likely to recover its value than other investments with a similar structure;

• for asset-backed securities, the origination date of the underlying loans, the remaining average life, the probability that credit performance of the underlying loans will deteriorate in the future, and our assessment of the quality of the collateral underlying the loan;

• failure of the issuer of the security to make scheduled interest or principal payments;

• any changes to the rating of the security by a rating agency;

• recoveries or additional declines in fair value subsequent to the balance sheet date; and

• our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

In assessing whether we expect to recover the cost basis of debt securities, particularly asset-backed securities, we must make a number of assumptions regarding the cash flows that we expect to receive from the security in future periods. These judgments are subjective in nature and may subsequently be proved to be inaccurate.

We evaluate our cost method interests in LPs/LLCs for OTTI by considering whether there has been a decline in fair value below the recorded value, which involves assumptions and estimates. We receive a report from each of the LPs/LLCs at least quarterly which provides us a NAV for our interest in the LP/LLC. The NAV is based on the fair values of securities held by the LP/LLC as determined by the LP/LLC manager. We consider the most recent NAV provided, the performance of the LP/LLC relative to the market, the stated objectives of the LP/LLC, the cash flows expected from the LP/LLC and audited financial statements of the entity, if available, in considering whether an OTTI exists.

Our investments in tax credit partnerships are evaluated for OTTI by comparing cash flow projections of the underlying projects generating the tax credits to our recorded basis, and considering our ability to utilize the tax credits generated by the investments.

We also evaluate our holdings of FHLB securities for impairment. We consider the current capital status of the FHLB, whether the FHLB is in compliance with regulatory minimum capital requirements, and the FHLB’s most recently reported operating results.

Deferred Policy Acquisition Costs

Policy acquisition costs (primarily commissions, premium taxes and underwriting salaries) which are directly related to the successful acquisition of new and renewal premiums are capitalized as deferred policy acquisition costs and charged to expense as the related premium revenue is recognized. We evaluate the recoverability of our deferred policy acquisition costs each reporting period, and any amounts estimated to be unrecoverable are charged to expense in the current period. Beginning January 1, 2012, in order to comply with adopted Financial Accounting Standards Board (FASB) guidance, we no longer capitalize internal selling agent and underwriter salary and benefit costs that are allocated to unsuccessful insurance contracts. Adoption of this guidance had no material effect on our results of operations or financial position.

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Deferred Taxes

Deferred federal income taxes arise from the recognition of temporary differences between the basis of assets and liabilities determined for financial reporting purposes and the basis determined for income tax purposes. Our temporary differences principally relate to loss reserves, unearned premiums, deferred policy acquisition costs, unrealized investment gains (losses) and investment impairments. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be in effect when such benefits are realized. We review our deferred tax assets quarterly for impairment. If we determine that it is more likely than not that some or all of a deferred tax asset will not be realized, a valuation allowance is recorded to reduce the carrying value of the asset. In assessing the need for a valuation allowance, management is required to make certain judgments and assumptions about our future operations based on historical experience and information as of the measurement period regarding reversal of existing temporary differences, carryback capacity, future taxable income (including its capital and operating characteristics) and tax planning strategies.

Unrecognized Tax Benefits

We evaluate tax positions taken on tax returns and recognize positions in our financial statements when it is more likely than not that we will sustain the position upon resolution with a taxing authority. If recognized, the benefit is measured as the largest amount of benefit that has a greater than fifty percent probability of being realized. We review uncertain tax positions each period, considering changes in facts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law, and make adjustments as we consider necessary. Adjustments to our unrecognized tax benefits may affect our income tax expense, and settlement of uncertain tax positions may require the use of cash. At June 30, 2012, our current tax liability includes $23.7 million for unrecognized tax benefits, and $1.1 million for related accrued interest.

Goodwill

Management evaluates the carrying value of goodwill annually during the fourth quarter. If, at any time during the year, events occur or circumstances change that would more likely than not reduce the fair value below the carrying value, we also evaluate goodwill at that time. We evaluate goodwill as one reporting unit because we operate as a single operating segment and our segment components are economically similar. We estimate the fair value of our reporting unit on the evaluation date based on market capitalization and an expected premium that would be paid to acquire control of our Company (a control premium). We then perform a sensitivity analysis using a range of historical stock prices and control premiums. We concluded as of our last evaluation date, October 3, 2011, that the fair value of our reporting unit exceeded the carrying value and no adjustment to impair goodwill was necessary.

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Accounting Changes

We are not aware of any accounting changes that we have not yet adopted as of June 30, 2012 that would have a material impact on our results of operations or financial position. Note 1 of the Notes to Condensed Consolidated Financial Statements provides additional detail regarding accounting changes.

Liquidity and Capital Resources and Financial Condition

Overview

ProAssurance Corporation is a holding company and is a legal entity separate and distinct from its subsidiaries. Because the holding company has no other business operations, dividends from its operating subsidiaries represent a significant source of funds for its obligations, including debt service and dividends. At June 30, 2012, we held cash and liquid investments of approximately $371.9 million outside of our insurance subsidiaries that are available for use without regulatory approval. Our insurance subsidiaries, in aggregate, are permitted to pay dividends of approximately $269 million over the remainder of 2012 without the prior approval of state insurance regulators. However, the payment of any dividend requires prior notice to the insurance regulator in the state of domicile, and the regulator may prevent the dividend if, in its judgment, payment of the dividend would have an adverse effect on the surplus of the insurance subsidiary. During the six months ended June 30, 2012, our insurance subsidiaries have paid extraordinary dividends of $25.0 million.

Operating Activities and Related Cash Flows

The principal components of our operating cash flows are the excess of premiums collected and net investment income over losses paid and operating costs, including income taxes. Timing delays exist between the collection of premiums and the payment of losses associated with the premiums. Premiums are generally collected within the twelve-month period after the policy is written, while our claim payments are generally paid over a more extended period of time. Likewise, timing delays exist between the payment of claims and the collection of any associated reinsurance recoveries.

Our operating activities provided positive cash flows of approximately $32.7 million and $53.1 million for the six months ended June 30, 2012 and 2011, respectively. Operating cash flows for 2012 and 2011 compare as follows:

(In millions)	Operating Cash Flow
Cash provided by operating activities for the six months ended June 30, 2011	$	53
Increase (decrease) in operating cash flows:
Increase in premium receipts (1)		6
Decrease in payments to reinsurers (2)		4
Increase in losses paid (3)		(28	)
Increase in deposit contracts (4)		5
Decrease in cash received for investments (5)		(9	)
Decrease in cash paid for other expenses (6)		10
Increase in Federal and state income tax payments (7)		(10	)
Other amounts not individually significant, net		2
Cash provided by operating activities for the six months ended June 30, 2012	$	33

(1) The increase in premium receipts primarily reflects an increase in premium volume in 2012, particularly the volume of tail premium, excluding the volume decline in 2012 attributable to two-year term policies. Two year term policies affect gross written premium, but have little effect on timing of premium receipts since half of the written amount is billed in the second term. Tail policies are typically collected in the period written.

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(2) Reinsurance contracts are generally for premiums written in a specific annual period, but can remain in effect until all claims under the contract have been resolved. Some contracts require annual settlements while others require settlement only after a number of years have elapsed, thus the amounts paid can vary widely from period to period.

(3) The timing of the payment of individual losses can be sporadic. The increase in loss payments for the first six months of 2012 primarily reflects the resolution of a greater number of larger cases resulting in indemnity payments. We currently estimate that approximately $15 million of the 2012 increase in indemnity payments is recoverable under existing reinsurance arrangements.

(4) We are party to certain contracts that involve claims handling but do not transfer insurance risk. As required by GAAP, receipts and disbursements for these contracts are not considered as receipts of premium or payments of losses, but rather are considered as deposits received or returned. These contracts do not constitute a significant business activity for us, but, increased our cash flows on a net basis by $5 million in 2012.

(5) The decrease in cash received for investments reflects the decrease in net investment income as well as timing differences of interest receipts between periods.

(6) The decrease in cash paid for other expenses is principally attributable to non-recurring payments of APS integration costs, primarily compensation-related, during 2011.

(7) The net increase in tax payments primarily reflects (in millions):

• Estimated tax payments in 2012 were higher as compared to 2011 by $8.9 million.

• Federal tax refunds received in 2011 of $7.0 million

• Payments of $5.9 million made in 2011 for the 2008 and 2007 tax years as a result of federal tax return audits conducted by the Internal Revenue Service. The payments reduced tax liabilities recognized prior to January 1, 2011 and did not increase or decrease 2011 tax expense.

Our operating activities provided positive cash flows of approximately $53.0 million and $75.9 million for the six months ended June 30, 2011 and 2010, respectively. Operating cash flows for 2011 and 2010 compare as follows:

(In millions)	Operating Cash Flow
Cash provided by operating activities for the six months ended June 30, 2010	$	76
Increase (decrease) in operating cash flows:
Decrease in premium receipts (1)		(19	)
Increase in payments to reinsurers (2)		(9	)
Decrease in losses paid (3)		24
Decrease in reinsurance recoveries (4)		(12	)
Increase in Federal and state income tax payments (5)		(12	)
Cash flows contributed by operations acquired November, 2010 as a part of the American Physician’s Service Group, Inc. (APS) transaction		7
Other amounts not individually significant, net		(2	)
Cash provided by operating activities for the six months ended June 30, 2011	$	53

(1) The decline in premium receipts primarily reflects a $10.0 million reduction in gross written premiums at our subsidiaries other than APS. Written premiums associated with two-year term policies increased by approximately $6.9 million for the six-month period ended 2011 as compared to 2010, with approximately half of the written amount scheduled to be collected in 2012. Additionally, in 2011 more of our insureds elected to take advantage of payment plans offered to them.

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(2) Reinsurance contracts are generally for premiums written in a specific annual period, but can remain in effect until all claims under the contract have been resolved. Some contracts require annual settlements while others require settlement only after a number of years have elapsed, thus the amounts paid can vary widely from period to period.

(3) The timing of our loss payments varies from period to period because the process for resolving claims is complex and occurs at an uneven pace depending upon the circumstances of the individual claim.

(4) The timing of reinsurance recoveries varies from period to period and can depend upon the terms of the applicable reinsurance agreement, the nature of the underlying claim and the timing and amount of underlying loss payments.

(5) The increase in tax payments primarily reflected:

• Estimated tax payments in 2011 were higher as compared to 2010 by $ 9.4 million.

• Federal tax refunds received in 2011 were $3.6 million higher as compared to 2010.

• Payments of $5.9 million made in 2011 for the 2008 and 2007 tax years as a result of Federal tax return audits conducted by the Internal Revenue Service.

Reinsurance

We use reinsurance to provide capacity to write larger limits of liability, to provide protection against losses in excess of policy limits, and to stabilize underwriting results in years in which higher losses occur. The purchase of reinsurance does not relieve us from the ultimate risk on our policies, but it does provide reimbursement from the reinsurer for certain losses paid by us.

Our risk retention level is dependent upon numerous factors including our risk tolerance and the capital we have to support it, the price and availability of reinsurance, volume of business, level of experience with a particular set of claims and our analysis of the potential underwriting results. We purchase reinsurance from a number of companies to mitigate concentrations of credit risk. We utilize a reinsurance broker to assist us in the placement of our reinsurance coverage and in the analysis of the credit quality of our reinsurers. We base our reinsurance buying decisions on an evaluation of the then-current financial strength, rating and stability of prospective reinsurers. However, the financial strength of our reinsurers, and their corresponding ability to pay us, may change in the future due to forces or events we cannot control or anticipate.

Taxes

We have received a draft Notice of Proposed Adjustment from the IRS related to its audit of our 2009 and 2010 federal income tax return stating that the IRS intends to disallow a substantial portion of the loss and loss adjustment expense deduction taken on our returns for these years. The proposed adjustment represents a temporary timing difference and impacts the timing of deductions, rather than their allowance, and would shift tax from deferred to current tax expense but would not increase total tax expense. As now written, the Notice of Proposed Adjustment would require that we reduce our current deduction for loss and loss adjustment expenses, thereby increasing our current tax liability by approximately $100 million including interest associated with the timing of the payment. For financial reporting purposes, the tax liability asserted in the Notice of Proposed Adjustment would be offset, excluding the interest component, by the establishment of a deferred tax asset in recognition that these losses and loss adjustment expenses will be deductible in future periods. We believe that our loss and loss adjustment expense deduction was computed in a manner consistent with tax law, our past practices, and the practices of other MPL insurers. We remain in discussions with the IRS, challenging the position asserted in the draft Notice of Proposed Adjustment. There are other taxpayers with legal actions pending against the IRS in the United States Tax Court challenging IRS audit findings with regard to loss and loss adjustment expense deductions, and any rulings on these cases may influence the timing and amount of any asserted additional tax liability in any final report we receive from the IRS, and in our response to the final report. Any payments made would come out of our cash and investments and could impact future investment earnings, but, except for interest on past-due taxes, if any, recorded tax expense will not change. We do not know when a final resolution will be reached with the IRS, or the amount of additional tax payments or interest that might be asserted.

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Litigation

We are involved in various legal actions related to insurance policies and claims handling including, but not limited to, claims asserted by policyholders. These types of legal actions arise in the ordinary course of business and, in accordance with GAAP for insurance entities, are considered as a part of our loss reserving process, which is described in detail under “Critical Accounting Estimates – Reserve for Losses and Loss Adjustment Expenses (reserve for losses or reserve).”

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Investing Activities and Related Cash Flows

Investment Exposures

The following table provides summarized information regarding our investments as of June 30, 2012:

			Included in Carrying Value:
(In thousands)	Carrying Value		Unrealized Gains		Unrealized Losses			Average Rating	(1)			% Total Investments
Fixed Maturities
Government
U.S. Treasury	$	231,776	$	14,884	$	(17	)	AA+		(2	)		6	%
U.S. Agency		71,008		5,386		(13	)	AA+		(2	)		2	%
Total government		302,784		20,270		(30	)	AA+		(2	)		7	%
State and Municipal Bonds
Pre-refunded		122,242		8,145		—		AA					3	%
General obligation		392,362		29,118		(27	)	AA					10	%
Special revenue		696,623		47,608		(142	)	AA-					17	%
Total state and municipal bonds		1,211,227		84,871		(169	)	AA					30	%
Corporate Debt
Financial institutions		422,757		16,034		(1,102	)	A					10	%
FDIC insured		3,281		11		—		AA+		(2	)		<1	%
Communications		96,689		5,685		(350	)	BBB					2	%
Utilities/Energy		281,632		19,486		(376	)	BBB+					7	%
Industrial		618,805		39,239		(1,084	)	BBB+					15	%
Other		11,580		443		(1	)	A-					<1	%
Total corporate debt		1,434,744		80,898		(2,913	)	A-					35	%
Securities backed by:
Agency mortgages		448,384		27,042		(114	)	AA+		(2	)		11	%
Non-agency mortgages		16,139		258		(611	)	BB					<1	%
Subprime mortgages		7,832		319		(1,209	)	BBB					<1	%
Alt A mortgages		4,582		69		(43	)	B-					<1	%
Commercial mortgages		74,240		5,591		(58	)	AAA					2	%
Credit card loans		21,675		570		—		AAA					1	%
Automobile loans		51,883		418		(3	)	AAA					1	%
Other asset loans		15,784		314		—		AAA					<1	%
Total asset-backed securities		640,519		34,581		(2,038	)	AA+					16	%
Total fixed maturities		3,589,274		220,620		(5,150	)	AA-					88	%
Equities
Financial		54,086		—		—							1	%
Utilities/Energy		23,938		—		—							1	%
Consumer oriented		39,176		—		—							1	%
Technology		9,718		—		—							<1	%
Industrial		14,555		—		—							<1	%
All Other		13,115		—		—							<1	%
Total equities		154,588		—		—							4	%
Short-Term		167,914		—		—							4	%
Business-owned life insurance (BOLI)		53,571		—		—							1	%
Investment in Unconsolidated Subsidiaries
Investment in tax credit partnerships		89,314		—		—							2	%
Business LLC interest		—		—		—							—
Investment in LPs		24,028		—		—							1	%
Total investment in unconsolidated subsidiaries		113,342		—		—							3	%
Other Investments
FHLB capital stock		4,301		—		—							<1	%
Investments in LP/LLCs		15,864		—		—							<1	%
Other		1,677		—		—							<1	%
Total other investments		21,842		—		—							1	%
Total Investments	$	4,100,531	$	220,620	$	(5,150	)						100	%

(1) A weighted average rating is calculated using available ratings from Standard & Poor’s, Moody’s and Fitch. The table presents the Standard & Poor’s rating that is equivalent to the computed average.

(2) The rating presented is the Standard & Poor’s rating rather than the average. The Moody’s rating is Aaa.

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A detailed listing of our investment holdings as of June 30, 2012 is presented in an Investor Supplement we make available in the Investor Relations section of our website, www.proassurance.com, or directly at www.proassurance.com/investorrelations/supplemental.aspx.

We manage our investments to ensure that we will have sufficient liquidity to meet our obligations, taking into consideration the timing of cash flows from our investments, including interest payments, dividends and principal payments, as well as the expected cash flows to be generated by our operations. In addition to the interest and dividends we will receive, we anticipate that between $50 million and $90 million of our investments will mature (or be paid down) each quarter of the next year and become available, if needed, to meet our cash flow requirements. The primary outflow of cash at our insurance subsidiaries is related to paid losses and operating costs, including income taxes. The payment of individual claims cannot be predicted with certainty; therefore, we rely upon the history of paid claims in estimating the timing of future claims payments. To the extent that we may have an unanticipated shortfall in cash we may either liquidate securities or borrow funds under existing borrowing arrangements through our $150 million credit facility and the FHLB system. However, given the relatively short duration of our investments, we do not foresee any such shortfall. Additional information regarding the credit facility is detailed in Note 8 of the Notes to Condensed Consolidated Financial Statements.

Our investment portfolio continues to be primarily composed of high quality fixed income securities with approximately 95% of our fixed maturities being investment grade securities as determined by national rating agencies. The weighted average effective duration of our fixed maturity securities at June 30, 2012 is 3.8 years; the weighted average effective duration of our fixed maturity securities combined with our short-term securities is 3.6 years.

We increased our investment in tax credit limited partnerships by an additional $7 million and $32 million during the first six months of 2012 and 2011, respectively. These investments are comprised of multiple separate limited partner interests designed to generate investment returns by providing tax benefits to investors in the form of project operating losses and tax credits. The related properties are principally low income housing properties. The $89.3 million carrying value of the partnerships reflects the commitments to the partnerships (less amortization) of which approximately $32.7 million is not yet funded as of June 30, 2012. As of June 30, 2011 the carrying value of the partnerships approximated $90.0 million, of which approximately $61.0 million had not yet been funded.

European Debt Exposure

We have no direct European sovereign debt exposure. We have indirect exposure through our investments in debt securities and through our reinsurance receivables. Issuers of our debt securities and our reinsurers may hold European sovereign debt or have counterparty exposure to European banks or European corporations. Entities that have significant European exposure may suffer credit downgrades due to European sovereign debt exposure or due to European creditor exposure if they have significant business in the Euro-zone or Eurocurrency denominated business should either or both fail, or should a severe European recession arise.

Our debt securities at June 30, 2012 include $127.1 million (3% of our total investments) where the issuer is domiciled in Europe or the underlying revenue stream supporting the security is European.

Our investments outside of Europe, and particularly our financial sector investments, could also be negatively affected by a significant European economic crisis. Our financial sector investments outside of Europe approximate $431.2 million at June 30, 2012. Also, our reinsurers typically operate globally and have large investment portfolios which may be linked directly or indirectly to the European economy. As of December 31, 2011, two of our largest reinsurers were domiciled in Europe, with net receivables totaling approximately $61 million. Our reinsurance receivables total $254.7 million at June 30, 2012.

We do not currently write insurance policies in Europe and do not have any notes or accounts receivable from European issuers, exclusive of our reinsurance receivables.

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Acquisitions

In June 2012, we entered into agreements to acquire Medmarc Mutual Insurance Company (Medmarc) and Independent Nevada Doctors Insurance Exchange (IND). Medmarc will be acquired through a sponsored demutualization that will provide Medmarc’s eligible members with cash payments of $146.2 million and future policy credits of $7.5 million. The transaction is expected to close in early January 2013. Medmarc is an underwriter of product liability insurance for medical technology and life sciences and also underwrites a book of legal professional liability insurance. Medmarc had direct written premium of $41 million for the year ended December 31, 2011 and statutory net assets of $160 million at March 31, 2012. The transaction is subject to customary conditions, including approval by Medmarc’s eligible members and insurance regulators in Vermont where Medmarc is domiciled. IND is a Nevada reciprocal exchange and in 2011 was the leading writer of MPL insurance in the state of Nevada. IND will become a part of ProAssurance through a conversion from a reciprocal to a stock insurance company. The IND transaction requires approval of IND subscribers and the Nevada Division of Insurance. Proceeds from the transaction will be paid in cash to eligible IND subscribers; terms of the transaction are not material to our financial statements. It is anticipated that both acquisitions will be funded with existing capital.

On November 30, 2010, we acquired 100% of the outstanding shares of American Physicians Service Group, Inc. (APS), a MPL provider principally insuring physicians in the state of Texas, in a transaction valued at $237 million including cash paid of $233 million and liabilities assumed of $4 million.

Financing Activities and Related Cash Flows

Treasury Shares

We did not repurchase any common shares during the six months ended June 30, 2012. We reacquired approximately 259,000 common shares having a total cost of $15.4 million during the six-month period ended June 30, 2011, including approximately 6,900 forfeited employer match shares (cost basis of $0.4 million) reacquired due to the termination of the ProAssurance Corporation Stock Ownership Plan. At June 30, 2012, approximately $153.5 million of Board authorizations for the repayment of debt or repurchase of common shares remain available for use, of which $17 million was used in July 2012 to repay the 2019 Note Payable. The remaining Board authorization at June 30, 2012 has been reduced due to repayment notices provided to debt trustees in May and June of 2012 that totaled $35 million (see discussion under “Debt”).

Shareholder Dividends

The Board of Directors of ProAssurance declared cash dividends of $0.25 per share in both the first and second quarters of 2012; the first quarter dividend totaled $7.7 million and was paid in April 2012; the second quarter dividend totaled $7.7 million and was paid in July 2012. Any decision to pay future cash dividends is subject to the Board’s final determination after a comprehensive review of financial performance, future expectations and other factors deemed relevant by the Board. The liability for unpaid dividends is included in Other Liabilities.

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Debt

Our long-term debt as of June 30, 2012 is comprised of the following:

($ in thousands)	Contractual Rate		Outstanding Principal		Carrying Value June 30, 2012
Trust Preferred Securities due 2034		4.3% (1)	$	22,992	$	22,992
Surplus Notes due May 2034		4.3% (1)		12,000		12,000
2019 Note Payable (2)		6.6% (3)		16,940		14,777
Revolving Credit Agreement (4)		N/A		—		—
					$	49,769

(1) Adjusted quarterly based on LIBOR.

(2) The 2019 Note Payable is valued at fair value. See Note 8 of the Notes to Condensed Consolidated Financial Statements.

(3) A related interest rate swap fixes rate at 6.6%. See Note 8 of the Notes to Condensed Consolidated Financial Statements.

(4) No balance outstanding as of June 30, 2012; expires April 15, 2014.

Prior to June 30, 2012, we obtained required approvals and notified the debt trustees of our intention to repay the Trust Preferred Securities due 2034 and Surplus Notes due May 2034 in August 2012. The principal balances, totaling $35 million, will be repaid at no gain or loss in August 2012.

In July 2012 we repaid in full the $16.9 million outstanding principal of the 2019 Note Payable and terminated the related interest rate swap. We will recognize a $2.5 million loss on the early repayment of the Note and termination of the swap in the third quarter of 2012.

Our revolving credit agreement allows us to borrow up to $150 million that would be used for general corporate purposes, including, but not limited to, short-term working capital, share repurchases as authorized by the Board, and support for other activities we enter into in the normal course of business. To date, we have not borrowed any funds under the agreement. We are also a member of the FHLB. Through membership, we have access to secured cash advances which can be used for liquidity purposes or other operational needs. To date, we have not established a FHLB line of credit or materially utilized our membership.

ProAssurance is currently in compliance with all covenants associated with its borrowing arrangements. Additional information regarding our debt is provided in Note 8 of the Notes to Condensed Consolidated Financial Statements.

Overview of Results–Three and Six Months Ended June 30, 2012 and 2011

Net income and Operating income (a non-GAAP financial measure, see reconciliation below) are as follows:

	Three Months Ended June 30				Six Months Ended June 30
(In millions, except per share data)	2012		2011		2012		2011
Net income	$	58.5	$	55.1	$	114.1	$	102.8
Operating income	$	59.5	$	53.7	$	107.7	$	98.6
Net income per diluted share	$	1.89	$	1.79	$	3.69	$	3.33
Operating income per diluted share	$	1.92	$	1.74	$	3.49	$	3.20

Results from the three and six months ended June 30, 2012 and 2011 compare as follows:

Revenues

Net premiums earned decreased for the 2012 three- and six-month periods by approximately $5.8 million or 4.2% and $1.2 million or 0.5%, respectively, principally reflecting the effects of a competitive market place. The effects of competition were mitigated by an increase in tail premiums written of $1.9 million for the 2012 three-month period and $10.3 million for the 2012 six-month period. Also, a reduction in the estimated premiums owed under our reinsurance arrangements increased net premiums earned by $2.9 million for both the three- and six-month periods.

45

Our net investment result (which includes both net investment income and earnings from unconsolidated subsidiaries) decreased by $1.6 million or 4.7% for the 2012 three-month period and $5.0 million or 7.2% for the six-month period. Net Investment Income decreased $1.8 million and $4.5 million, for the three- and six-month periods, respectively, primarily due to lower yields on our fixed income securities. Equity in Earnings of Unconsolidated Subsidiaries increased $0.2 million for the 2012 three-month period and decreased $0.5 million for the 2012 six-month period primarily reflecting the net effect of the amortization of a larger investment in tax credit partnerships and higher earnings from our interests in certain LPs.

The three months ended June 30, 2012 resulted in a net realized investment loss of $1.5 million as compared to net realized investment gains of $2.2 million for the same period in 2011. Net realized investment gains were $9.1 million for the six months ended June 30, 2012 as compared to $6.3 million for the 2011 six-month period. Our trading portfolio generated holding losses in the second quarter of 2012 which partially offset holding gains generated during the first quarter of 2012. Net gains from the sale of available-for-sale securities were less in 2012 than in 2011 for both the three- and six-month periods. Impairments recognized in 2012 were lower than in 2011 for both the three-month and the six-month period.

Expenses

Current accident year net losses decreased by $6.4 million or 5.6% and increased by $0.8 million or 0.4% for the 2012 three- and six-month periods, respectively. The decline for the three-month period was principally attributable to a lower volume for physician non-tail exposures. For the six-month period, the effect of a lower volume for non-tail exposures was more than offset by an increase in tail exposures. We expect higher losses per exposure for tail coverages. We reduced net losses by $60.1 million and $107.5 million for the 2012 three- and six-month periods, respectively, and by $50.2 million and $90.2 million for the same periods in 2011 as a result of our review of our estimate of net losses incurred for prior accident years.

Underwriting, policy acquisition and operating expenses increased by $2.5 million or 7.7% and $1.2 million or 1.8% for the 2012 three- and six-month periods, respectively, primarily reflecting higher salary costs in 2012 and the change in timing of recognition of policy acquisition expenses resulting from new FASB guidance.

Ratios

Our net loss ratio decreased by 10.4 percentage points for the 2012 three-month period and 6.0 percentage points for the 2012 six-month period, reflecting reductions of 9.2 percentage points and 6.7 percentage points, respectively, attributable to prior year favorable development. Our current accident year net loss ratio decreased 1.2 percentage points and increased 0.7 percentage points for the 2012 three- and six-month periods, respectively, principally due to changes in the mix of insured risks.

Our underwriting expense ratio increased 2.8 and 0.8 percentage points for the 2012 three- and six-month periods, respectively, reflecting higher expenses and a decline in net earned premium during 2012.

Our operating ratio declined by 7.4 and 3.7 percentage points for the 2012 three- and six-month periods, respectively, reflecting the improved net loss ratio, partially offset by a higher expense ratio and a lower investment ratio.

Return on equity is 10.4% and 10.3% for the 2012 three- and six-month periods, respectively, on an annualized basis.

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Book Value per Share

Our book value per share at June 30, 2012 is $74.30 compared to $70.84 at December 31, 2011. The increase primarily reflects the effect of our 2012 net income and an increase in accumulated other comprehensive income, partially offset by dividends declared during the six months ended June 30, 2012 which reduced our book value per share by $0.50. Due to the size of our Shareholders’ Equity (approximately $2.3 billion at June 30, 2012), the growth rate of our book value per share may slow. The past growth rates of our book value per share do not necessarily predict similar future results.

Non-GAAP Financial Measures

Operating income is a non-GAAP financial measure that is widely used to evaluate the performance of insurance entities. Operating income excludes the after-tax effects of realized investment gains or losses, guaranty fund assessments and, in 2012, the effect of confidential settlements that do not reflect normal operating results. We believe operating income presents a useful view of the performance of our insurance operations, but should be considered in conjunction with net income computed in accordance with GAAP.

The following table is a reconciliation of Net income to Operating income:

	Three Months Ended June 30						Six Months Ended June 30
(In thousands, except per share data)	2012			2011			2012			2011
Net income	$	58,453		$	55,096		$	114,098		$	102,790
Items excluded in the calculation of operating income:
Net realized investment (gains) losses		1,548			(2,200	)		(9,130	)		(6,324	)
Guaranty fund assessments (recoupments)		(1	)		(15	)		(25	)		(58	)
Effect of confidential settlements, net		—			—			(714	)		—
Pre-tax effect of exclusions		1,547			(2,215	)		(9,869	)		(6,382	)
Tax effect, at 35%		(541	)		775			3,454			2,234
Operating income	$	59,459		$	53,656		$	107,683		$	98,642
Per diluted common share:
Net income	$	1.89		$	1.79		$	3.69		$	3.33
Effect of exclusions		0.03			(0.05	)		(0.20	)		(0.13	)
Operating income per diluted common share	$	1.92		$	1.74		$	3.49		$	3.20

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Results of Operations–Three and Six Months Ended June 30, 2012 Compared to Three and Six Months Ended June 30, 2011

Selected consolidated financial data for each period is summarized in the table below.

	Three Months Ended June 30									Six Months Ended June 30
($ in thousands, except share data)	2012			2011			Change			2012			2011			Change
Revenues:
Net premiums earned	$	131,266		$	137,063		$	(5,797	)	$	267,925		$	269,140		$	(1,215	)
Net investment income		34,510			36,297			(1,787	)		68,003			72,457			(4,454	)
Equity in earnings (loss) of unconsolidated subsidiaries		(2,227	)		(2,416	)		189			(4,293	)		(3,780	)		(513	)
Net realized investment gains (losses)		(1,548	)		2,200			(3,748	)		9,130			6,324			2,806
Other income		1,868			1,685			183			3,675			4,273			(598	)
Total revenues		163,869			174,829			(10,960	)		344,440			348,414			(3,974	)
Expenses:
Losses and loss adjustment expenses		55,132			69,394			(14,262	)		133,437			146,493			(13,056	)
Reinsurance recoveries		(7,048	)		(5,041	)		(2,007	)		(15,154	)		(11,717	)		(3,437	)
Net losses and loss adjustment expenses		48,084			64,353			(16,269	)		118,283			134,776			(16,493	)
Underwriting, policy acquisition and operating expenses		35,405			32,871			2,534			69,803			68,578			1,225
Interest expense		826			918			(92	)		1,651			1,713			(62	)
Total expenses		84,315			98,142			(13,827	)		189,737			205,067			(15,330	)
Income before income taxes		79,554			76,687			2,867			154,703			143,347			11,356
Income taxes		21,101			21,591			(490	)		40,605			40,557			48
Net income	$	58,453		$	55,096		$	3,357		$	114,098		$	102,790		$	11,308
Earnings per share:
Basic	$	1.91		$	1.80		$	0.11		$	3.73		$	3.36		$	0.37
Diluted	$	1.89		$	1.79		$	0.10		$	3.69		$	3.33		$	0.36
Net loss ratio		36.6	%		47.0	%		(10.4	)		44.1	%		50.1	%		(6.0	)
Underwriting expense ratio		26.8	%		24.0	%		2.8			25.7	%		24.9	%		0.8
Combined ratio		63.4	%		71.0	%		(7.6	)		69.8	%		75.0	%		(5.2	)
Operating ratio		37.1	%		44.5	%		(7.4	)		44.4	%		48.1	%		(3.7	)
Tax ratio		26.5	%		28.2	%		(1.7	)		26.2	%		28.3	%		(2.1	)
Return on equity*		10.4	%		11.4	%		(1.0	)		10.3	%		10.8	%		(0.5	)

* Annualized

In all tables that follow, the abbreviation “nm” indicates that the percentage change is not meaningful.

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Premiums Written

Changes in our premium volume are driven by four primary factors: (1) our retention of existing business, (2) the premium charged for business that is renewed, which is affected both by rates charged and by the amount and type of coverage an insured chooses to purchase, (3) the timing of premium written for business generated by multi-period policies, and (4) the amount of new business we generate. The professional liability market remains competitive with some competitors choosing to compete primarily on price.

Gross, ceded and net premiums written are as follows:

	Three Months Ended June 30											Six Months Ended June 30
($ in thousands)	2012			2011			Change					2012			2011			Change
Gross premiums written	$	102,228		$	115,302		$	(13,074	)	(11.3	%)	$	272,676		$	276,115		$	(3,439	)	(1.2	%)
Ceded premiums written		(10,358	)		(8,291	)		(2,067	)	24.9	%		(22,808	)		(19,221	)		(3,587	)	18.7	%
Net premiums written	$	91,870		$	107,011		$	(15,141	)	(14.1	%)	$	249,868		$	256,894		$	(7,026	)	(2.7	%)

Gross Premiums Written

Gross premiums written by component are as follows:

	Three Months Ended June 30									Six Months Ended June 30
($ in thousands)	2012		2011		Change					2012		2011		Change
Gross premiums written:
Physician	$	73,795	$	89,439	$	(15,644	)	(17.5	%)	$	205,817	$	221,525	$	(15,708	)	(7.1	%)
Non-physician healthcare providers		10,048		10,164		(116	)	(1.1	%)		21,724		22,076		(352	)	(1.6	%)
Hospital and facility		8,196		7,336		860		11.7	%		15,272		13,585		1,687		12.4	%
Other		4,216		4,379		(163	)	(3.7	%)		10,316		9,685		631		6.5	%
Non-continuing		329		273		56		20.5	%		706		738		(32	)	(4.3	%)
Tail coverage premium, all policy types		5,644		3,711		1,933		52.1	%		18,841		8,506		10,335		121.5	%
Total	$	102,228	$	115,302	$	(13,074	)	(11.3	%)	$	272,676	$	276,115	$	(3,439	)	(1.2	%)

Physician Premiums

As compared to 2011, physician premiums declined during the 2012 second quarter period after having been nearly flat for the first quarter period. The expected timing differences associated with two-year policies accounted for more than 35% of total physician premium decrease in both the second quarter and the year-to-date periods.

Our retention rate for our standard physician business is 88% and 90% for the three and six months ended June 30, 2012, respectively, as compared to 90% for both the 2011 three- and six-month periods. We calculate our retention rate as retained premium divided by all premium subject to renewal. Retention rates are affected by a number of factors. We may lose insureds to competitors or to alternative insurance mechanisms such as risk retention groups or self-insurance entities (often when physicians join hospitals or large group practices) or due to pricing or other issues. We may choose not to renew an insured as a result of our underwriting evaluation. Insureds may also terminate coverage because they have left the practice of medicine for various reasons, principally for retirement but also for personal reasons or due to disability or death.

Charged rates for our renewed physician business have averaged 2% higher than the expiring premiums during the 2012 three-month period and remained relatively flat for the 2012 six-month period. Our charged rates include the effects of filed rates, surcharges and discounts. The average increase for the second quarter is attributable to the mix of policies renewed during the period rather than to rate increases across all lines and states. In the second quarter of 2012 as compared to second quarter 2011, more renewals were claims-made policies subject to a standard rate increase. Rates for claims made policies increase at renewal for four renewals (years) after the policy is initially written.

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Approximately $5.6 million and $6.1 million of the written premium decrease for the three- and six-month periods, respectively, is associated with two-year term policies. Gross premiums written associated with these policies is $1.5 million and $7.6 million for the three and six months ended June 30, 2012, respectively, as compared to $7.1 million and $12.6 million for the same respective periods in 2011. We offer two-year term policies (as opposed to a one-year term) to our physician insureds in one selected jurisdiction. The premium associated with both years is included in written premium in the period the policy is written.

New physician business written in 2012 approximated $2 million and $5 million for the three- and six-month periods, respectively.

Non-physician Premiums

Non-physician healthcare providers are primarily dentists, chiropractors and allied health professionals. Premium volume for these coverages is consistent with 2011.

Hospital and facility premiums increased for the three- and six-month periods of 2012 primarily due to new business.

Non-physician “other” premiums are primarily legal professional liability premiums. Changes in premium volume for these coverages for the 2012 three- and six-month periods principally relate to legal professional liability premiums.

Non-continuing premiums consist of premiums derived from optometry coverages discontinued in early 2012 and certain miscellaneous liability coverages which were discontinued in 2010 but that continued to produce small amounts of written premium in 2011.

Tail Coverage Premiums

We offer extended reporting endorsement or “tail” coverage to insureds that are discontinuing their claims-made coverage with us, and we also periodically offer “tail” coverage through custom policies. The amount of tail coverage premium written can vary widely from period to period. A large portion of the increase in tail premium for the 2012 six-month period is attributable to a single custom policy issued to a hospital that terminated its self insurance arrangement.

Ceded Premiums Written

Ceded premiums written compare as follows:

	Three Months Ended June 30											Six Months Ended June 30
($ in thousands)	2012			2011			Change					2012			2011			Change
Primary reinsurance arrangements	$	4,545		$	5,870		$	(1,325	)	(22.6	%)	$	12,107		$	12,567		$	(460	)	(3.7	%)
Reduction in premiums owed under reinsurance arrangements		(2,850	)		—			(2,850	)	nm			(2,850	)		—			(2,850	)	nm
Ascension Certitude program		4,779			3,727			1,052		28.2	%		5,153			3,739			1,414		37.8	%
Commutation		—			(5,634	)		5,634		nm			—			(5,634	)		5,634		nm
Other premiums ceded		3,884			4,328			(444	)	(10.3	%)		8,398			8,549			(151	)	(1.8	%)
Total ceded premiums written	$	10,358		$	8,291		$	2,067		24.9	%	$	22,808		$	19,221		$	3,587		18.7	%

We reinsure most of our MPL coverages under a single reinsurance agreement that is renewed annually. There was no significant change in treaty terms upon the last renewal of the program.

Premiums ceded represent the amounts owed to our reinsurers for their assumption of a portion of our losses. The ultimate amount owed under certain of our reinsurance arrangements is variable and is determined by the loss experience of the business ceded, subject to minimums and maximums. Many years may elapse before all losses recoverable under a reinsurance arrangement are known. In the intervening periods, amounts owed are estimated. Premiums ceded for the current period includes both our estimate of premiums owed under reinsurance arrangements of the current period and changes to our previous estimate of premiums owed under reinsurance arrangements of prior periods. During the second quarter of 2012, we reduced our estimate of premiums owed under reinsurance arrangements for prior years by $2.9 million.

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A substantial portion of the policies renewed under the Ascension Health (Ascension) Certitude program during the 2012 second quarter are heavily reinsured by an Ascension affiliate. There was a nominal amount of Ascension premium written prior to the second quarter of 2011.

During 2011, we commuted (terminated) certain of our reinsurance arrangements with Colisee Re (formerly AXA Reassurance S.A.) in return for approximately $4.3 million in cash. The commutation reduced Ceded Premium, on both a written and an earned basis, by $5.6 million and reduced Reinsurance Recoveries by approximately $4.0 million.

Ceded Premiums Ratio

The principal components of the change in our ceded premiums ratio (ceded premiums as a percentage of gross premiums written) are shown in the following table:

	Three Months Ended June 30									Six Months Ended June 30
	2012			2011			Change			2012			2011			Change
Ceded premiums ratio, excluding other listed factors		8.9	%		9.3	%		(0.4	)		7.8	%		7.8	%		—
Effect on ceded premiums ratio from:
Reduction in premiums owed under reinsurance arrangements		(3.0	%)		—			(3.0	)		(1.1	%)		—			(1.1	)
Ascension Certitude program		4.2	%		3.0	%		1.2			1.7	%		1.3	%		0.4
Commutation		—			(5.1	%)		5.1			—			(2.1	%)		2.1
Ceded premiums ratio, as reported		10.1	%		7.2	%		2.9			8.4	%		7.0	%		1.4

Net Premiums Earned

Net premiums earned are as follows:

	Three Months Ended June 30											Six Months Ended June 30
($ in thousands)	2012			2011			Change					2012			2011			Change
Premiums earned	$	138,412		$	142,409		$	(3,997	)	(2.8	%)	$	286,015		$	283,783		$	2,232		0.8	%
Premiums ceded		(7,146	)		(5,346	)		(1,800	)	33.7	%		(18,090	)		(14,643	)		(3,447	)	23.5	%
Net premiums earned	$	131,266		$	137,063		$	(5,797	)	(4.2	%)	$	267,925		$	269,140		$	(1,215	)	(0.5	%)

Net premiums earned consist of premiums earned less the portion of earned premiums that we cede to our reinsurers for their assumption of a portion of our losses. Because premiums are generally earned pro rata over the entire policy period, fluctuations in premiums earned tend to lag those of premiums written. Generally, our policies carry a term of one year, but as discussed above, we renew certain policies with a two-year term. Tail coverage premiums are generally 100% earned in the period written because the policies insure only incidents that occurred in prior periods and are not cancellable. Additionally, ceded premium changes due to commutations or changes to estimates of premiums owed under reinsurance arrangements are fully earned in the period of change.

The increase in premiums earned for the 2012 six-month period is primarily attributable to tail premiums written. Components of the increase in premiums ceded for the 2012 three- and six-month periods are detailed in the following table:

	Premiums Ceded Increase (Decrease) 2012 versus 2011
($ in thousands)	Three Months Ended June 30			Six Months Ended June 30
Reduction in premiums owed under reinsurance arrangements*	$	(2,850	)	$	(2,850	)
Ascension Certitude program*		787			2,004
Commutation*		5,634			5,634
All other factors		(1,771	)		(1,341	)
Net increase	$	1,800		$	3,447

* See “Ceded Premiums Written.”

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Net Investment Income, Equity in Earnings (Loss) of Unconsolidated Subsidiaries, Net Realized Investment Gains (Losses)

Net Investment Income

Net investment income is primarily derived from the income earned by our fixed maturity securities and also includes income from our short-term and cash equivalent investments, dividend income from equity securities, earnings from other investments and increases in the cash surrender value of business owned life insurance contracts. Investment fees and expenses are deducted from investment income.

Net investment income by investment category is as follows:

	Three Months Ended June 30											Six Months Ended June 30
($ in thousands)	2012			2011			Change					2012			2011			Change
Fixed maturities	$	34,093		$	36,682		$	(2,589	)	(7.1	%)	$	67,363		$	72,634		$	(5,271	)	(7.3	%)
Equities		1,608			186			1,422		>100	%		2,649			416			2,233		>100	%
Short-term investments		38			17			21		>100	%		57			73			(16	)	(21.9	%)
Other invested assets		39			575			(536	)	(93.2	%)		441			1,564			(1,123	)	(71.8	%)
Business owned life insurance		461			472			(11	)	(2.3	%)		918			936			(18	)	(1.9	%)
Investment expenses		(1,729	)		(1,635	)		(94	)	5.7	%		(3,425	)		(3,166	)		(259	)	8.2	%
Net investment income	$	34,510		$	36,297		$	(1,787	)	(4.9	%)	$	68,003		$	72,457		$	(4,454	)	(6.1	%)

Fixed Maturities

The decrease in income for the 2012 three- and six-month periods primarily reflects lower yields on our portfolio, combined with lower average fixed income investment balances. A $0.5 million and $0.9 million decline in the income produced by our Treasury Inflation-Protected Securities (TIPS) for the three- and six-month periods in 2012 contributed to the lower yield.

The overall yield on our portfolio declined for the 2012 three- and six-month periods because we have not been able to reinvest proceeds from maturities, pay-downs and sales at rates comparable to expiring rates while maintaining our asset quality and the duration of our portfolio. Average yields for our available-for-sale fixed maturity securities during the three and six months ended June 30, 2012 and 2011 are as follows:

	Three Months ended June 30		Six Months Ended June 30
	2012	2011	2012	2011
Average income yield	4.0%	4.2%	3.9%	4.2%
Average tax equivalent income yield	4.5%	4.7%	4.5%	4.7%

The level of our investment in fixed maturity securities varies depending upon a number of factors, including, among others, our operating cash needs, anticipated shifts in credit markets, the attractiveness of other investment alternatives and cash needed for acquisitions or other capital purposes. In 2012 as compared to 2011, our average investment in fixed maturities decreased by approximately 3% and 2% for the three- and six-month periods, respectively.

Equity in Earnings (Loss) of Unconsolidated Subsidiaries

Equity in earnings (loss) of unconsolidated subsidiaries is derived from our investment interests accounted for under the equity method, as follows:

	Three Months Ended June 30									Six Months Ended June 30
(In thousands)	2012			2011			Change			2012			2011			Change
Investment LPs	$	180		$	(535	)	$	715		$	770		$	15		$	755
Business LLC interest		(182	)		(593	)		411			(728	)		(1,409	)		681
Tax credit partnerships		(2,225	)		(1,288	)		(937	)		(4,335	)		(2,386	)		(1,949	)
Equity in earnings (loss) of unconsolidated subsidiaries	$	(2,227	)	$	(2,416	)	$	189		$	(4,293	)	$	(3,780	)	$	(513	)

We hold interests in certain LPs that generate earnings from trading portfolios. The performance of the LPs is affected by the volatility of equity and credit markets.

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Our business LLC interest is a non-controlling interest in an entity that began active business in 2011. We recognize quarterly our allocable portion of the operating results reported by the LLC. The entity has been slower to produce positive operating returns than initially anticipated and losses to date have fully eroded our initial investment.

Our tax credit investments are designed to generate investment returns by providing tax benefits to fund investors in the form of project operating losses and tax credits. Our tax credit partnerships reduced our tax expenses by approximately $2.5 million and $5.1 million during the three and six months ended June 30, 2012, respectively, while we recognized $2.2 million and $4.3 million of pre-tax amortization ($1.4 million and $2.8 million after tax) during the same respective periods on these investments noted in the table above.

Non-GAAP Financial Measure – Tax Equivalent Investment Result

We believe that to fully understand our investment returns it is important to consider the current tax benefits associated with certain investments; therefore, we impute a pro forma tax-equivalent investment result by adjusting the current tax benefit into the amount of investment income a taxable investment would need to produce to fairly compare to an investment with preferential tax treatment. We believe this better reflects the economics of our decision to invest in certain asset classes that are either taxed at lower rates and/or result in reductions to our current federal income tax expense.

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Net investment income, as reported for GAAP	$	34,510		$	36,297		$	68,003		$	72,457
Taxable equivalent adjustments, calculated using the 35% federal statutory tax rate:
State and municipal bonds		4,606			4,836			9,290			9,842
BOLI		248			254			494			504
Dividends received deduction		214			168			481			376
Pro forma tax-equivalent net investment income		39,578			41,555			78,268			83,179
Equity in earnings (loss) of unconsolidated subsidiaries, as reported for GAAP		(2,227	)		(2,416	)		(4,293	)		(3,780	)
Taxable equivalent adjustment, calculated using the 35% federal statutory tax rate:
Tax credit partnerships		3,818			2,831			7,861			4,860
Pro forma tax-equivalent equity in earnings (loss) of unconsolidated subsidiaries		1,591			415			3,568			1,080
Pro forma tax-equivalent investment results	$	41,169		$	41,970		$	81,836		$	84,259

Net Realized Investment Gains (Losses)

The following table provides detailed information regarding our net realized investment gains (losses).

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Other-than-temporary impairment losses, total:
Residential mortgage-backed securities	$	(218	)	$	(319	)	$	(463	)	$	(769	)
Corporate debt		—			—			(830	)		—
Other investments		—			(746	)		(131	)		(2,133	)
Portion recognized in (reclassified from) Other Comprehensive Income:
Residential mortgage-backed securities		(201	)		(113	)		(201	)		(681	)
Net impairment losses recognized in earnings		(419	)		(1,178	)		(1,625	)		(3,583	)
Gross realized gains, available-for-sale securities		2,262			5,664			6,150			10,292
Gross realized (losses), available-for-sale securities		(89	)		(1,113	)		(183	)		(1,357	)
Net realized gains (losses), trading securities		(50	)		223			727			2,915
Change in unrealized holding gains (losses), trading securities		(3,032	)		(570	)		4,905			(1,341	)
Decrease (increase) in the fair value of liabilities carried at fair value		(220	)		(826	)		(844	)		(602	)
Net realized investment gains (losses)	$	(1,548	)	$	2,200		$	9,130		$	6,324

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We recognized credit-related impairments in earnings of $0.4 million and $0.7 million during the 2012 three- and six-month periods, respectively, and $0.4 million and $1.5 million for the same respective periods of 2011, related to certain residential mortgage-backed securities because the expected future cash flows from the securities were less than our carrying value.

We recognized credit-related impairments of $0.8 million related to a corporate debt security during the first quarter of 2012 due to deterioration of the credit standing of its issuer.

We recognized impairments of $0.1 million during the first quarter of 2012 and $0.7 million and $2.1 million for the 2011 three- and six-month periods, respectively, related to an interest in an LLC which we accounted for using the cost method. The LLC announced in 2011 that it planned to convert to a publicly traded investment fund and we impaired the investment to the NAV reported by the fund. The conversion occurred during the second quarter of 2012.

We substantially increased the size of our trading portfolio over the previous year. Unrealized trading portfolio losses reflect favorable gains in the first quarter of 2012 which partially deteriorated in the second quarter.

Gains (losses) attributable to change in the fair value of liabilities are entirely attributable to our 2019 Note Payable and the related interest rate swap, as discussed in Notes 2 and 8 of the Notes to Condensed Consolidated Financial Statements.

Losses and Loss Adjustment Expenses

The determination of calendar year losses involves the actuarial evaluation of incurred losses for the current accident year and the actuarial re-evaluation of incurred losses for prior accident years, including an evaluation of the reserve amounts required for losses in excess of policy limits.

Accident year refers to the accounting period in which the insured event becomes a liability of the insurer. For claims-made policies, which represent over 90% of the Company’s business, the insured event generally becomes a liability when the event is first reported to the insurer. For occurrence policies the insured event becomes a liability when the event takes place. We believe that measuring losses on an accident year basis is the best measure of the underlying profitability of the premiums earned in that period, since it associates policy premiums earned with the estimate of the losses incurred related to those policy premiums.

The following table summarizes calendar year net losses and net loss ratios for the three and six months ended June 30, 2012 and 2011 by separating losses between the current accident year and all prior accident years.

	Net Losses
	Three Months Ended June 30									Six Months Ended June 30
($ In millions)	2012			2011			Change			2012			2011			Change
Current accident year	$	108.2		$	114.6		$	(6.4	)	$	225.8		$	225.0		$	0.8
Prior accident years		(60.1	)		(50.2	)		(9.9	)		(107.5	)		(90.2	)		(17.3	)
Calendar year	$	48.1		$	64.4		$	(16.3	)	$	118.3		$	134.8		$	(16.5	)
	Net Loss Ratios*
	Three Months Ended June  30									Six Months Ended June  30
	2012			2011			Change			2012			2011			Change
Current accident year		82.4	%		83.6	%		(1.2	)		84.3	%		83.6	%		0.7
Prior accident years		(45.8	%)		(36.6	%)		(9.2	)		(40.2	%)		(33.5	%)		(6.7	)
Calendar year		36.6	%		47.0	%		(10.4	)		44.1	%		50.1	%		(6.0	)

* Net losses as specified divided by net premiums earned.

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Our current accident year net loss ratios for the three and six months ended June 30, 2012 and 2011 compare as follows:

	Three Months Ended June 30									Six Months Ended June 30
	2012			2011			Change			2012			2011			Change
Current accident year net loss ratio, excluding other listed factors		82.2	%		83.2	%		(1.0	)		83.2	%		82.7	%		0.5
Effect attributable to:
Reduction in premiums owed under reinsurance arrangements		(1.8	%)		—			(1.8	)		(1.0	%)		—			(1.0	)
Commutation recorded in 2011		—			(0.5	%)		0.5			—			(0.2	%)		0.2
Tail coverages		2.0	%		0.9	%		1.1			2.1	%		1.1	%		1.0
Current accident year net loss ratio, as reported		82.4	%		83.6	%		(1.2	)		84.3	%		83.6	%		0.7

Exclusive of the effect of items separately identified in the table above, the change in our 2012 current accident year net loss ratio is primarily attributable to changes in the mix of insured risks. As discussed under “Net Premiums Earned”, during the second quarter of 2012 we reduced our estimate of premiums owed under reinsurance arrangements which lowered our current accident year net loss ratio for both the three- and the six-month periods as the reduction increased net premiums earned but had no effect on net losses incurred. A commutation recorded in 2011 (see “Net Premiums Earned”) decreased our 2011 current accident year net loss ratio; no commutation was recorded in 2012. An increase in tail coverages during 2012, particularly in the six-month period, partially offset these ratio declines as we expect higher losses for tail coverages than for our other professional liability coverages.

During the three- and six-month periods of both 2012 and 2011, we recognized favorable loss development, on a net basis, related to reserves previously established for prior accident years within our retained layers of coverage ($1 million and below). We recognized favorable loss development of $60.1 million and $107.5 million for the 2012 three- and six-month periods, respectively, primarily related to accident years 2004 to 2009. We recognized favorable loss development of $50.2 million and $90.2 million for the same respective periods of 2011, primarily related to accident years 2004 to 2009. A detailed discussion of factors influencing our recognition of loss development recognized is included in the Critical Accounting Estimates section of Item 2, under the caption “Reserve for Losses and Loss Adjustment Expenses.”

Assumptions used in establishing our reserve are regularly reviewed and updated by management as new data becomes available. Any adjustments necessary are reflected in the current operations. Due to the size of our reserve, even a small percentage adjustment to the assumptions can have a material effect on our results of operations for the period in which the change is made, as was the case in 2011 and has been thus far in 2012.

Underwriting, Policy Acquisition and Operating Expenses

The table below provides a comparison of 2012 and 2011 underwriting, policy acquisition and operating expenses for the three and six months ended June 30:

	Three Months Ended June 30								Six Months Ended June 30
($ in thousands)	2012		2011		Change				2012		2011		Change
Insurance operation expenses	$	35,216	$	32,829	$	2,387	7.3	%	$	68,985	$	67,075	$	1,910		2.8	%
Agency expenses		189		42		147	>100	%		818		1,503		(685	)	(45.6	%)
	$	35,405	$	32,871	$	2,534	7.7	%	$	69,803	$	68,578	$	1,225		1.8	%

Insurance Operation Expenses

The increase in insurance operation expenses in 2012 as compared to the same periods in 2011 primarily reflects the net effect of the following:

– Salary and benefits expenses increased by $2.0 million and $3.9 million during the 2012 three- and six-month periods, respectively. The increase reflects higher stock compensation and bonus costs as well as additional costs incurred related to the enhancement of our customer service capabilities during 2012. We relocated a number of positions in order to create a centralized customer service center. Relocation benefits are being provided to affected employees as well as termination benefits for employees unable to relocate.

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– As discussed in Notes 1 and 5 of the Notes to Condensed Consolidated Financial Statements, we adopted, on a prospective basis, new FASB guidance related to the deferral of policy acquisition costs. Our 2012 insurance operation expenses include policy acquisition expenses that would have been deferred to later periods under previous accounting guidance of approximately $1.1 million and $2.2 million for the 2012 three- and six-month periods, respectively. The new guidance affects the timing, but not the amount of acquisition costs ultimately expensed, as the decrease in the expense deferral reduces amortization of policy acquisition costs by the same amount, recognized over the term of the associated successful policies. Amortization of policy acquisition costs for the 2012 three- and six-month periods is lower by $0.5 million and $0.7 million, respectively, than would have been recognized under previous guidance.

– Amortization of deferred policy acquisition costs reflects increases of $0.5 million and $1.3 million for the 2012 three- and six-month periods, respectively, related to the acquisition of APS in November 2010. Due to the application of GAAP purchase accounting rules, no asset for deferred policy acquisition costs was recognized as a part of the purchase price allocation of APS; consequently, amortization of deferred policy acquisition costs in 2011 was reduced.

– On a sporadic basis our expenses are reduced by recoveries related to the settlement of litigation. Recoveries in 2012 were $0.8 million lower (and thus expenses on a net basis were higher) for the three and six months ended June 30, 2012 than for the comparable periods of 2011.

– Costs associated with the operations acquired from APS, primarily personnel costs and professional fees, were approximately $1.8 million and $3.3 million lower in the 2012 three- and six-month periods, respectively, as compared to the same respective periods of 2011.

– Various other operating costs were collectively higher by approximately $0.3 million for the 2012 three-month period and lower by $2.3 million for the 2012 six-month period.

Underwriting Expense Ratio

	Underwriting Expense Ratio *
	Three Months Ended June 30						Six Months Ended June 30
		2012		2011		Change		2012		2011		Change
Underwriting expense ratio		26.8	%	24.0	%	2.8		25.7	%	24.9	%	0.8

* Our expense ratio computations exclude agency expenses as discussed below.

Approximately 1.8 and 0.7 percentage points of the three- and six-month increases in our underwriting expense ratio are attributable to the previously discussed overall increase in expenses. The remainder of the change is due to the change in net earned premium, including the change attributable to reinsurance premiums as discussed under the header “Net Premiums Earned.”

Agency expenses

We maintain limited agency operations that both generate premium revenues for our insurance subsidiaries and earn external commission and service fee revenues. Agency operations that are associated with the generation of premium revenues by our insurance subsidiaries are included in insurance operation expenses in the above table. Expenses of agency operations that are directly associated with external commission and service fee revenues are included in agency expenses in the above table. Agency expenses for 2011 include non-recurring expenses associated with the dissolution of certain agency operations.

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Interest Expense

Interest expense remained relatively flat for the three and six months ended June 30, 2012 as compared to the same respective periods in 2011. As discussed in Liquidity and Capital Resources and Financial Condition, we intend to repay all of our outstanding debt, exclusive of the revolving credit agreement, during the third quarter of 2012. Interest expense by debt obligation is provided in the following table:

	Three Months Ended June 30							Six Months Ended June 30
(In thousands)	2012		2011		Change			2012		2011		Change
Trust Preferred Securities due 2034	$	252	$	244	$	8		$	506	$	483	$	23
Surplus Notes due May 2034		131		126		5			264		253		11
2019 Note Payable		284		289		(5	)		569		576		(7	)
Revolving credit agreement fees and amortization		159		135		24			309		135		174
Other		—		124		(124	)		3		266		(263	)
	$	826	$	918	$	(92	)	$	1,651	$	1,713	$	(62	)

Taxes

Factors affecting our effective tax rate include the following:

	Three Months Ended June 30						Six Months Ended June 30
	2012			2011			2012			2011
Statutory rate		35.0	%		35.0	%		35.0	%		35.0	%
Tax-exempt income		(5.3	%)		(4.4	%)		(5.6	%)		(4.7	%)
Tax credits		(4.0	%)		(2.4	%)		(4.2	%)		(2.2	%)
Other		0.8	%		—			1.0	%		0.2	%
Effective tax rate		26.5	%		28.2	%		26.2	%		28.3	%

Our effective tax rate decreased in 2012 as compared to 2011, primarily due to an increase in the expected tax benefit from tax credits transferred to us by our tax credit partnership investments and an increase in the expected effect of tax-exempt dividend income. We recognized expected tax benefits of approximately $2.5 million and $5.1 million for the three and six months ended June 30, 2012, respectively, related to the credits, compared to expected tax benefits of $1.8 million and $3.2 million for the 2011 three- and six-month periods.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We believe that we are principally exposed to three types of market risk related to our investment operations. These risks are interest rate risk, credit risk and equity price risk.

Interest Rate Risk

Our fixed maturities portfolio is exposed to interest rate risk. Fluctuations in interest rates have a direct impact on the market valuation of these securities. As interest rates rise, market values of fixed income portfolios fall and vice versa. Certain of the securities are held in an unrealized loss position; we do not intend to sell and believe we will not be required to sell any of the debt securities held in an unrealized loss position before its anticipated recovery.

The following table summarizes estimated changes in the fair value of our available-for-sale fixed maturity securities for specific hypothetical changes in interest rates by asset class at June 30, 2012 and December 31, 2011. There are principally two factors that determine interest rates on a given security: market interest rates and credit spreads. As different asset classes can be affected in different ways by movements in those two factors, we have broken out our portfolio by asset class in the following table.

	Interest Rate Shift in Basis Points
	June 30, 2012
	(200)		(100)		Current		100		200
Fair Value (in millions):
U.S. Treasury obligations	$	250	$	249	$	232	$	227	$	222
U.S. Agency obligations		72		72		71		69		66
State and municipal bonds		1,253		1,239		1,211		1,145		1,093
Corporate debt		1,484		1,474		1,435		1,382		1,334
Asset-backed securities		654		651		640		620		597
All fixed maturity securities	$	3,713	$	3,685	$	3,589	$	3,443	$	3,312
Duration:
U.S. Treasury obligations		3.10		3.08		3.02		2.96		2.89
U.S. Agency obligations		2.78		2.78		2.84		3.26		3.33
State and municipal bonds		3.98		4.17		4.35		4.46		4.54
Corporate debt		4.09		4.11		4.07		3.99		3.91
Asset-backed securities		1.27		1.50		2.65		3.41		3.81
All fixed maturity securities		3.46		3.57		3.82		3.96		4.02
	December 31, 2011
Fair Value (in millions):
U.S. Treasury obligations	$	303	$	301	$	284	$	277	$	270
U.S. Agency obligations		70		70		68		65		63
State and municipal bonds		1,301		1,279		1,228		1,172		1,117
Corporate debt		1,429		1,413		1,368		1,314		1,263
Asset-backed securities		735		733		718		695		669
All fixed maturity securities	$	3,838	$	3,796	$	3,666	$	3,523	$	3,382
Duration:
U.S. Treasury obligations		3.42		3.39		3.33		4.00		3.95
U.S. Agency obligations		3.25		3.26		3.43		3.62		3.69
State and municipal bonds		4.22		4.44		4.58		4.69		4.76
Corporate debt		4.07		4.05		4.00		3.91		3.83
Asset-backed securities		1.01		1.54		2.87		3.48		3.83
All fixed maturity securities		3.47		3.63		3.91		4.09		4.14

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Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including the maintenance of the existing level and composition of fixed income security assets, and should not be relied on as indicative of future results.

Certain shortcomings are inherent in the method of analysis presented in the computation of the fair value of fixed rate instruments. Actual values may differ from those projections presented should market conditions vary from assumptions used in the calculation of the fair value of individual securities, including non-parallel shifts in the term structure of interest rates and changing individual issuer credit spreads.

ProAssurance’s cash and short-term investment portfolio at June 30, 2012 is on a cost basis which approximates its fair value. This portfolio lacks significant interest rate sensitivity due to its short duration.

Credit Risk

We have exposure to credit risk primarily as a holder of fixed income securities. We control this exposure by emphasizing investment grade credit quality in the fixed income securities we purchase.

As of June 30, 2012, 95% of our fixed maturity securities are rated investment grade as determined by Nationally Recognized Statistical Rating Organizations (NRSROs), such as A.M. Best, Fitch, Moody’s and Standard & Poor’s. We believe that this concentration in investment grade securities reduces our exposure to credit risk on our fixed income investments to an acceptable level. However, investment grade securities, in spite of their rating, can rapidly deteriorate and result in significant losses. Ratings published by the NRSROs are one of the tools used to evaluate the credit worthiness of our securities. The ratings reflect the subjective opinion of the rating agencies as to the credit worthiness of the securities, and therefore, we may be subject to additional credit exposure should the rating prove to be unreliable.

We hold $1.2 billion of municipal bonds at June 30, 2012. We require the bonds that we purchase to meet our credit criteria on a stand-alone basis. As of June 30, 2012, on a stand-alone basis, our municipal bonds have a weighted average rating of AA.

We also have exposure to credit risk related to our receivables from reinsurers. Our receivables from reinsurers (on both paid and unpaid losses) approximate $255 million at June 30, 2012 and $252 million at December 31, 2011. We monitor the credit risk associated with our reinsurers using publicly available financial and rating agency data.

Equity Price Risk

At June 30, 2012 the fair value of our investment in common stocks is $155 million. These securities are subject to equity price risk, which is defined as the potential for loss in fair value due to a decline in equity prices. The weighted average beta of this group of securities is 0.96. Beta measures the price sensitivity of an equity security or group of equity securities to a change in the broader equity market, in this case the S&P 500 Index. If the value of the S&P 500 Index increased by 10%, the fair value of these securities would be expected to increase by 10% to $169 million. Conversely, a 10% decrease in the S&P 500 Index would imply a decrease of 10% in the fair value of these securities to $140 million. The selected hypothetical changes of plus or minus 10% do not reflect what could be considered the best or worst case scenarios and are used for illustrative purposes only.

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ITEM 4. CONTROLS AND PROCEDURES.

The Chief Executive Officer and Chief Financial Officer of the Company participated in management’s evaluation of our disclosure controls and procedures (as defined in SEC Rule 13a-15(e)) as of June 30, 2012. ProAssurance’s disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to our management as appropriate to allow timely decisions regarding disclosure and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There have been no significant changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, those controls during the quarter.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

See Note 7 of the Notes to Condensed Consolidated Financial Statements.

ITEM 1A. RISK FACTORS.

There are no changes to the “Risk Factors” in Part 1, Item 1A of the 2011 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a) Not applicable.

(b) Not applicable.

(c) Information required by Item 703 of Regulation S-K.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
April 1 – 30, 2012		—	$	—		—	$	188,449,201
May 1 – 31, 2012		—	$	—		—	$	176,449,201	(2)
June 1 – 30, 2012		—	$	—		—	$	153,457,201	(2)
Total		—	$	—		—

(1) In November 2010, the ProAssurance Board of Directors authorized $200 million for the repurchase of common shares or the retirement of outstanding debt. This is ProAssurance’s only plan for the repurchase of common shares, and the plan has no expiration date.

(2) After giving effect to commitments to redeem Trust Preferred Securities and Surplus Notes. See Note 8 of the Notes to Condensed Consolidated Financial Statements.

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ITEM 6. EXHIBITS

10.1	Form of Release and Severance Compensation Agreement dated as of September 1, 2011 between ProAssurance and Ross E. Taubman:*
10.2	Form of Release and Severance Compensation Agreement dated as of April 2, 2012 between ProAssurance and Jerry D. Brant.*
10.3	Form of Indemnification Agreement between ProAssurance and each of the following named executive officers and directors of ProAssurance:*
	Victor T. Adamo
	Lucian F. Bloodworth
	Robert E. Flowers
	Howard H. Friedman
	M. James Gorrie
	Jeffrey P. Lisenby
	William J. Listwan
	John J. McMahon
	Drayton Nabers
	Frank B. O’Neil
	Ann F. Putallaz
	Edward L. Rand, Jr.
	Frank A. Spinosa
	W. Stancil Starnes
	Ross E. Taubman
	Anthony R. Tersigni
	Darryl K. Thomas
	Adam P. Wilczek
	Thomas A. S. Wilson, Jr.
31.1	Certification of Principal Executive Officer of ProAssurance as required under SEC rule 13a-14(a).
31.2	Certification of Principal Financial and Accounting Officer of ProAssurance as required under SEC rule 13a-14(a).
32.1	Certification of Principal Executive Officer of ProAssurance as required under SEC Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as amended (18 U.S.C. 1350).
32.2	Certification of Principal Financial and Accounting Officer of ProAssurance as required under SEC Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as amended (18 U.S.C. 1350).
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Denotes a management contract or compensatory plan, contract or arrangement required to be filed as an exhibit to this report.

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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, thereunto duly authorized.

PROASSURANCE CORPORATION

August 6, 2012

/s/    Edward L. Rand, Jr.

Edward L. Rand, Jr.

Chief Financial and Accounting Officer

(Duly authorized officer and principal financial and
accounting officer)

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EX-10.1

Exhibit 10.1

August 11, 2011

RELEASE AND SEVERANCE COMPENSATION AGREEMENT

THIS RELEASE AND SEVERANCE COMPENSATION AGREEMENT (the “Agreement”) is made and entered into effective September 1. 2011, (the “Effective Date”) between and among Ross E. Taubman, DPM an individual (the “Executive”) and ProAssurance Group Services Corporation, an Alabama corporation (“PRA Group Services”), on its own behalf and on behalf of Podiatry Insurance Company of America (“PICA”) and ProAssurance Corporation (“ProAssurance”). ProAssurance Group Services Corporation, Podiatry Insurance Company of America, and ProAssurance Corporation are hereinafter collectively referred to as the “Companies.”

RECITALS:

The Executive, as of the Effective Date, has agreed to leave private practice and become an executive officer of PICA in which capacity he will provide provides services to the Companies as an at will employee.. Executive will be employed at PICA’s offices located at 3000 Meridian Boulevard, Suite 400, Franklin, Tennessee 37067 in Williamson County, Tennessee, which will be Executive’s primary location of employment on date of this Agreement. The Companies have offered to expand protection to the Executive in the form of severance benefits payable on termination of employment under certain circumstances in consideration of Executive’s agreement to become an employee of PRA Group Services. PRA Group Services and Executive have entered into this Agreement to evidence the terms and conditions for payment of severance benefits upon termination of Executive’s employment as described herein.

AGREEMENT

NOW, THEREFORE, These Premises considered, and in consideration of the mutual covenants and promises in this Agreement, the sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:

(a) “Annual Base Salary” of the Executive shall be defined as the Executive’s annual base rate of compensation in effect as of the Date of Termination (herein defined), but in no event less than the greater of: (A) the Executive’s initial annual base rate of $350,000; or (B) the Executive’s annual base rate of compensation in effect as of the end of the last calendar quarter preceding the Date of Termination.

(b) “Average Annual Incentive Award(s) and Bonus(es)” of the Executive shall be defined as the amount equal to the average of the annual incentive award(s) and bonus(es) paid to Executive in each of the three complete calendar years prior to the Date of Termination or, if shorter, in each of the complete calendar years during the Executive’s entire period of employment with the Companies. The Annual Incentive Award(s) and Bonus(es) shall mean the dollar value of the cash or other consideration paid to the Executive by the Companies

as annual performance based compensation (whether or not deferred) in each calendar year during said period; the performance based compensation shall be deemed to be paid to Executive in the calendar year that the Executive is notified of the amount of the award of the performance based compensation and has the right to accept payment of the award. The Executive’s annual incentive awards and bonuses do not include long-term incentive compensation; therefore, Annual Incentive Awards and Bonuses shall be calculated excluding the value of options to purchase stock, performance shares, restricted stock units, or other long-term incentives;

(c) “Beneficial Ownership” is used as such term is used within the meaning of Rule 13d-3 promulgated under the Exchange Act.

(d) “Board” means the Board of Directors of ProAssurance either acting as a full Board or through its Compensation Committee.

(e) “Cause” means: (i) the Executive has been convicted in a federal or state court of a crime classified as a felony; (ii) action or inaction by the Executive (A) that constitutes embezzlement, theft, misappropriation or conversion of assets of the Companies which alone or together with related actions or inactions involve assets of more than a de minimus amount or that constitutes intentional fraud, gross malfeasance of duty, or conduct grossly inappropriate to Executive’s office, and (B) such action or inaction has adversely affected or is likely to adversely affect the business of the Companies, taken as a whole, or has resulted or is intended to result in a direct or indirect gain or personal enrichment of Executive to the detriment of the Companies; or (iii) Executive has been grossly inattentive to, or in a grossly negligent manner failed to competently perform, Executive’s job duties and the failure was not cured within 45 days after written notice from ProAssurance.

(f) “Code” means the Internal Revenue Code of 1986, as amended

(g) “Change of Control” shall mean the occurrence of any one of the following events during the term of this Agreement:

(i) an acquisition of the voting securities of ProAssurance by any Person, immediately after which such Person has Beneficial Ownership of more than 50.1% of the combined voting power of ProAssurance’s then outstanding voting securities, or an acquisition of the voting securities of PICA by any Person, other than a direct or indirect subsidiary of ProAssurance, immediately after which such Person has Beneficial Ownership of more than 50.1% of the combined voting power of PICA’s then outstanding voting securities;

(ii) a merger, consolidation or reorganization involving ProAssurance or PICA in which an entity other than ProAssurance or PICA (as applicable) is the surviving entity or in which ProAssurance or PICA (as applicable) is the surviving entity and any one Person, or more than one Person acting as a group (as defined in Section 409A of the Code), acquires ownership of stock of ProAssurance or PICA (as applicable) that together with the stock held by such Person or group, constitutes more than 50.1% of the outstanding voting securities of the surviving entity; or

(iii) the sale or other disposition of substantially all of the assets of ProAssurance or PICA (as defined in the regulations under Section 409A of the Code); or

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(iv) any other transaction that results in ProAssurance no longer having direct or indirect control of a majority of the outstanding voting securities of PICA or the successor to its business, so long as any one Person, or more than one Person acting as a group (as defined in Section 409A of the Code), acquires ownership of stock of PICA or the successor to its business that, together with the stock held by such Person or group, constitutes more than 50.1% of the outstanding voting securities of the surviving entity.

In no event shall a Change of Control be deemed to have occurred, with respect to Executive, if the Executive is part of a purchasing group which consummates a Change of Control Transaction. The Executive shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Executive is an equity participant or has agreed to become an equity participant in the purchasing company or group (except for ownership of less than 5% of the stock of the purchasing company).

(h) “Change of Control Transaction” means any of the transactions as described in subparagraphs (i), (ii) and (iii) of Section 1(g) hereof.

(i) “Disability” means a serious injury or illness that requires Executive to be under regular care of a licensed medical physician and renders the Executive incapable of performing the essential functions of the Executive’s position for twelve (12) consecutive months as determined by the Board in good faith and upon receipt of and in reliance on competent medical advice from one or more individuals selected by the Board, who are qualified to give professional medical advice. Executive will submit to such medical or psychiatric examinations and tests as such medical professional deems necessary to make any determination of Executive’s Disability and consent to such medical professional sharing the results of such examination with a representative of the Board.

(j) “Date of Termination” means Executive’s “separation from service” (as defined in Section 1.409A-3(a)(1) of the Treasury Regulations).

(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(l) “Good Reason” shall constitute any of the following circumstances if they occur without the Executive’s express written consent during the term of this Agreement: (i) a material diminution in the Executive’s authority, duties or responsibilities such that Executive no longer holds a position with executive level responsibilities consistent with the Executive’s training and experience; (ii) the Companies require a material change in the Executive’s primary location of employment of more than 100 miles from the location of the Executive’s primary location of employment on date of this Agreement; (iii) the Companies materially reduce the Executive’s incentive compensation opportunities and employee benefits to a level that is less than is provided to other executives of comparable rank with the Companies; (iv) a material breach by the Companies of any provision of this Agreement; (v) a material reduction by the Companies in the Executive’s Annual Base Salary (herein defined); (vi) the termination or non-renewal of this Agreement by the Companies except for the automatic termination of this Agreement at the expiration of the term that includes the date when the Executive reaches 65 years of age.

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(m) “Severance Benefits” means the payments and other benefits to be provided to the Executive under Section 3(a) or (b) hereof.

2. Term of Agreement. This Agreement shall continue in effect for an initial period commencing on the Effective Date and ending on August 31, 2013 (the “Initial Term”). Thereafter, this Agreement shall automatically be extended for successive terms of one year (each a “Renewal Term”), except that this Agreement shall not be renewed and shall terminate automatically and without any action of the Companies or the Executive at the expiration of the term that includes the date when the Executive reaches 65 years of age. If not sooner terminated, any of the Companies may elect to terminate this Agreement at the expiration of the then current term by delivery of written notice of the termination of this Agreement at least six months prior to the commencement of any renewal term.

3. Severance Benefits.

(a) If (A) during the Initial Term of this Agreement the Companies terminate the employment of Executive for any reason other than Cause, death or Disability, or the Executive terminates employment with the Companies for Good Reason, and (B) the Executive executes the Release as required in Section 3(c) hereof, the Executive shall receive the following benefits:

(i) Executive shall receive an amount equal to two (2) years of Annual Base Salary;

(ii) An amount equal to two (2) times the Average Annual Incentive Award(s) and Bonus(es); provided that for any Date of Termination occurring during the Initial Term, the amount paid under this Section 3(a)(ii) shall not be less than $70,192 Subject to the foregoing, the Average Annual Incentive Award(s) and Bonus(es)” shall be calculated in the manner set forth in Section 1(b) hereof; and

(iii) Payment of the Executive’s monthly COBRA premiums for continued health and dental insurance coverage for the shorter of the following: eighteen (18) months from the Date of Termination or until the Executive becomes eligible for substantially similar coverage under a subsequent employer’s group health plan; and

(iv) Outplacement services that are customary to Executive’s position.

(b) (1) If (A) during a Renewal Term of this Agreement the Companies terminate the employment of Executive for any reason other than Cause, death or Disability, or the Executive terminates employment with the Companies for Good Reason, and (B) the Executive executes the Release as required in Section 3(c) hereof, the Executive shall receive the following benefits:

(i) An amount equal to one (1) year of Executive’s Annual Base Salary;

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(ii) An amount equal to the Average Annual Incentive Award(s) and Bonus(es). The Average Annual Incentive Award(s) and Bonus(es)” shall be calculated in the manner set forth in Section 1(b) hereof; and

(iii) Payment of the Executive’s monthly COBRA premiums for continued health and dental insurance coverage for the shorter of the following: (A) twelve (12) months from the Date of Termination or until the Executive becomes eligible for substantially similar coverage under a subsequent employer’s group health plan; and

(iv) Outplacement services that are customary to Executive’s position.

(b) (2) Notwithstanding the provisions of Section 3(b)(1) hereof, the Executive shall receive the Severance Benefits described in this Section 3(b)(2) in lieu of and not in addition to the Severance Benefits described in Section 3(b)(1) hereof if all of the following conditions are satisfied: (A) a Change of Control Transaction occurs during the term of this Agreement; (B) during the period commencing on the date of the Change of Control Transaction and ending two (2) years after the effective date of the Change of Control Transaction, (x) the Companies terminate the employment of Executive for any reason other than Cause, Disability or death, or (y) the Executive terminates employment with the Companies for Good Reason; and (C) the Executive executes the Release as required in Section 3(c) hereof. In such event, the Severance Benefits payable to the Executive pursuant to this Section 3(b) shall be as follows:

(i) An amount equal to two (2) times the Executive’s Annual Base Salary;

(ii) An amount equal to two (2) times the Average Annual Incentive Award(s) or Bonus(es). The Average Annual incentive Award(s) and Bonus(es) shall be calculated in the manner set forth in Section 1(b) hereof;

(iii) Payment of the Executive’s monthly COBRA premiums for continued health and dental insurance coverage for the shorter of the following: eighteen (18) months from the Date of Termination or until the Executive becomes eligible for substantially similar coverage under a subsequent employer’s group health plan; and

(iv) Outplacement services that are customary to Executive’s position.

(c) Executive understands and agrees that the payment of the Severance Benefits described in subparagraphs (i) and (ii) of Section 3(a) or subparagraphs (i) and (ii) of either Section 3(b)(1) or Section 3(b)(2) hereof is subject to and conditioned upon Executive’s execution of the Release substantially in the form attached hereto as Exhibit A within twenty-two (22) days after the Date of Termination without subsequent revocation by Executive within seven (7) days after the execution of the Release. Subject to the foregoing, payment of the Severance Benefits, described in subparagraphs (i) (Annual Base Salary) and (ii) (Average Annual Incentive Award(s) or Bonus(es)) of Section 3(a), Section 3(b)(1) and Section 3(b)(2) hereof shall be made to Executive in cash or good funds in substantially equal installments during the Restricted Period (as defined in Section 6 hereof) in accordance with the normal payroll practices of ProAssurance in effect as of the Date of Termination commencing on the first payroll payment date following the expiration of thirty (30) days after the Date of

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Termination; provided that the obligation of the Companies to pay such Severance Benefits to the Executive shall be subject to termination as provided in Section 8 hereof in the event the Executive violates the covenants under either Section 6 or 7 hereof. The Companies shall withhold from any amounts payable under this Agreement all federal, state, city or other income and employment taxes that shall be required. Notwithstanding the foregoing, if the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), the payment schedule for Severance Benefits shall be modified or adjusted to provide that no payments shall be made until the expiration of six (6) months following the Date of Termination. In the event that payments are so delayed, a lump sum payment of the accumulated unpaid amounts attributable to the six (6) month period shall be made to Executive on the first day of the seventh month following the Date of Termination. This six month delay shall not apply to any Severance Benefits which are not subject to the requirements of Section 409A of the Code by reason of their being separation pay upon an involuntary separation from service and their meeting the requirements and limitations of the regulations under the above referenced Code section. In no event shall the aggregate amount of Severance Benefits be reduced as a result of such modification or adjustment. For purposes of Section 409A of the Code, the right to the series of installment payments is to be treated as a right to receive a series of separate payments.

(d) The outplacement services included in the Severance Benefits shall be provided to the Executive promptly after the execution of the Release but not later than the end of the calendar year following the year in which the Date of Termination occurred.

(e) The Executive shall be entitled to the following in addition to and not in limitation of the Severance Benefits: (i) accrued and unpaid base salary as of the Date of Termination; (ii) accrued vacation and sick leave, if any, on Date of Termination in accordance with the then current policy or plan of the Companies with respect to terminated employees generally; and (iii) vested benefits under the Companies’ employee benefit plans in which the Executive was a participant on Date of Termination, which vested benefits shall be paid or provided for in accordance with the terms of said employee benefit plans.

(f) The Executive shall not be entitled to receive Severance Benefits if employment with the Companies is terminated by reason of death or Disability of Executive; or by reason of termination of employment by the Executive without Good Reason; or by reason of termination of employment by the Companies with Cause.

(g) The Executive shall be under no duty or obligation to seek or accept other employment and shall not be required to mitigate the amount of the Severance Benefits provided under the Agreement by seeking employment or otherwise; provided, however, that the Executive shall be required to notify the Companies if the Executive becomes covered by a health or dental care program providing substantially similar coverage, at which time health or dental care continuation coverage provided under this Agreement shall cease.

4. Good Reason for Termination. In the event that Executive desires to terminate employment with the Companies for Good Reason, the Executive must provide the Companies with written notice no later than 45 calendar days after the Executive knows or should have known that Good Reason has occurred. Following the Executive’s notice, the Companies shall have 45 calendar days to rectify the circumstances causing the Good Reason. If

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the Companies fail to rectify the event(s) causing the Good Reason within the 45 day period after the Executive’s notice, or if any of the Companies delivers to the Executive written notice stating that the circumstances cannot or shall not be rectified, the Executive shall be entitled to assert Good Reason and terminate employment on or before 90 days after the delivery of the Executive’s notice. Should Executive fail to provide the required notice in a timely manner, Good Reason shall not be deemed to have occurred as a result of that event. The term of this Agreement shall not be deemed to have expired during the notice period, however, as long as the Executive has provided notice within the term.

5. Cause. If the Executive’s employment relationship with the Companies is terminated by the Companies for Cause, the Executive shall not be eligible for Severance Benefits and all rights of the Executive and obligations of the Companies under this Agreement shall expire. Any termination of the Executive’s employment by the Companies for Cause shall be communicated by a notice of termination to the Executive. The notice of termination shall be a written notice indicating the specific termination provision of this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under this provision. In the event the Executive disputes the basis for termination for Cause, Executive may elect to bypass the claims procedure set forth in Section 11 hereof and file for settlement of the dispute in arbitration as provided in Section 12 hereof; provided that if the arbitrator rules in favor of the Executive, the time for the execution of the Release under Section 3 hereof shall be extended until twenty-two (22) days after the final decision by the arbitrator, and in the event the Executive executes the Release during said twenty-two (22) day period and does not revoke the Release within seven (7) days after execution, the Executive shall be paid Severance Benefits as provided in Section 3 hereof commencing on the first payroll payment date following the expiration of thirty (30) days after the final decision of the arbitrator(or if earlier, the December 31 coincident with or immediately following the final decision of the arbitrator); and Executive shall be reimbursed for any COBRA premiums that were paid by Executive in the interim period (but not exceeding the maximum period specified under Section 3 hereof) between the termination of employment for COBRA purposes and the Date of Termination as determined by the arbitrator, with such reimbursement to be made on the first payroll payment date following the final decision of the arbitrator (or if earlier, the December 31 coincident with or immediately following the final decision of the arbitrator).

6. Non-Competition and Nonsolicitation Covenant. The Executive will not during the Restricted Period (herein defined):

(a) sell, solicit, induce, promote, facilitate, bring about, quote rates for, receive, write, bind, broker, transfer, accept or direct replacement or renewal insurance coverage or services for, or accept or direct any offer to purchase medical professional liability insurance (as defined below), to or from, a Customer (as defined below). In addition, and without limitation to the foregoing, Executive shall not otherwise directly or indirectly suggest, advise or attempt to persuade any Customer to discontinue any policy of insurance issued by the Insurance Subsidiary or to cancel, replace or not renew such policies nor shall Executive direct any Customers to obtain, renew or replace a policy of medical professional liability insurance with or through any person other than Employer; or

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(b) become Employed by a Competitor Company in a Primary Market Area of an Insurance Subsidiary, except that Executive may be employed with a Competitor Company so long as and on the condition that the Executive does not participate in the medical professional liability insurance business of the Competitor Company;

(c) solicit or induce any employees of the Companies to leave such employment or accept employment with any other person or entity, or solicit or induce any insurance agent of an Insurance Subsidiary to offer, sell or market medical professional liability insurance for a Competitor Company in a Primary Market Area of an Insurance Subsidiary.

For purposes of this Section 6 only, the following terms shall have the meanings set forth below:

“Companies” has the meaning set forth in the initial paragraph of this Agreement.

“Competitor Company” means an insurance company, insurance agency, business, for profit or not for profit organization (other than the Companies) that provides, or offers to provide medical professional liability insurance to health care providers.

“Customer” means (A) any health care provider engaged in a podiatric or chiropractic practice who or which was insured by an Insurance Subsidiary at any time during Executive’s employment with the Companies or (B) any insured or prospective insured of an Insurance Subsidiary with whom Executive had contact with during and in connection with Executive’s employment with the Companies.

“Employed” includes activities as an owner, proprietor, employee, agent, solicitor, partner, member, manager, principal, shareholder (owning more than 1% of the outstanding stock), consultant, officer, director or independent contractor.

“Health care providers” means physicians, dentists, podiatrists, physician assistants, chiropractors, nurse practitioners, other individual health care providers and hospital and other institutional health care providers.

“Insurance Subsidiary” means any direct or indirect subsidiary of ProAssurance Corporation, including without limitation PICA and PACO Assurance Company, Inc., that offers medical professional liability insurance or non-risk bearing products and services related to underwriting, claims or risk management, or indemnification for medical professional liability.

“Medical professional liability insurance” means medical malpractice insurance and reinsurance, and equivalent services such as administration of self-insured trusts, claims management services and risk management services for health care providers. “Medical professional liability insurance” does not include services provided as an employee of a health care provider if such services are rendered solely for the purpose of servicing medical professional liability risk of the employer or that of its employees.

“Primary Market Area” means any state in which the Insurance Subsidiaries derived more than $10 million in aggregate revenues from the sale of medical professional liability insurance and non-risk bearing medical professional liability services or products to health care providers in the most recent complete fiscal year prior to the Date of Termination.

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“Restricted Period” means a period of twelve (12) months from the Date of Termination; provided that in the event Severance Benefits are due to be paid to the Executive under Section 3(b) (2) hereof, the Restricted Period shall be extended and shall mean a period of twenty-four (24) months from Date of Termination.

7. Confidentiality. Executive will remain obligated under any confidentiality or nondisclosure agreement with or policy of the Companies (or any of them) that is currently in effect or to which the Executive may in the future be bound. In addition to and without limitation of the foregoing Executive understands, acknowledges and agrees to the following:

(a) During the course of Executive’s employment with the Companies, certain confidential information may have been divulged to or become known by Executive in the nature of, but not limited to (i) information concerning the Companies’ and their affiliates’ current, former and prospective employees; (ii) business practices and business plan; (iii) customer information; (iv) contract information; (v) marketing strategies; (vi) business plans; (vii) product information; (viii) policies and procedures; (ix) financial, pricing and wage information; (x) administrative information; (xi) future plans of the Companies and their affiliates; (xii) and other trade secrets, which is valuable, confidential information of Companies and their affiliates (all of which is referred to herein as “Confidential Information”), which Confidential Information has been uniquely developed by the Companies and their affiliates and cannot be readily obtained by third parties from outside sources.

(b) The Confidential Information is important and is an essential asset of the Companies.

(c) Executive’s knowledge of the Confidential Information could be useful to a competitor of the Companies, and their affiliates which do or intend to do business in competition with the Companies or their affiliates.

In recognition of the facts expressed above, Executive expressly agrees that Executive shall not use for Executive’s personal benefit, or disclose, communicate or divulge to, or use for the direct or indirect benefit of any person, firm, association or company, any confidential or competitive material or information of the Companies or their affiliates, or Confidential Information.

8 Reasonableness of Restrictions; Available Remedies.

(a) The Companies acknowledge and agree that the duties of Executive may require that Executive must have and continue to have throughout the period of employment the benefits and use of its goodwill, confidential information and trade secrets to properly carry out Executive’s responsibilities, and that the Companies accordingly promise to provide Executive with access to new and additional confidential information and trade secrets as they are generated, without regard to the duration of his employment, and to authorize Executive to engage in activities that will create new and additional confidential information and trade secrets. Executive and the Companies agree that the restrictions contained in Sections 6 and 7 of this Agreement are fair and reasonable in all respects, including the geographic and temporal restrictions, and that the benefits described in this Agreement, to the extent any separate or special consideration is necessary, are fully sufficient for Executive’s obligations under this Agreement.

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(b) If the Executive is deemed to have materially breached the non-competition covenants set forth in Section 6 hereof or the confidentiality covenants set forth in Section 7 hereof, the Companies may, in addition to seeking an injunction or any other remedy they may have, withhold or cancel any remaining payments or benefits due to the Executive pursuant to Section 3 of this Agreement. The Companies shall give prior or contemporaneous written notice of such withholding or cancellation of payments in accordance with Section 3 hereof. If the Executive violates any of these covenants, the Companies shall be further entitled to an immediate preliminary and permanent injunctive relief, without bond, in addition to any other remedy which may be available to the Companies.

9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Companies and Executive and their respective devisees, heirs, legal or personal representatives, successors and assigns. Notwithstanding the foregoing, this Agreement is personal to the Executive and the rights and obligations hereunder may not be assigned by Executive without the prior written consent of ProAssurance. In the event that Executive dies while receiving Severance Benefits under this Agreement, any remaining unpaid Severance Benefits shall be paid to the estate of the Executive following the payment schedule set forth in Section 3(c) of this Agreement after ProAssurance receives notice of death and payment instructions from the representative of the estate of Executive, but in no event shall any payment be made later than the December 31 immediately following the date payment is due or, if later, the 15th day of the third calendar month following the date payment is due.

10. Notice. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or commercial courier or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses as set forth below or to such other address as one party may have furnished to the other in writing in accordance herewith.

Notice to the Executive:
Ross E. Taubman, DPM
Notice to the Companies:
ProAssurance Corporation	Street Address:
Mailing Address:	100 Brookwood Place
P. O. Box 590009	Birmingham, Alabama 35209
Birmingham, Alabama 35259-0009
Attention: President: cc Secretary

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11. Claims Procedure.

(a) The administrator for purposes of this Agreement shall be ProAssurance (“Administrator”), whose address is 100 Brookwood Place, Birmingham, Alabama 35209; Telephone: (205) 877-4400. The “Named Fiduciary” as defined in Section 402(a) (2) or ERISA, also shall be ProAssurance. ProAssurance shall have the right to designate one or more employees of the Companies as the Administrator and the Named Fiduciary at any time, and to change the address and telephone number of the same. ProAssurance shall give the Executive written notice of any change in the Administrator and Named Fiduciary, or in the address or telephone number of the same.

(b) The Administrator shall make all determinations as to the right of any person to receive benefits under the Agreement. Any denial by the Administrator of a claim for benefits by the Executive (“the claimant”) shall be stated in writing by the Administrator and delivered or mailed to the claimant within ten (10) days after receipt of the claim, unless special circumstances require an extension of time for processing the claim. If such an extension is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 10-day period. In no event shall such extension exceed a period of ten (10) days from the end of the initial period. Any notice of denial shall set forth the specific reasons for the denial, specific reference to pertinent provisions of this Agreement upon which the denial is based, a description of any additional material or information necessary for the claimant to perfect the claim, with an explanation of why such material or information is necessary, and any explanation of claim review procedures, written to the best of the Administrator’s ability in a manner that may be understood without legal or actuarial counsel.

(c) A claimant whose claim for benefits has been wholly or partially denied by the Administrator may request, within ten (10) days following the receipt of such denial, in a writing addressed to the Administrator, a review of such denial. The claimant shall be entitled to submit such issues or comments in writing or otherwise, as the claimant shall consider relevant to a determination of the claim, and the claimant may include a request for a hearing in person before the Administrator. Prior to submitting the request, the claimant shall be entitled to review such documents as the Administrator shall agree are pertinent to the claim. The claimant may, at all stages of review, be represented by counsel, legal or otherwise, of the claimant’s choice. All requests for review shall be promptly resolved. The Administrator’s decision with respect to any such review shall be set forth in writing and shall be mailed to the claimant not later than ten (10) days following receipt by the Administrator of the claimant’s request unless special circumstances, such as the need to hold a hearing, require an extension of time for processing, in which case the Administrator’s decision shall be so mailed not later than twenty (20) days after receipt of such request.

12. Arbitration. The parties to this Agreement agree that final and binding arbitration shall be the sole recourse to settle any claim or controversy arising out of or relating to a breach or the interpretation of this Agreement, except as either party may be seeking injunctive relief. Either party may file for arbitration. A claimant seeking relief on a claim for benefits, however, must first follow the procedure in Section 11 hereof and may file for arbitration within sixty (60) days following claimant’s receipt of the Administrator’s written decision on review under Section 11(c) hereof, or if the Administrator fails to provide any written decision under Section 11

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hereof, within 60 days of the date on which such written decision was required to be delivered to the claimant as therein provided. The arbitration shall be held at a mutually agreeable location, and shall be subject to and in accordance with the arbitration rules then in effect of the American Arbitration Association; provided that if the location cannot be agreed upon the arbitration shall be held in Nashville, Tennessee. The arbitrator may award any and all remedies allowable by the cause of action subject to the arbitration, but the arbitrator’s sole authority shall be to interpret and apply the provisions of this Agreement. In reaching its decision the arbitrator shall have no authority to change or modify any provision of this Agreement or other written agreement between the parties. The arbitrator shall have the power to compel the attendance of witnesses at the hearing. Any court having jurisdiction may enter a judgment based upon such arbitration. All decisions of the arbitrator shall be final and binding on the parties without appeal to any court. Upon execution of this Agreement, the Executive shall be deemed to have waived any right to commence litigation proceedings regarding this Agreement outside of arbitration or injunctive relief without the express consent of ProAssurance. The Companies shall pay all arbitration fees and the arbitrator’s compensation. If the Executive prevails in the arbitration proceeding, the arbitrator may require the Companies to reimburse the Executive for the reasonable fees and expenses of Executive’s personal counsel for his or her professional services rendered to the Executive in connection with the enforcement of this Agreement. The amount of expenses eligible for reimbursement during one calendar year may not affect the expenses eligible for reimbursement in any other calendar year.

13. Miscellaneous.

(a) Except insofar as this provision may be contrary to applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment of any benefits under this Agreement shall be valid or recognized by the Companies.

(b) This Agreement is an unfunded deferred compensation arrangement for a member of a select group of the Companies’ management and any exemptions under ERISA, as applicable to such arrangement, shall be applicable to this Agreement. Nothing in this Agreement shall require or be deemed to require the Companies or any of them to segregate, earmark or otherwise set aside any funds or other assets to provide for any payments made or required to be made hereunder.

(c) It is understood acknowledged and agreed that Executive is and will be an “at will” employee of any one or more of the Companies. Nothing in this Agreement shall be deemed to create an employment agreement between the Executive and the Companies or any of them providing for Executive’s employment for any fixed duration, nor shall it be deemed to modify or undercut the Executive’s at will employment status with the Companies.

(d) It is understood and agreed by the Companies and Executive that the terms of this Agreement relating to the payment of Severance Benefits are intended to comply in all respects with the requirements of Code Section 409A. For purposes of determining whether Severance Benefits may be payable to an Executive in compliance with Code Section 409A, the Executive’s employment will be considered as having been terminated for purposes of this Agreement if the parties reasonably anticipate either (i) that Executive will no longer perform any services for the Companies or (ii) that the level of bona fide services performed for the

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Companies (whether as an employee or independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by Executive over the immediately preceding 36-month period (or the full period of services to the Companies if Executive has been providing services to the Companies for less than 36 months).

(e) Neither the provisions of this Agreement nor the severance benefits provided hereunder shall reduce any amounts otherwise payable, or in any way diminish the Executive’s rights as an employee of the Companies, whether existing now or hereafter, under any benefit, incentive, retirement, stock option, stock bonus or stock purchase plan, or any employment agreement or other plan or arrangement.

(f) This Agreement sets forth the entire agreement between the parties with respect to the matters set forth herein and supersedes in their entirety any prior written or oral agreements or understandings between Executive and the Companies regarding the subject matter of this Agreement; provided, however, that the Companies are bound by the terms of the April 6, 2011 letter from Gregory P. Jacobson to the Executive during the Initial Term of this Agreement (attached to this Agreement as an Exhibit). This Agreement may not be modified or amended except by written agreement intended as such and signed by all parties.

(g) The Companies, from time to time, shall provide government agencies with such reports concerning this Agreement as may be required by law, and shall provide Executive with such disclosure concerning this Agreement as may be required by law or as the Companies may deem appropriate.

(h) Executive and the Companies respectively acknowledge that each of them has read and understand this Agreement, that they have each had adequate time to consider this Agreement and discuss it with each of their attorneys and advisors, that each of them understands the consequences of entering into this Agreement, that each of them is knowingly and voluntarily entering into this Agreement, and that they are each competent to enter into this Agreement.

(i) If any provision of this Agreement is determined to be unenforceable, at the discretion of ProAssurance the remainder of this Agreement shall not be affected but each remaining provision shall continue to be valid and effective and shall be modified so that it is enforceable to the fullest extent permitted by law. Moreover, in the event this Agreement is determined to be unenforceable against any of the Companies, it shall continue to be valid and enforceable against the other Companies.

(j) This Agreement will be interpreted as a whole according to its fair terms. It will not be construed strictly for or against either party.

(k) Except to the extent that federal law controls, this Agreement is to be construed according to Delaware law.

[Signatures on following page]

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.

EXECUTIVE:
Ross E. Taubman, DPM
ProAssurance Group Services Corporation
By:
	Victor T. Adamo
Its:	President
ProAssurance Corporation
By:
	Victor T. Adamo
Its:	President
Podiatry Insurance Company of America
By:
	Jerry D. Brant, DPM
Its:	President

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RELEASE IN CONJUNCTION WITH SEVERANCE COMPENSATION

This Release of Claims (“Release”) is given to ProAssurance Corporation (“ProAssurance”), for itself and for its subsidiaries (including but not limited to ProAssurance Group Services Corporation and Podiatry Insurance Company of America) and any successor company that has assumed the Agreement to which this Release was an attachment (all such organizations being referred to in this Release as the “Companies”) and Ross E. Taubman, DPM (“Executive”).

The Companies and Executive have agreed to terminate their employment relationship. To effect an orderly termination, the Executive, and the Companies are entering into this Release.

1. Effective with the Date of Termination, Executive is relieved of all duties and obligations to the Companies, except as provided in this Release or any applicable provisions of the Release and Severance Compensation Agreement between Companies and Executive, effective as of September 1, 2011 (“Agreement”), which survive termination of the employment relationship. Unless otherwise specifically defined herein, capitalized terms shall have the meaning attributed to them in the Agreement.

2. Executive hereby resigns as an officer and director, as applicable, of the Companies effective on the Date of Termination and hereby waives any and all rights Executive may otherwise have to continued employment with or re-employment by the Companies or any parent, subsidiary or affiliate of Companies.

3. Executive agrees that this Release, the Agreement and the Severance Benefits provided under the Agreement are confidential and shall not be disclosed or published directly or indirectly to third persons, except as necessary to enforce its terms, by Executive or to Executive’s immediate family upon their agreement not to disclose the fact or terms of this Release, or to Executive’s attorney, financial consultant or accountant, except that Executive and the Companies may disclose, as necessary, (i) the fact that Executive has terminated Executive’s employment with the Companies, and (ii) the terms of this Agreement and Severance Benefits as required under the securities laws and regulations and the listing requirements of any stock exchange or national market system and as otherwise required by law.

4. Any fringe benefits that Executive has received or currently is receiving from the Companies or its affiliates shall cease effective with the Date of Termination, except as otherwise provided for in this Release, in the Agreement or by law.

5. The parties agree that the terms contained and payments provided for in the Agreement are compensation for and in full consideration of Employee’s release of claims under this Release, and Executive’s confidentiality, non-compete, non-solicitation and non-disclosure agreements contained in the Agreement.

6. The Executive shall be under no duty or obligation to seek or accept other employment and shall not be required to mitigate the amount of the Severance Benefits (as defined and provided under the Agreement) by seeking employment or otherwise, provided,

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however, that the Executive shall be required to notify the Companies if the Executive becomes covered by a health or dental care program providing substantially similar coverage, at which time health or dental care continuation coverage provided under the Agreement shall cease.

7. Executive waives, releases, and forever discharges the Companies and each of their direct or indirect parents, subsidiaries, affiliates, and any partnerships, joint ventures or other entities involving or related to any of the Companies, their parents, subsidiaries or affiliates, and all present or former employees, officers, agents, directors, successors, assigns and attorneys of any of these corporations, persons or entities (all collectively referred to in this Release as the “Released”) from any and all claims, charges, suits, causes of action, demands, expenses and compensation whatsoever, known or unknown, direct or indirect, on account of or growing out of Executive’s employment with and termination from the Companies, or relationship or termination of such relationship with any of the Released, or arising out of related events occurring through the date on which this Release is executed. This includes, but is not limited to, claims for breach of any employment contract; handbook or manual; any express or implied contract; any tort; continued employment; loss of wages or benefits; attorney fees; employment discrimination arising under any federal, state, or local civil rights or anti-discrimination statute, including specifically any claims Executive may have under the federal Age Discrimination in Employment Act, as amended, 29 USC §§ 621, et seq.; emotional distress; harassment; defamation; libel; slander; and all other types of claims or causes of action whatsoever arising under any other state or federal statute or common law of the United States. Notwithstanding anything in this Release to the contrary, nothing in this Release shall be construed to waive, release or discharge the Companies from making any payments or providing any benefits to Executive in accordance with the terms of the Agreement after the Date of Termination

8. The Executive does not waive or release any rights or claims that may arise under the federal Age Discrimination in Employment Act, as amended, after the date on which this Release is executed by the Executive.

9. The Executive acknowledges and agrees that Executive has been advised in writing by this Release, and otherwise, to CONSULT WITH AN ATTORNEY before Executive executes this Release.

10. The Executive agrees that Executive received a copy of this Release prior to executing the Agreement, that this Release incorporates the Companies’ FINAL OFFER; that Executive has been given a period of at least twenty-two (22) calendar days within which to consider this Release and its terms and to consult with an attorney should Executive so elect.

11. The Executive shall have seven (7) calendar days following Executive’s execution of this Release to revoke this Release. Any revocation of this Release shall be made in writing by the Executive and shall be received on or before the time of close of business on the seventh calendar day following the date of the Employee’s execution of this Release at ProAssurance’s address at 100 Brookwood Place, P. O. Box 590009, Birmingham, Alabama 35259-0009, Attention: President: cc Secretary, or such other place as the Companies may notify Executive in writing. This Release shall not become effective or enforceable until the eighth (8^th) calendar day following the Executive’s execution of this Release.

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12. Executive and the Companies acknowledge that they have read and understand this Release, that they have had adequate time to consider this Release and discuss it with their attorneys and advisors, that they understand the consequences of entering into this Release, that they are knowingly and voluntarily entering into this Release, and that they are competent to enter into this Release.

13. This Release shall benefit and be binding upon the parties and their respective directors, officers, employees, agents, heirs, successors, assigns, devisees and legal or personal representatives.

14. This Release, along with the attached Agreement, sets forth the entire agreement between the parties at the time and date these documents are executed, and fully supersedes any and all prior agreements or understandings between them pertaining to the subject matter in this Release. This Release may not be modified or amended except by a written agreement intended as such, and signed by all parties.

15. Except to the extent that federal law controls, this Release is to be construed according to the law of the state of Delaware.

16. If any provision of this Release is determined to be unenforceable, at the discretion of ProAssurance the remainder of this Release shall not be affected but each remaining provision or portion shall continue to be valid and effective and shall be modified so that it is enforceable to the fullest extent permitted by law.

17. To signify their agreement to the terms of this Release, the parties have executed it on the date set forth opposite their signatures, or those of their authorized agents, which follow.

	EXECUTIVE
Dated:	Ross E. Taubman

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EX-10.2

Exhibit 10.2

Execution Copy

RELEASE AND SEVERANCE COMPENSATION AGREEMENT

THIS RELEASE AND SEVERANCE COMPENSATION AGREEMENT (the “Agreement”) is made and entered into effective April 2, 2012 (the “Effective Date”) between and among ProAssurance Group Services Corporation, an Alabama corporation, and ProAssurance Corporation, a Delaware corporation (“ProAssurance”), and Jerry D. Brant, an individual (the “Executive”). ProAssurance and its direct and indirect subsidiaries, including without limitation Podiatry Insurance Company of America (“PICA), are hereinafter collectively referred to as the “Companies.”

RECITALS:

ProAssurance and Executive are entering into this Agreement in accordance with the terms of the Employment Agreement dated April 1, 2009, pursuant to which Executive was employed as the President and CEO of PICA for a three-year term. As of the Effective Date, the Employment Agreement has terminated, Executive has resigned as President and CEO of PICA, and Executive continues to provide services to the Companies as an at-will employee of ProAssurance Group Services Corporation, which is a wholly owned subsidiary of ProAssurance. Executive is currently employed at the Companies’ offices in Williamson County, Tennessee, which is Executive’s primary location of employment on date of this Agreement. ProAssurance has offered to expand protection to the Executive in the form of severance benefits payable on termination of employment under certain circumstances in consideration of Executive’s agreement to continue his employment with the Companies. ProAssurance and Executive have entered into this Agreement to evidence the terms and conditions for payment of severance benefits upon termination of Executive’s employment with the Companies.

AGREEMENT

NOW, THEREFORE, These Premises Considered, and in consideration of the mutual covenants and promises in this Agreement, the sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:

(a) “Annual Base Salary” of the Executive shall be defined as the Executive’s annual base rate of compensation in effect as of the Date of Termination (herein defined), but in no event less than the greater of: (A) the Executive’s annual base rate of compensation in effect as of the Effective Date of this Agreement; or (B) the Executive’s annual base rate of compensation in effect as of the end of the last calendar quarter preceding the Date of Termination.

(b) “Beneficial Ownership” is used as such term is used within the meaning of Rule 13d-3 promulgated under the Exchange Act.

(c) “Board” means the Board of Directors of ProAssurance either acting as a full Board or through its Compensation Committee.

(d) “Cash Benefits” means the sum of (i) the cash payments due to be paid to the Executive under Section 3(a)(i) hereof; and (ii) the cash payment due to be made to Executive pursuant to Section 3(a)(ii) hereof, if any. Executive and the Companies agree that the amount of the Cash Benefits is $1,912,962 as of the Effective Date.

(e) “Cause” means: (i) the Executive has been convicted in a federal or state court of a crime classified as a felony; (ii) action or inaction by the Executive (A) that constitutes embezzlement, theft, misappropriation or conversion of assets of the Companies which alone or together with related actions or inactions involve assets of more than a de minimus amount or that constitutes intentional fraud, gross malfeasance of duty, or conduct grossly inappropriate to Executive’s office, and (B) such action or inaction has adversely affected or is likely to adversely affect the business of the Companies, taken as a whole, or has resulted or is intended to result in a direct or indirect gain or personal enrichment of Executive to the detriment of the Companies; or (iii) Executive has been grossly inattentive to, or in a grossly negligent manner failed to competently perform, Executive’s job duties and the failure was not cured within 45 days after written notice from ProAssurance.

(f) “Code” means the Internal Revenue Code of 1986, as amended

(g) “Disability” means a serious injury or illness that requires Executive to be under regular care of a licensed medical physician and renders the Executive incapable of engaging in any substantial gainful activity for twelve (12) consecutive months as determined by the Board in good faith and upon receipt of and in reliance on competent medical advice from one or more individuals selected by the Board, who are qualified to give professional medical advice. Executive will submit to such medical or psychiatric examinations and tests as such medical professional deems necessary to make any determination of Executive’s Disability and consent to such medical professional sharing the results of such examination with a representative of the Board.

(h) “Date of Termination” means Executive’s “separation from service” (as defined in Section 1.409A-3(a)(1) of the Treasury Regulations).

(i) “Employment Agreement” means the Employment Agreement between Executive and ProAssurance, dated April 1, 2009.

(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(k) “Good Reason” shall constitute any of the following circumstances if they occur without the Executive’s express written consent during the term of this Agreement: (i) a material diminution in the Executive’s authority, duties or responsibilities such that Executive no longer holds a position with executive level responsibilities consistent with the Executive’s position of Chief Executive Officer of PICA; (ii) the Companies require a material change in the

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Executive’s primary location of employment of more than 100 miles from the location of the Executive’s primary location of employment on date of this Agreement; (iii) the Companies materially reduce the Executive’s incentive compensation opportunities and employee benefits to a level that is less than is provided to other senior level executives of the Companies; (iv) a material breach by the Companies of any provision of this Agreement; (v) a material reduction by the Companies in the Executive’s Annual Base Salary (herein defined); (vi) the death or Disability of Executive; or (vii) the election of the Executive to terminate his employment with the Companies pursuant to Section 3(g) hereof.

(l) “Severance Benefits” means the payments and other benefits to be provided to the Executive under Section 3 (a) hereof.

2. Term of Agreement.

(a) The term of this Agreement shall commence on the Effective Date and end on the sooner of either April 1, 2015 or Executive’s termination of employment with the Companies (the “Term”).

(b) During the Term of this Agreement, Executive shall be entitled to compensation for his services as an employee of the Companies on substantially the same terms as set forth in Section 3 of the Employment Agreement.

3. Severance Benefits.

(a) If (A) during the Term of this Agreement, the Companies terminate the employment of Executive for any reason other than Cause or the Executive terminates employment with the Companies for Good Reason, and (B) the Executive, executes the Release as required in Section 3(b) hereof, the Executive shall receive the following benefits:

(i) An amount equal to the product of the Executive’s Annual Base Salary multiplied by the Severance Term Factor. For purposes of this Section 3(a)(i), the Severance Term Factor shall be the number 36 minus the number of full calendar months that have elapsed since the Effective Date (and counting the month in which the Effective Date occurs as a full calendar month for this purpose) divided by 12;

(ii) If applicable, an amount equal to the payment required to be made to the Executive under Section 6(b) hereof;

(iii) An amount equal to $19,368 in lieu of Executive’s monthly COBRA premiums for continued health and dental insurance coverage for eighteen (18) months from the Date of Termination; and

(iv) Outplacement services that are customary to Executive’s position.

(b) Executive understands and agrees that the payment of Cash Benefits is subject to and conditioned upon the execution of the Release substantially in the form attached hereto as Exhibit A (the “Release”) within twenty-two days after the Date of Termination without subsequent revocation by Executive within seven (7) days after execution of the Release.

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Subject to the foregoing, payment of the Cash Benefits shall be made to Executive in cash or good funds in equal monthly installments during the Restricted Period (as defined in Section 6 hereof) in accordance with the normal payroll practices of ProAssurance in effect on Date of Termination commencing on the first payroll payment date following the expiration of thirty (30) days after the Date of Termination; provided that the obligation of the Companies to pay the Cash Benefits to the Executive shall be subject to termination as provided in Section 8 hereof in the event the Executive violates the covenants under either Section 6 or Section 7 hereof. The Companies shall withhold from any amounts payable under this Agreement all federal, state, city or other income and employment taxes that shall be required. Notwithstanding the foregoing, if the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), the payment schedule for Cash Benefits shall be modified or adjusted to provide that no payments shall be made until the expiration of six (6) months following the Date of Termination. In the event that payments are so delayed, a lump sum payment of the accumulated unpaid amounts attributable to the six (6) month period shall be made to Executive on the first day of the seventh month following the Date of Termination. This six month delay shall not apply to any Cash Benefits which are not subject to the requirements of Section 409A of the Code by reason of their being separation pay upon an involuntary separation from service and their meeting the requirements and limitations of the regulations under the above referenced Code section. In no event shall the aggregate amount of Cash Benefits be reduced as a result of such modification or adjustment. For purposes of Code Section 409A, the right to the series of installment payments is to be treated as the right to receive a series of separate payments.

(c) The payment to be made under Section 3(a)(iii) shall be a lump sum cash payment to be made at the time of the first payment of the Cash Benefits pursuant to Section 3(b) hereof. The outplacement services to be provided pursuant to Section 3(a)(iv) hereof shall be provided to the Executive promptly after the execution of the Release but not later than the end of the calendar year following the year in which the Date of Termination occurred.

(d) The Executive shall be entitled to the following in addition to and not in limitation of the Severance Benefits: (i) accrued and unpaid base salary as of the Date of Termination; (ii) accrued vacation and sick leave, if any, on Date of Termination in accordance with the then current policy or plan of the Companies with respect to terminated employees generally; and (iii) vested benefits under the Companies’ employee benefit plans in which the Executive was a participant on Date of Termination, which vested benefits shall be paid or provided for in accordance with the terms of said employee benefit plans.

(e) The Executive shall not be entitled to receive Severance Benefits if employment with the Companies is terminated by reason of termination of employment by the Executive without Good Reason (herein defined) or by reason of termination of employment by the Companies with Cause.

(f) The Executive shall be under no duty or obligation to seek or accept other employment and shall not be required to mitigate the amount of the Severance Benefits provided under the Agreement by seeking employment or otherwise.

(g) Notwithstanding any provisions of this Agreement and this Section 3 to the contrary, the Executive may unilaterally and of his own accord terminate his employment

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relationship with the Companies during the Term by delivery of notice to ProAssurance in accordance with Section 10 hereof. In the event the Executive elects to terminate employment with the Companies pursuant to this Section 3(g), the Executive shall be deemed to have terminated his employment for Good Reason and shall be entitled to Severance Benefits pursuant to Section 3(a) hereof, and neither Executive nor the Companies shall be required to comply with the provisions of Section 4 hereof; provided that if the Companies deliver a notice of termination for Cause under Section 5 hereof which sets forth reasons for termination for Cause that occurred prior to the date of delivery of Executive’s notice of termination pursuant to this Section 3(g) and the Executive’s employment is terminated for Cause for the reasons set forth in said notice of termination for Cause, the employment of the Executive shall be deemed to have been terminated by the Companies for Cause, and not by the Executive for Good Reason, and the Executive shall not be entitled to any Severance Benefits hereunder

4. Good Reason for Termination. In the event that Executive desires to terminate employment with the Companies for Good Reason (other than for death or Disability or notice under Section 3(g) hereof), the Executive must provide the Companies with written notice no later than 45 calendar days after the Executive knows or should have known that Good Reason has occurred. Following the Executive’s notice, the Companies shall have 45 calendar days to rectify the circumstances causing the Good Reason. If the Companies fail to rectify the event(s) causing the Good Reason within the 45 day period after the Executive’s notice, or if any of the Companies delivers to the Executive written notice stating that the circumstances cannot or shall not be rectified, the Executive shall be entitled to assert Good Reason and terminate employment on or before 90 days after the delivery of the Executive’s notice. Should Executive fail to provide the required notice in a timely manner, Good Reason shall not be deemed to have occurred as a result of that event. The term of this Agreement shall not be deemed to have expired during the notice period, however, as long as the Executive has provided notice within the term.

5. Cause. If the Executive’s employment relationship with the Companies is terminated by the Companies for Cause, the Executive shall not be eligible for Severance Benefits and all rights of the Executive and obligations of the Companies under this Agreement shall expire. Any termination of the Executive’s employment by the Companies for Cause shall be communicated by a notice of termination to the Executive. The notice of termination shall be a written notice indicating the specific termination provision of this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under this provision. In the event the Executive disputes the basis for termination for Cause, Executive may elect to bypass the claims procedure set forth in Section 11 hereof and file for settlement of the dispute in arbitration as provided in Section 12 hereof; provided that if the arbitrator rules in favor of the Executive, the time for the execution of the Release under Section 3(b)hereof shall be extended twenty-two (22) days after the final decision by the arbitrator, and in the event the Executive executes the Release during said twenty-two (22) day period and does not revoke the Release within seven (7) days after execution, the Executive shall be paid Cash Benefits as provided in Section 3(b) hereof commencing on the first payroll payment date following the expiration of thirty (30) days after the final decision of the arbitrator (or if earlier, the December 31 coincident with or immediately following the final decision of the arbitrator).

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6. Non-Competition; Nonsolicitation of Employee.

(a) The Executive will not during the Restricted Period (herein defined):

(i) become Employed by a Competitor Company that offers, sells or markets podiatric professional liability insurance in any state in which PICA is actively writing podiatric professional liability insurance on Date of Termination;

(ii) become Employed by a Competitor Company that offers, sells, or markets medical professional liability insurance in a Primary Market Area of an Insurance Subsidiary, except that Executive may be employed with a Competitor Company so long as and on the condition that the Executive does not participate in the medical professional liability insurance business of the Competitor Company; or

(iii) solicit or induce any employees of the Companies to leave such employment or accept employment with any other person or entity, or solicit or induce any insurance agent of an Insurance Subsidiary to offer, sell or market medical professional liability insurance for a Competitor Company in a Primary Market Area of an Insurance Subsidiary.

For purposes of this Section 6 only, the following terms shall have the meanings set forth below:

“Companies” has the meaning set forth in the initial paragraph of this Agreement.

“Competitor Company” means an insurance company, insurance agency, business, for profit or not for profit organization (other than the Companies) that provides, or offers to provide professional liability insurance to health care providers.

“Employed” includes activities as an owner, proprietor, employee, agent, solicitor, partner, member, manager, principal, shareholder (owning more than 1% of the outstanding stock), consultant, officer, director or independent contractor.

“Health care providers” means physicians, dentists, podiatrists, chiropractors, physician assistants, nurse practitioners, other individual health care providers and hospital and other institutional health care providers.

“Insurance Subsidiary” means any direct or indirect subsidiary of ProAssurance that offers medical professional liability insurance or non-risk bearing products and services related to underwriting, claims or risk management, or indemnification for medical professional liability.

“Primary Market Area” means any state in which the Insurance Subsidiaries derived more than $15 million in aggregate revenues from the sale of medical professional liability insurance and non-risk bearing medical professional liability services or products to health care providers in the most recent complete fiscal year prior to the Date of Termination.

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“Medical Professional liability insurance” means medical malpractice insurance and reinsurance, and equivalent services such as administration of self-insured trusts, claims management services and risk management services for health care providers. “Professional liability insurance” does not include services provided as an employee of a health care provider if such services are rendered solely for the purpose of servicing medical professional liability risk of the employer or that of its employees.

“Restricted Period” means a period of twenty-four (24) months from the Date of Termination; provided that if Executive terminates employment pursuant to Section 3(g) hereof on or before June 30, 2012, the “Restricted Period” means a period of thirty-six (36) months from Date of Termination.

(b) The Companies understand that Executive intends to terminate his employment in accordance with Section 3(g) hereof in connection with his planned retirement in 2012, and in connection therewith, Executive has provided substantial assistance to the Companies in the transition of leadership at PICA. In consideration of Executive’s cooperation and assistance in the transition of PICA’s leadership and to provide the Companies additional protection from competition by extending the Restricted Period from twenty-four (24) months to thirty-six (36) months, the Company agrees to pay the Executive the sum of $300,000 if the Executive elects to terminate his employment pursuant to Section 3(g) hereof on or before June 30, 2012. Such payment shall be made as part of the Severance Benefits in accordance with Section 3(a)(ii) hereof. If the Executive does not elect to terminate his employment pursuant to Section 3(g) hereof the payment to be made under this Section 6(b) shall be forfeited and shall not be included in the Cash Benefits payable hereunder.

7. Confidentiality. Executive will remain obligated under any confidentiality or nondisclosure agreement with or policy of the Companies (or any of them) that is currently in effect or to which the Executive may in the future be bound. In addition to and without limitation of the foregoing Executive understands, acknowledges and agrees to the following:

(a) During the course of Executive’s employment with the Companies, certain confidential information may have been divulged to or become known by Executive in the nature of, but not limited to (i) information concerning the Companies’ and their affiliates’ current, former and prospective employees; (ii) business practices and business plan; (iii) customer information; (iv) contract information; (v) marketing strategies; (vi) business plans; (vii) product information; (viii) policies and procedures; (ix) financial, pricing and wage information; (x) administrative information; (xi) future plans of the Companies and their affiliates; (xii) and other trade secrets, which is valuable, confidential information of Companies and their affiliates (all of which is referred to herein as “Confidential Information”), which Confidential Information has been uniquely developed by the Companies and their affiliates and cannot be readily obtained by third parties from outside sources.

(b) The Confidential Information is important and is an essential asset of the Companies.

(c) Executive’s knowledge of the Confidential Information could be useful to a competitor of the Companies, and their affiliates which do or intend to do business in competition with the Companies or their affiliates.

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In recognition of the facts expressed above, Executive expressly agrees that Executive shall not use for Executive’s personal benefit, or disclose, communicate or divulge to, or use for the direct or indirect benefit of any person, firm, association or company, any confidential or competitive material or information of the Companies or their affiliates, or Confidential Information.

8. Reasonableness of Restrictions; Available Remedies.

(a) The Companies acknowledge and agree that the duties of Executive may require that Executive must have and continue to have throughout the period of employment the benefits and use of its goodwill, confidential information and trade secrets to properly carry out Executive’s responsibilities, and that the Companies accordingly promise to provide Executive with access to new and additional confidential information and trade secrets as they are generated, without regard to the duration of his employment, and to authorize Executive to engage in activities that will create new and additional confidential information and trade secrets. Executive and the Companies agree that the restrictions contained in Sections 6 and 7 of this Agreement are fair and reasonable in all respects, including the geographic and temporal restrictions, and that the benefits described in this Agreement, to the extent any separate or special consideration is necessary, are fully sufficient for Executive’s obligations under this Agreement.

(b) If the Executive is deemed to have materially breached the non-competition covenants set forth in Section 6 hereof or the confidentiality covenants set forth in Section 7 hereof, the Companies may, in addition to seeking an injunction or any other remedy they may have, withhold or cancel any remaining payments of Cash Benefits due to the Executive pursuant to Section 3 of this Agreement. The Companies shall give prior or contemporaneous written notice of such withholding or cancellation of payments in accordance with Section 3 hereof. If the Executive violates any of these covenants, the Companies shall be further entitled to an immediate preliminary and permanent injunctive relief, without bond, in addition to any other remedy which may be available to the Companies.

9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Companies and Executive and their respective devisees, heirs, legal or personal representatives, successors and assigns. Notwithstanding the foregoing, this Agreement is personal to the Executive and the rights and obligations hereunder may not be assigned by Executive without the prior written consent of ProAssurance. In the event the Executive dies or suffers Disability while receiving Severance Benefits under this Agreement, any remaining unpaid Severance Benefits shall be paid to the estate of the Executive following the payment schedule set forth in Section 3(b) hereof in accordance with the payment instructions from the personal representative of the estate of the Executive.

10. Notice. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or commercial courier or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses as set forth below or to such other address as one party may have furnished to the other in writing in accordance herewith.

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Notice to the Executive:
Jerry D. Brant
Notice to the Companies:
ProAssurance Corporation	Street Address:
Mailing Address:	100 Brookwood Place
P. O. Box 590009	Birmingham, Alabama 35209
Birmingham, Alabama 35259-0009
Attention: President: cc Secretary

11. Claims Procedure.

(a) The administrator for purposes of this Agreement shall be ProAssurance (“Administrator”), whose address is 100 Brookwood Place, Birmingham, Alabama 35209; Telephone: (205) 877-4400. The “Named Fiduciary” as defined in Section 402(a) (2) or ERISA, also shall be ProAssurance. ProAssurance shall have the right to designate one or more employees of the Companies as the Administrator and the Named Fiduciary at any time, and to change the address and telephone number of the same. ProAssurance shall give the Executive written notice of any change in the Administrator and Named Fiduciary, or in the address or telephone number of the same.

(b) The Administrator shall make all determinations as to the right of any person to receive benefits under the Agreement. Any denial by the Administrator of a claim for benefits by the Executive (“the claimant”) shall be stated in writing by the Administrator and delivered or mailed to the claimant within ten (10) days after receipt of the claim, unless special circumstances require an extension of time for processing the claim. If such an extension is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 10-day period. In no event shall such extension exceed a period of ten (10) days from the end of the initial period. Any notice of denial shall set forth the specific reasons for the denial, specific reference to pertinent provisions of this Agreement upon which the denial is based, a description of any additional material or information necessary for the claimant to perfect the claim, with an explanation of why such material or information is necessary, and any explanation of claim review procedures, written to the best of the Administrator’s ability in a manner that may be understood without legal or actuarial counsel.

(c) A claimant whose claim for benefits has been wholly or partially denied by the Administrator may request, within ten (10) days following the receipt of such denial, in a writing addressed to the Administrator, a review of such denial. The claimant shall be entitled to submit such issues or comments in writing or otherwise, as the claimant shall consider relevant to a determination of the claim, and the claimant may include a request for a hearing in person before the Administrator. Prior to submitting the request, the claimant shall be entitled to review such documents as the Administrator shall agree are pertinent to the claim. The claimant may, at all stages of review, be represented by counsel, legal or otherwise, of the claimant’s choice. All

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requests for review shall be promptly resolved. The Administrator’s decision with respect to any such review shall be set forth in writing and shall be mailed to the claimant not later than ten (10) days following receipt by the Administrator of the claimant’s request unless special circumstances, such as the need to hold a hearing, require an extension of time for processing, in which case the Administrator’s decision shall be so mailed not later than twenty (20) days after receipt of such request.

12. Arbitration. The parties to this Agreement agree that final and binding arbitration shall be the sole recourse to settle any claim or controversy arising out of or relating to a breach or the interpretation of this Agreement, except as either party may be seeking injunctive relief. Either party may file for arbitration. A claimant seeking relief on a claim for benefits, however, must first follow the procedure in Section 11 hereof and may file for arbitration within sixty (60) days following claimant’s receipt of the Administrator’s written decision on review under Section 11(c) hereof, or if the Administrator fails to provide any written decision under Section 11 hereof, within 60 days of the date on which such written decision was required to be delivered to the claimant as therein provided. The arbitration shall be held at a mutually agreeable location, and shall be subject to and in accordance with the arbitration rules then in effect of the American Arbitration Association; provided that if the location cannot be agreed upon the arbitration shall be held in either Birmingham, Alabama, or Chicago, Illinois, whichever location is closer to the principal office where the Executive was employed on the Date of Termination. The arbitrator may award any and all remedies allowable by the cause of action subject to the arbitration, but the arbitrator’s sole authority shall be to interpret and apply the provisions of this Agreement. In reaching its decision the arbitrator shall have no authority to change or modify any provision of this Agreement or other written agreement between the parties. The arbitrator shall have the power to compel the attendance of witnesses at the hearing. Any court having jurisdiction may enter a judgment based upon such arbitration. All decisions of the arbitrator shall be final and binding on the parties without appeal to any court. Upon execution of this Agreement, the Executive shall be deemed to have waived any right to commence litigation proceedings regarding this Agreement outside of arbitration or injunctive relief without the express consent of ProAssurance. The Companies shall pay all arbitration fees and the arbitrator’s compensation. If the Executive prevails in the arbitration proceeding, the arbitrator may require the Companies to reimburse the Executive for the reasonable fees and expenses of Executive’s personal counsel for his or her professional services rendered to the Executive in connection with the enforcement of this Agreement.

13. Miscellaneous.

(a) Except insofar as this provision may be contrary to applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment of any benefits under this Agreement shall be valid or recognized by the Companies.

(b) This Agreement is an unfunded deferred compensation arrangement for a member of a select group of the Companies’ management and any exemptions under ERISA, as applicable to such arrangement, shall be applicable to this Agreement. Nothing in this Agreement shall require or be deemed to require the Companies or any of them to segregate, earmark or otherwise set aside any funds or other assets to provide for any payments made or required to be made hereunder.

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(c) It is understood acknowledged and agreed that Executive is and will be an “at will’” employee of any one or more of the Companies, and subject to the provisions of Section 2 and Section 3 hereof, the Executive may resign at any time for any reason and the Companies may terminate Executive’s employment at any time for any reason.

(d) It is understood and agreed by the Companies and Executive that the terms of this Agreement relating to the payment of Severance Benefits are intended to comply in all respects with the requirements of Code Section 409A and shall be interpreted, applied and effected in a manner consistent with the requirements of Code Section 409A. For purposes of determining whether Severance Benefits may be payable to the Executive in compliance with Code Section 409A and Section 1(h) hereof, the Executive’s employment will be considered as having been terminated for purposes of this Agreement if the parties reasonably anticipate either (i) that Executive will no longer perform any services for the Companies or (ii) that the level of bona fide services performed for the Companies (whether as an employee or independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by Executive over the immediately preceding 36-month period (or the full period of services to the Companies if Executive has been providing services to the Companies for less than 36 months).

(e) Neither the provisions of this Agreement nor the severance benefits provided hereunder shall reduce any amounts otherwise payable or affect the terms pursuant to which such amounts will be paid, or in any way diminish the Executive’s rights as an employee of the Companies, whether existing now or hereafter, under any benefit, incentive, retirement, stock option, stock bonus or stock purchase plan, or any employment agreement or other plan or arrangement.

(f) This Agreement sets forth the entire agreement between the parties with respect to the matters set forth herein and supersedes in their entirety any prior written or oral agreements or understandings between Executive and the Companies regarding the subject matter of this Agreement This Agreement may not be modified or amended except by written agreement intended as such and signed by all parties.

(g) The Companies, from time to time, shall provide government agencies with such reports concerning this Agreement as may be required by law, and shall provide Executive with such disclosure concerning this Agreement as may be required by law or as the Companies may deem appropriate.

(h) Executive and the Companies respectively acknowledge that each of them has read and understand this Agreement, that they have each had adequate time to consider this Agreement and discuss it with each of their attorneys and advisors, that each of them understands the consequences of entering into this Agreement, that each of them is knowingly and voluntarily entering into this Agreement, and that they are each competent to enter into this Agreement.

(i) The provisions of this Agreement shall survive the expiration of its Term. If any provision of this Agreement is determined to be unenforceable, at the discretion of ProAssurance the remainder of this Agreement shall not be affected but each remaining provision shall continue to be valid and effective and shall be modified so that it is enforceable to the fullest extent permitted by law. Moreover, in the event this Agreement is determined to be unenforceable against any of the Companies, it shall continue to be valid and enforceable against the other Companies.

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(j) This Agreement will be interpreted as a whole according to its fair terms. It will not be construed strictly for or against either party.

(k) Except to the extent that federal law controls, this Agreement is to be construed according to Delaware law.

[Signatures on following page]

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

EXECUTIVE:
Jerry D. Brant
PROASSURANCE CORPORATION
By:
	Victor T. Adamo, President
PROASSURANCE GROUP SERVICES CORPORATION
By:
	Victor T. Adamo, President

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Execution Copy

RELEASE IN CONJUNCTION WITH SEVERANCE COMPENSATION

This Release of Claims (“Release”) is made in favor of ProAssurance Corporation (“ProAssurance”), for itself and for its subsidiaries (including, but not limited to, ProAssurance Group Services Corporation) and any successor company that has assumed the Agreement to which this Release was an attachment (all such organizations being referred to in this Release as the “Companies”) and Jerry D. Brant (“Executive”).

The Companies and Executive have agreed to terminate their employment relationship. To effect an orderly termination, the Executive, and the Companies are entering into this Release.

1. Effective with the Date of Termination, Executive is relieved of all duties and obligations to the Companies, except as provided in this Release or any applicable provisions of the Release and Severance Compensation Agreement between Companies and Executive, effective as of April 2, 2012 (“Agreement”), which survive termination of the employment relationship. Unless otherwise specifically defined herein, capitalized terms shall have the meaning attributed to them in the Agreement.

2. Executive hereby resigns as an employee of each of the Companies effective on April 3, 2012, and waives any and all rights Executive may otherwise have to continued employment with or re-employment by the Companies or any parent, subsidiary or affiliate of Companies.

3. Executive agrees that this Release, the Agreement, and the Severance Benefits provided under the Agreement are confidential and shall not be disclosed or published directly or indirectly to third persons, except as necessary to enforce its terms, by Executive or to Executive’s immediate family upon their agreement not to disclose the fact or terms of this Release, or to Executive’s attorney, financial consultant or accountant, except that Executive and the Companies may disclose, as necessary, (i) the fact that Executive has terminated Executive’s employment with the Companies and (ii) the terms of this Agreement and Severance Benefits as required under the securities laws and regulations and the listing requirements of any stock exchange or national market system and as otherwise required by law.

4. Any fringe benefits that Executive has received or currently is receiving from the Companies or its affiliates shall cease effective with the Date of Termination, except as otherwise provided for in this Release, in the Agreement or by law.

5. The parties agree that the terms contained and payments provided for in the Agreement are compensation for and in full consideration of Employee’s release of claims under this Release, and Executive’s confidentiality, non-compete, non-solicitation and non-disclosure agreements contained in the Agreement.

6. The Executive shall be under no duty or obligation to seek or accept other employment and shall not be required to mitigate the amount of the Severance Benefits (as defined and provided under the Agreement) by seeking employment or otherwise.

7. Executive waives, releases, and forever discharges the Companies and each of their direct or indirect parents, subsidiaries, affiliates, and any partnerships, joint ventures or other entities involving or related to any of the Companies, their parents, subsidiaries or affiliates, and all present or former employees, officers, agents, directors, successors, assigns and attorneys of any of these corporations, persons or entities (all collectively referred to in this Release as the “Released”) from any and all claims, charges, suits, causes of action, demands, expenses and compensation whatsoever, known or unknown, direct or indirect, on account of or growing out of Executive’s employment with and termination from the Companies, or relationship or termination of such relationship with any of the Released, or arising out of related events occurring through the date on which this Release is executed. This includes, but is not limited to, claims for breach of any employment contract; handbook or manual; any express or implied contract; any tort; continued employment; loss of wages or benefits; attorney fees; employment discrimination arising under any federal, state, or local civil rights or anti-discrimination statute, including specifically any claims Executive may have under the federal Age Discrimination in Employment Act, as amended, 29 USC §§ 621, et seq.; emotional distress; harassment; defamation; libel; slander; and all other types of claims or causes of action whatsoever arising under any other state or federal statute or common law of the United States. Notwithstanding anything in this Release to the contrary, nothing in this Release shall be construed to waive, release or discharge the Companies from making any payments or providing any benefits to Executive in accordance with the terms of the Agreement after the Date of Termination

8. The Executive does not waive or release any rights or claims that may arise under the federal Age Discrimination in Employment Act, as amended, after the date on which this Release is executed by the Executive.

9. The Executive acknowledges and agrees that Executive has been advised in writing by this Release, and otherwise, to CONSULT WITH AN ATTORNEY before Executive executes this Release.

10. The Executive agrees that Executive received a copy of this Release prior to executing the Agreement, that this Release incorporates the Companies’ FINAL OFFER; that Executive has been given a period of at least twenty-two (22) calendar days within which to consider this Release and its terms and to consult with an attorney should Executive so elect.

11. The Executive shall have seven (7) calendar days following Executive’s execution of this Release to revoke this Release. Any revocation of this Release shall be made in writing by the Executive and shall be received on or before the time of close of business on the seventh calendar day following the date of the Employee’s execution of this Release at ProAssurance’s address at 100 Brookwood Place, P. O. Box 590009, Birmingham, Alabama 35259-0009, Attention: President: cc Secretary, or such other place as the Companies may notify Executive in writing. This Release shall not become effective or enforceable until the eighth (8^th) calendar day following the Executive’s execution of this Release.

12. Executive and the Companies acknowledge that they have read and understand this Release, that they have had adequate time to consider this Release and discuss it with their attorneys and advisors, that they understand the consequences of entering into this Release, that they are knowingly and voluntarily entering into this Release, and that they are competent to enter into this Release.

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13. This Release shall benefit and be binding upon the parties and their respective directors, officers, employees, agents, heirs, successors, assigns, devisees and legal or personal representatives.

14. This Release, along with the attached Agreement, sets forth the entire agreement between the parties at the time and date these documents are executed, and fully supersedes any and all prior agreements or understandings between them pertaining to the subject matter in this Release. This Release may not be modified or amended except by a written agreement intended as such, and signed by all parties.

15. Except to the extent that federal law controls, this Release is to be construed according to the law of the state of Delaware.

16. If any provision of this Release is determined to be unenforceable, at the discretion of ProAssurance the remainder of this Release shall not be affected but each remaining provision or portion shall continue to be valid and effective and shall be modified so that it is enforceable to the fullest extent permitted by law.

17. To signify their agreement to the terms of this Release, the parties have executed it on the date set forth opposite their signatures, or those of their authorized agents, which follow.

	EXECUTIVE
Dated:
	Jerry D. Brant
	PROASSURANCE CORPORATION
Dated:	By:
		Victor T. Adamo, President

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EX-10.3

Exhibit 10.3

PROASSURANCE CORPORATION

INDEMNIFICATION AGREEMENT

THIS Agreement is made effective as of the [16th day of May, 2012], by and between ProAssurance Corporation, a Delaware corporation (the “Company”), and                      (“Indemnitee”).

Recitals

WHEREAS, the Company has adopted Bylaws (the “Bylaws”) which provide for the indemnification of the directors, officers, agents, and employees of the Company in accordance with Section 145 of the General Corporation Laws of Delaware (the “State Statute”);

WHEREAS, the State Statute provides that it is not exclusive, and thus contemplates that contracts may be entered into between the Company and the members of its Board of Directors and Officers and employees of the Company with respect to the indemnification of such individuals;

WHEREAS, the terms, cost and availability of directors’ and officers’ liability insurance (“Liability Insurance”) have raised questions regarding the adequacy and reliability of the protection afforded to directors and officers thereby; and

WHEREAS, in order to induce the Indemnitee to continue to perform services on behalf of the Company, the Company has determined and agreed to enter into this contract with the Indemnitee.

Agreement

NOW, THEREFORE, in consideration of and for the Indemnitee’s agreement to serve as a director, officer, employee or agent of the Company, and to render service on behalf of the Company, the parties agree as follows:

1. Liability Insurance. The Company, as of the date of this Agreement, has acquired a Liability Insurance policy. The Company shall use reasonable efforts to maintain Liability Insurance during the term of this Agreement, but shall not be required to continue to maintain Liability Insurance if in the sole business judgment of the directors then in office, (i) the premium cost for such insurance is excessive, (ii) the premium cost for such insurance is not reasonably related to the amount of coverage provided, of (iii) the coverage provided by such insurance is so limited by its terms and exclusions or otherwise that sufficient benefit is not derived therefrom.

2. Indemnity. The Company agrees to indemnify and reimburse Indemnitee to the full extent authorized and permitted by the provisions of the Bylaws of the Company and the laws of the State of Delaware, and by any amendment thereof, authorizing or permitting such indemnification which is adopted after the date hereof.

3. Additional Indemnity.

(a) Subject only to the exclusions set forth in Section 4 hereof, the Company shall indemnify and reimburse Indemnitee under any circumstances where Indemnitee was or is a party or is threatened to be made a party to a threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal, including an action by or in the right of the corporation (a “Proceeding”), by reason of the fact that he or she is or was a director, officer, employee, or agent of the Company, or is or was serving at the request of the Company as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise, whether for profit or not, against reasonable expenses, including attorneys’ fees, judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit, or proceeding, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company or its shareholders or policyholders, and with respect to a criminal action or proceeding, if Indemnitee had no reasonable cause to believe his or her conduct was unlawful. The termination of an action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company or its shareholders or policyholders, and, with respect to a criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

(b) The indemnification provided shall extend to all expenses and circumstances for which indemnification is permitted under paragraph 3(a) above, that arise:

(i) During the term of this Agreement based upon the activities of Indemnitee prior to or during the term of this Agreement; and,

(ii) Subsequent to the term of this Agreement based upon the activities of Indemnitee prior to or during the term of this Agreement.

(c) The term “Company” shall for purposes of this Agreement include ProAssurance Corporation and its direct and indirect majority-owned subsidiaries.

4. Limitations on Indemnity. No indemnity pursuant to Section 3 hereof shall be paid by the Company:

(a) except to the extent the aggregate of losses to be indemnified hereunder exceed the amount of such losses for which Indemnitee is indemnified either: pursuant to Section 2 hereof; pursuant to an Indemnification Agreement with any parent, subsidiary or affiliate of the Company; or, pursuant to any Liability Insurance purchased and maintained by the Company pursuant to Section 1 hereof;

(b) in respect to remuneration paid to Indemnitee if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law;

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(c) on account of any suit in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state, or local statutory law;

(d) on account of Indemnitee conduct which is finally adjudged to have been knowingly fraudulent, deliberately dishonest or willful misconduct;

(e) if indemnification is prohibited by applicable law of the State of Delaware;

(f) for a claim, issue, or matter in which Indemnitee has been found liable to the Company unless and only to the extent that the Court of Chancery in Delaware or the court in which the action or suit was brought has determined upon application that, despite the adjudication of liability but in view of all circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for the expenses which the court considers proper; or

(g) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful.

5. Term of Agreement. The original term of this Agreement shall be the twelve month period commencing on the date of this agreement. This Agreement shall renew for successive one year terms unless sooner terminated upon termination of Indemnitee’s position as an officer, director or employee of the Company or upon delivery of written notice of termination by the Company to the Indemnitee not less than 60 days prior to the date of termination stated in the notice. Notwithstanding anything in this Agreement to the contrary, the indemnification and advancement of expenses provided pursuant to this Agreement shall survive the termination of this Agreement with respect to all actions or inactions occurring or alleged to have occurred prior to or during the term of this Agreement, and this Agreement shall remain binding upon the Company with respect to the covered activities of Indemnitee occurring or alleged to have occurred prior to or during the term of this Agreement.

6. Notification and Defense of Claim. Promptly after receipt by Indemnitee of notice of the commencement or threatened commencement of any Proceeding, Indemnitee will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve it from any liability which it may have to Indemnitee otherwise than under this Agreement. With respect to any such action, Proceeding as to which Indemnitee notifies the Company of the commencement thereof:

(a) The Company will be entitled to participate therein at its own expense; and

(b) Except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel selected by the Company and consented to by Indemnitee, which consent shall not be unreasonably withheld. After notice from the Company to Indemnitee of its election so to assume the defense thereof, the Company will not be liable to

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Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ his own counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after the notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Company, (ii) a conflict of interest between the Company and Indemnitee exists in the conduct of the defense of such action; or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Company or as to which a conflict of interest exists between the Company and Indemnitee.

The Company shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. The Company shall not settle any action or claim in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. Neither the Company nor Indemnitee will unreasonably withhold its consent to any proposed settlement.

7. Payment of Indemnity. Any indemnification shall be made promptly and in any event within forty-five (45) days, upon the written request of the director, officer, employee or agent of the Company, unless a determination is reasonably and promptly made that such director, officer, employee or agent failed to meet the applicable standard of conduct set forth in Section 1 hereof or that such director, officer or employee is not entitled to indemnity under Section 3 hereof. Such determination shall be made (l) by the Board of Directors by a majority vote of a quorum consisting of disinterested directors, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (4) by the stockholders. If the request for indemnification involves a Proceeding that arises from the merger, consolidation, reorganization, liquidation, sale of all or substantially all of the assets, or other extraordinary transaction of the Company, the inquiry and resolution thereof required by this Section 7, at the option of the person seeking indemnification, shall be made by a neutral person mutually acceptable to the Company and the person seeking indemnification. If no disposition of such claim for indemnification is made within forty-five (45) days, a favorable determination of entitlement to indemnification shall be deemed to have been made. The expenses (including attorney’s fees) incurred by the person seeking indemnification in connection with successfully establishing such person’s right to indemnification, in whole or in part, shall also be indemnified by the Company.

8. Expense Advances.

(a) Except as set forth in subparagraph Section 8(b) below, the Company will, if requested by Indemnitee, advance, to the fullest extent permitted by law, to Indemnitee (hereinafter an “Expense Advance”) any and all Expenses (as defined in subparagraph (d) below) actually and reasonably paid or incurred by Indemnitee in connection with any Proceeding (whether prior to or after its final disposition). Indemnitee’s right to each Expense Advance will be made without regard to Indemnitee’s ultimate entitlement to indemnification under the other

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provisions of this Agreement, or under provisions of the Certificate of Incorporation or Bylaws or otherwise. Each Expense Advance will be unsecured and interest free and will be made by the Company without regard to Indemnitee’s ability to repay the Expense Advance; provided, however, that an Expense Advance will be made only upon delivery to the Company of a written affirmation by Indemnitee of such Indemnitee’s good faith belief that Indemnitee has met the standard of conduct necessary for indemnification under the Delaware General Corporation Law, and a written undertaking (hereinafter an “Undertaking”), by or on behalf of Indemnitee, to repay such Expense Advance if it is ultimately determined, by final decision by a court or arbitrator, as applicable, from which there is no further right to appeal, that Indemnitee has not met the standard of conduct necessary for indemnification under the Delaware General Corporation Law, or is not entitled to be indemnified for such Expenses under the Certificate of Incorporation, Bylaws, the Delaware General Corporation Law, this Agreement or otherwise. An Expense eligible for an Expense Advance will include any and all reasonable Expenses incurred pursuing an action to enforce the right of advancement provided for in this Section 8 including Expenses incurred preparing and forwarding statements to the Company to support the Expense Advances claimed.

(b) Indemnitee will not be entitled to any Expense Advance in connection with any of the matters for which indemnity is excluded pursuant to Section 4.

(c) An Expense Advance pursuant to Section 8(a) hereof will be made within ten business days after the receipt by the Company of a written statement or statements from Indemnitee requesting such Expense Advance (which statement or statements will include, if requested by the Company, reasonable detail underlying the Expenses for which the Expense Advance is requested), whether such request is made prior to or after final disposition of such Proceeding. Such request must be accompanied by all information required by Section 8(a), including but not limited to, the Undertaking.

(d) “Expenses” means all attorney’s fees, disbursements and retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, fax transmission charges, secretarial services, delivery service fees and all other disbursements or expenses paid or incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding, or in connection with seeking indemnification under this Agreement. Expenses will also include Expenses paid or incurred in connection with any appeal resulting from any Proceeding, including the premium, security for and other costs relating to any appeal bond or its equivalent. Expenses, however, will not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

9. Enforcement.

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on the Company hereby in order to induce Indemnitee to serve and/or continue to serve the Company, and acknowledges that Indemnitee is relying upon this Agreement in continuing to serve in such capacity.

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(b) In the event Indemnitee is required to bring any action to enforce rights and/or to collect moneys due under this Agreement and is successful in such action, Company shall reimburse Indemnitee for all of Indemnitee’s reasonable fees and expenses in bringing and pursuing such action.

10. Separability. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable under applicable federal or state law or for any other reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof.

11. Governing Law; Binding Effect; Amendment; Notice.

(a) This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware without effect to its conflict of law provisions, except to the extent that the provisions of the Sarbanes-Oxley Act of 2002 and other federal laws preempt the applicable state law to the enforceability or interpretation of this Agreement.

(b) This Agreement shall be binding upon Indemnitee and upon the Company, its successors and assigns, and shall inure to the benefit of the Indemnitee, his or her heirs, personal representatives and assigns and to the benefit of the Company, its successors and assigns.

(c) No amendment or modification of this Agreement (including any retroactive or prospective amendment) shall be effective unless in writing signed by both parties hereto. The termination or cancellation of this Agreement shall not be effective unless terminated in accordance with Section 5 hereof or terminated or cancelled in a writing signed by both parties hereto.

(d) Any notice required to be given hereunder shall be deemed given when deposited with the United States Postal Service, postage prepaid, addressed to the person to receive notice at its address below, or such other address as may have theretofore been specified by such person in a notice pursuant hereto, or delivered in person to that person (or an executive officer thereof in the case of the Company).

12. Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration, in Birmingham, Alabama, in accordance with the Commercial Arbitration rules of the American Arbitration Association, except that the arbitrator(s) shall be required to be familiar with the laws of the State of Delaware as they relate to this Agreement. Judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written.

6

PROASSURANCE CORPORATION

(the “Company”)

By:

Its                                     

Address for Notice:

ProAssurance Corporation

100 Brookwood Place

Birmingham, Alabama 35209

Attn: Corporate Secretary

(“Indemnitee”)

Signature

Print Name

Address for Notice:

7

EX-31.1

Exhibit 31.1

CERTIFICATION

I, W. Stancil Starnes, certify that:

1. I have reviewed this report on Form 10-Q of ProAssurance Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2012

/s/ W. Stancil Starnes

W. Stancil Starnes

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Edward L. Rand, Jr., certify that:

1. I have reviewed this report on Form 10-Q of ProAssurance Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2012

/s/ Edward L. Rand, Jr.

Edward L. Rand, Jr.

Chief Financial and Accounting Officer

EX-32.1

Exhibit 32.1

A signed original of this written statement required by Section 906 has been provided to ProAssurance Corporation and will be retained by ProAssurance Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ProAssurance Corporation (the “Company”) on Form 10-Q for the quarter ending June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, W. Stancil Starnes, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ W. Stancil Starnes

W. Stancil Starnes

Chief Executive Officer

August 6, 2012

EX-32.2

Exhibit 32.2

A signed original of this written statement required by Section 906 has been provided to ProAssurance Corporation and will be retained by ProAssurance Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ProAssurance Corporation (the “Company”) on Form 10-Q for the quarter ending June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward L. Rand, Jr., Chief Financial and Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Edward L. Rand, Jr.

Edward L. Rand, Jr.

Chief Financial and Accounting Officer

August 6, 2012

XML

Income Taxes (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Income Taxes (Textual) [Abstract]
ProAssurance's liability for unrecognized tax benefits	$ 23.7	$ 18.6

XML

Variable Interest Entities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Variable Interest Entities (Textual) [Abstract]
Other investments	$ 21,842	$ 38,224
Investment in Unconsolidated Subsidiaries	113,342	111,324
Variable Interest Entity, Not Primary Beneficiary [Member]
Variable Interest Entities (Textual) [Abstract]
Other investments	15,900	32,100
Investment in Unconsolidated Subsidiaries	$ 24,000	$ 24,500

XML

Investments (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
U.S. Treasury obligations [Member]
Investments held in an unrealized loss position
Fair Value	$ 9,738	$ 8,379
Unrealized Loss	(30)	(3)
Less than 12 months, Fair Value	9,738	8,379
Less than 12 months, Unrealized Loss	(30)	(3)
State and municipal bonds [Member]
Investments held in an unrealized loss position
Fair Value	20,884	9,743
Unrealized Loss	(169)	(206)
Less than 12 months, Fair Value	18,715	7,143
Less than 12 months, Unrealized Loss	(108)	(10)
More than 12 months, Fair Value	2,169	2,600
More than 12 months, Unrealized Loss	(61)	(196)
Corporate debt [Member]
Investments held in an unrealized loss position
Fair Value	121,495	205,605
Unrealized Loss	(2,913)	(7,661)
Less than 12 months, Fair Value	98,390	194,057
Less than 12 months, Unrealized Loss	(1,770)	(6,691)
More than 12 months, Fair Value	23,105	11,548
More than 12 months, Unrealized Loss	(1,143)	(970)
Residential mortgage-backed securities [Member]
Investments held in an unrealized loss position
Fair Value	40,159	49,525
Unrealized Loss	(1,977)	(2,131)
Less than 12 months, Fair Value	29,651	38,146
Less than 12 months, Unrealized Loss	(738)	(488)
More than 12 months, Fair Value	10,508	11,379
More than 12 months, Unrealized Loss	(1,239)	(1,643)
Commercial mortgage-backed securities [Member]
Investments held in an unrealized loss position
Fair Value	1,113	4,086
Unrealized Loss	(58)	(59)
Less than 12 months, Fair Value		3,143
Less than 12 months, Unrealized Loss		(2)
More than 12 months, Fair Value	1,113	943
More than 12 months, Unrealized Loss	(58)	(57)
Other asset-backed securities [Member]
Investments held in an unrealized loss position
Fair Value	4,836	19,031
Unrealized Loss	(3)	(31)
Less than 12 months, Fair Value	4,765	19,031
Less than 12 months, Unrealized Loss	(3)	(31)
More than 12 months, Fair Value	71
Debt Securities [Member]
Investments held in an unrealized loss position
Fair Value	198,225	296,369
Unrealized Loss	(5,150)	(10,091)
Less than 12 months, Fair Value	161,259	269,899
Less than 12 months, Unrealized Loss	(2,649)	(7,225)
More than 12 months, Fair Value	36,966	26,470
More than 12 months, Unrealized Loss	(2,501)	(2,866)
Investments in LPs/LLCs [Member]
Investments held in an unrealized loss position
Fair Value	5,656	4,198
Unrealized Loss	(875)	(984)
Less than 12 months, Fair Value	4,928	3,815
Less than 12 months, Unrealized Loss	(663)	(856)
More than 12 months, Fair Value	728	383
More than 12 months, Unrealized Loss	$ (212)	$ (128)

XML

Fair Value Measurement (Details 2) (Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
State and municipal bonds [Member]
Assets:
Assets, Fair Value	7,200
Corporate debt with limited observable inputs [Member]
Assets:
Assets, Fair Value	10,500
2019 Note payable, Interest rate swap agreement [Member]
Liabilities:
Liabilities, Fair Value	19,500
Discount cash flows valuation technique [Member] | State and municipal bonds [Member] | Maximum [Member]
Assets:
Comparability Adjustment	10.00%
Discount cash flows valuation technique [Member] | State and municipal bonds [Member] | Minimum [Member]
Assets:
Comparability Adjustment	0.00%
Discount cash flows valuation technique [Member] | State and municipal bonds [Member] | Weighted Average [Member]
Assets:
Comparability Adjustment	5.00%
Discount cash flows valuation technique [Member] | Corporate debt with limited observable inputs [Member] | Maximum [Member]
Assets:
Comparability Adjustment	5.00%
Discount cash flows valuation technique [Member] | Corporate debt with limited observable inputs [Member] | Minimum [Member]
Assets:
Comparability Adjustment	0.00%
Discount cash flows valuation technique [Member] | Corporate debt with limited observable inputs [Member] | Weighted Average [Member]
Assets:
Comparability Adjustment	2.50%
Discount cash flows valuation technique [Member] | 2019 Note payable, Interest rate swap agreement [Member] | Maximum [Member]
Liabilities:
Comparability Adjustment	5.00%
Discount cash flows valuation technique [Member] | 2019 Note payable, Interest rate swap agreement [Member] | Minimum [Member]
Liabilities:
Comparability Adjustment	0.00%
Discount cash flows valuation technique [Member] | 2019 Note payable, Interest rate swap agreement [Member] | Weighted Average [Member]
Liabilities:
Comparability Adjustment	2.50%
Market comparable securities valuation technique [Member] | State and municipal bonds [Member] | Maximum [Member]
Assets:
Comparability Adjustment	10.00%
Market comparable securities valuation technique [Member] | State and municipal bonds [Member] | Minimum [Member]
Assets:
Comparability Adjustment	0.00%
Market comparable securities valuation technique [Member] | State and municipal bonds [Member] | Weighted Average [Member]
Assets:
Comparability Adjustment	5.00%
Market comparable securities valuation technique [Member] | Corporate debt with limited observable inputs [Member] | Maximum [Member]
Assets:
Comparability Adjustment	5.00%
Market comparable securities valuation technique [Member] | Corporate debt with limited observable inputs [Member] | Minimum [Member]
Assets:
Comparability Adjustment	0.00%
Market comparable securities valuation technique [Member] | Corporate debt with limited observable inputs [Member] | Weighted Average [Member]
Assets:
Comparability Adjustment	2.50%

XML

Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Commitments and Contingencies (Textual) [Abstract]
Commitments to fund tax credit partnerships	$ 33
Commitments outstanding to fund private equity partnerships	51
Medmarc Insurance Group [Member]
Loss Contingencies [Line Items]
Cash payments related to business acquisition	146.2
Future policy credits related to business acquisition	$ 7.5

XML

Investments (Details 8) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Information regarding sales and purchases of available-for-sale securities
Proceeds from sales (exclusive of maturities and pay downs)	$ 99.8	$ 141.4	$ 305.9	$ 310.9
Purchases of other available-for-sale securities	$ 99.5	$ 200.7	$ 347.1	$ 452.7

XML

Earnings Per Share (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share (Textual) [Abstract]
Outstanding options not considered to be dilutive	0	0	0	0

XML

Investments

6 Months Ended

Jun. 30, 2012

Investments [Abstract]

Investments

3. Investments

The amortized cost and estimated fair value of available-for-sale fixed maturities and equity securities are as follows:

	June 30, 2012
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed maturities
U.S. Treasury obligations	$	216,909	$	14,884	$	(17	)	$	231,776
U.S. Agency obligations		65,635		5,386		(13	)		71,008
State and municipal bonds		1,126,525		84,871		(169	)		1,211,227
Corporate debt		1,356,759		80,898		(2,913	)		1,434,744
Residential mortgage-backed securities		451,226		27,688		(1,977	)*		476,937
Commercial mortgage-backed securities		68,707		5,591		(58	)		74,240
Other asset-backed securities		88,043		1,302		(3	)		89,342
	$	3,373,804	$	220,620	$	(5,150	)	$	3,589,274
	December 31, 2011
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed maturities
U.S. Treasury obligations	$	267,120	$	16,748	$	(3	)	$	283,865
U.S. Agency obligations		62,520		5,584		—			68,104
State and municipal bonds		1,145,025		83,568		(206	)		1,228,387
Corporate debt		1,307,504		68,105		(7,661	)		1,367,948
Residential mortgage-backed securities		514,412		30,270		(2,131	)*		542,551
Commercial mortgage-backed securities		76,366		4,881		(59	)		81,188
Other asset-backed securities		92,773		978		(31	)		93,720
		3,465,720		210,134		(10,091	)		3,665,763
Equity securities		6		19		—			25
	$	3,465,726	$	210,153	$	(10,091	)	$	3,665,788

* Includes other-than-temporary impairments recognized in accumulated other comprehensive income of $3.1 million at June 30, 2012 and $3.3 million at December 31, 2011.

The recorded cost basis and estimated fair value of available-for-sale fixed maturities at June 30, 2012, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. ProAssurance uses the call date as the contractual maturity for pre-refunded state and municipal bonds which are 100% backed by U.S. Treasury obligations.

(In thousands)	Amortized Cost		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total Fair Value
Fixed maturities, available for sale
U.S. Treasury obligations	$	216,909	$	35,562	$	118,492	$	73,654	$	4,068	$	231,776
U.S. Agency obligations		65,635		5,700		52,293		12,758		257		71,008
State and municipal bonds		1,126,525		29,760		371,190		541,666		268,611		1,211,227
Corporate debt		1,356,759		74,089		685,847		633,546		41,262		1,434,744
Residential mortgage-backed securities		451,226										476,937
Commercial mortgage-backed securities		68,707										74,240
Other asset-backed securities		88,043										89,342
	$	3,373,804									$	3,589,274

Excluding investments in bonds and notes of the U.S. Government, a U.S. Government agency or pre-refunded state and municipal bonds which are 100% backed by U.S. Treasury obligations, no investment in any entity or its affiliates exceeds 10% of shareholders’ equity at June 30, 2012.

At June 30, 2012, ProAssurance has available-for-sale securities with a fair value of $21.8 million on deposit with various state insurance departments to meet regulatory requirements. ProAssurance also has available-for-sale securities with a fair value of $25.4 million that are pledged as collateral security for the 2019 Note Payable (see Note 8).

Business Owned Life Insurance (BOLI)

ProAssurance holds BOLI policies on management employees that are carried at the current cash surrender value of the policies (original cost $35 million). The primary purpose of the program is to offset future employee benefit expenses through earnings on the cash value of the policies. ProAssurance is the owner and principal beneficiary of these policies.

Other Investments

ProAssurance has Other Investments comprised of the following:

(In millions)	June 30,     2012		December 31, 2011
Investment in LLC, at NAV	$	—	$	15.9
Investments in LPs/LLCs, at cost		15.9		16.2
FHLB capital stock, at cost		4.3		4.4
Other, principally an annuity, at amortized cost		1.6		1.7
	$	21.8	$	38.2

FHLB capital stock is not marketable, but may be liquidated by terminating membership in the FHLB. The liquidation process can take up to five years.

Unconsolidated Subsidiaries

ProAssurance holds investments in unconsolidated subsidiaries, accounted for under the equity method. The investments include the following:

	Carrying Value				Unfunded Commitments June 30, 2012		Percentage Ownership June 30, 2012
(In millions)	June 30,     2012		December 31, 2011
Investment LPs/LLCs:
Tax credit partnerships	$	89.3	$	86.8	$	32.7	<20%
Long/Short equity fund		17.1		17.1		—	<20%
Non-public equity fund		6.9		6.7		3.5	<20%
Business LLC		—		0.7		—	See below
	$	113.3	$	111.3	$	36.2

Tax credit partnerships interests held by ProAssurance generate investment returns by providing tax benefits to fund investors in the form of project operating losses and tax credits. The related properties are principally low income housing projects.

The Long/Short equity fund LP targets absolute returns using a strategy designed to take advantage of event-driven market opportunities.

The Non-public equity fund LP holds diversified private equities and is structured to provide capital appreciation.

The Business LLC interest is a convertible preferred interest in a service-related business that began business operations in 2011. The preferred interest can be converted into a non-controlling common interest in May 2015, but conversion is not required. As of June 30, 2012 the carrying value of the interest is zero due to the recognition of losses incurred to-date by the LLC.

Investments Held in a Loss Position

The following tables provide summarized information with respect to investments held in an unrealized loss position at June 30, 2012 and December 31, 2011, including the length of time the investment has been held in a continuous unrealized loss position.

	June 30, 2012
	Total					Less than 12 months					More than 12 months
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Loss			Value		Loss			Value		Loss
Fixed maturities, available for sale
U.S. Treasury obligations	$	6,763	$	(17	)	$	6,763	$	(17	)	$	—	$	—
U.S. Agency obligations		2,975		(13	)		2,975		(13	)		—		—
State and municipal bonds		20,884		(169	)		18,715		(108	)		2,169		(61	)
Corporate debt		121,495		(2,913	)		98,390		(1,770	)		23,105		(1,143	)
Residential mortgage-backed securities		40,159		(1,977	)		29,651		(738	)		10,508		(1,239	)
Commercial mortgage-backed securities		1,113		(58	)		—		—			1,113		(58	)
Other asset-backed securities		4,836		(3	)		4,765		(3	)		71		—
	$	198,225	$	(5,150	)	$	161,259	$	(2,649	)	$	36,966	$	(2,501	)
Other investments
Investments in LPs/LLCs carried at cost	$	5,656	$	(875	)	$	4,928	$	(663	)	$	728	$	(212	)

	December 31, 2011
	Total					Less than 12 months					More than 12 months
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Loss			Value		Loss			Value		Loss
Fixed maturities, available for sale
U.S. Treasury obligations	$	8,379	$	(3	)	$	8,379	$	(3	)	$	—	$	—
State and municipal bonds		9,743		(206	)		7,143		(10	)		2,600		(196	)
Corporate debt		205,605		(7,661	)		194,057		(6,691	)		11,548		(970	)
Residential mortgage-backed securities		49,525		(2,131	)		38,146		(488	)		11,379		(1,643	)
Commercial mortgage-backed securities		4,086		(59	)		3,143		(2	)		943		(57	)
Other asset-backed securities		19,031		(31	)		19,031		(31	)		—		—
	$	296,369	$	(10,091	)	$	269,899	$	(7,225	)	$	26,470	$	(2,866	)
Other investments
Investments in LPs/LLCs carried at cost	$	4,198	$	(984	)	$	3,815	$	(856	)	$	383	$	(128	)

As of June 30, 2012, there are 179 debt securities (6.9% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 163 issuers. The single greatest unrealized loss position is approximately $0.8 million; the second greatest unrealized loss position is approximately $0.5 million. The securities were evaluated for impairment as of June 30, 2012.

As of December 31, 2011, there were 251 debt securities (9.6% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 224 issuers. The single greatest unrealized loss position approximated $1.2 million; the second greatest unrealized loss position approximated $1.0 million. The securities were evaluated for impairment as of December 31, 2011.

Each quarter, ProAssurance performs a detailed analysis for the purpose of assessing whether any of the securities it holds in an unrealized loss position have suffered an other-than-temporary impairment in value. A detailed discussion of the factors considered in the assessment is included in Note 1 of the Notes to Consolidated Financial Statements included in ProAssurance’s December 31, 2011 Form 10-K.

At June 30, 2012, fixed maturity securities held in an unrealized loss position, excluding asset-backed securities, have paid all scheduled contractual payments and are expected to continue doing so. Expected future cash flows of asset-backed securities held in an unrealized loss position equaled or exceeded the current amortized cost basis of the security; such future cash flows were estimated using the most recently available six-month historical performance data for the collateral (loans) underlying the security or, if historical data was not available, sector based assumptions.

Net Investment Income

Net investment income by investment category is as follows:

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Fixed maturities	$	34,093		$	36,682		$	67,363		$	72,634
Equities		1,608			186			2,649			416
Short-term investments		38			17			57			73
Other invested assets		39			575			441			1,564
Business owned life insurance		461			472			918			936
		36,239			37,932			71,428			75,623
Investment expenses		(1,729	)		(1,635	)		(3,425	)		(3,166	)
Net investment income	$	34,510		$	36,297		$	68,003		$	72,457

Net Realized Investment Gains (Losses)

Net realized investment gains (losses) are comprised of the following:

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Total other-than-temporary impairment losses:
Residential mortgage-backed securities	$	(218	)	$	(319	)	$	(463	)	$	(769	)
Corporate debt		—			—			(830	)		—
Other investments		—			(746	)		(131	)		(2,133	)
Portion recognized in (reclassified from) Other Comprehensive Income:
Residential mortgage-backed securities		(201	)		(113	)		(201	)		(681	)
Net impairment losses recognized in earnings		(419	)		(1,178	)		(1,625	)		(3,583	)
Gross realized gains, available-for-sale securities		2,262			5,664			6,150			10,292
Gross realized (losses), available-for-sale securities		(89	)		(1,113	)		(183	)		(1,357	)
Net realized gains (losses), trading securities		(50	)		223			727			2,915
Change in unrealized holding gains (losses), trading securities		(3,032	)		(570	)		4,905			(1,341	)
Decrease (increase) in the fair value of liabilities carried at fair value		(220	)		(826	)		(844	)		(602	)
Net realized investment gains (losses)	$	(1,548	)	$	2,200		$	9,130		$	6,324

ProAssurance recognized credit-related impairments in earnings of $0.4 million and $0.7 million during the 2012 three- and six-month periods, respectively, and $0.4 million and $1.5 million for the same respective periods of 2011, related to certain residential mortgage-backed securities because the expected future cash flows from the securities were less than the carrying value.

ProAssurance recognized credit-related impairments of $0.8 million related to a corporate debt security during the first quarter of 2012 due to deterioration of the credit standing of the issuer.

ProAssurance recognized impairments of $0.1 million during the first quarter of 2012 and $0.7 million and $2.1 million for the 2011 three- and six-month periods, respectively, related to an interest in an LLC accounted for using the cost method. The LLC announced in 2011 a plan to convert to a publicly traded investment fund, and OTTI was recognized in subsequent periods in order to carry the interest at the NAV reported by the fund. The conversion occurred during the second quarter of 2012.

The following table presents a roll forward of cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the other-than-temporary impairment has been recorded in Other Comprehensive Income.

	Three Months Ended June 30				Six Months Ended  June 30
(In thousands)	2012		2011		2012		2011
Balance beginning of period	$	5,937	$	5,334	$	5,870	$	4,446
Additional credit losses recognized during the period, related to securities for which OTTI has been previously recognized		201		394		268		1,282
Balance June 30	$	6,138	$	5,728	$	6,138	$	5,728

Other information regarding sales and purchases of available-for-sale securities are as follows:

	Three Months Ended June 30				Six Months Ended  June 30
(In millions)	2012		2011		2012		2011
Proceeds from sales (exclusive of maturities and paydowns)	$	99.8	$	141.4	$	305.9	$	310.9
Purchases	$	99.5	$	200.7	$	347.1	$	452.7

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Long-term Debt (Details) (USD $)	1 Months Ended	9 Months Ended			6 Months Ended			6 Months Ended		6 Months Ended				6 Months Ended
	Jul. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2012 Trust Preferred Securities Due 2034 [Member]	Dec. 31, 2011 Trust Preferred Securities Due 2034 [Member]	Jun. 30, 2012 Surplus Notes Due 2034 May [Member]	Jun. 30, 2012 Surplus Notes Due 2034 [Member]	Dec. 31, 2011 Surplus Notes Due 2034 [Member]	Jun. 30, 2012 Note Payable Due 2019 [Member]	Jul. 31, 2012 Note Payable Due 2019 [Member]	Dec. 31, 2011 Note Payable Due 2019 [Member]	Dec. 31, 2011 Note Payable Due 2012 [Member]	Jun. 30, 2012 Revolving Credit Agreement [Member]
Outstanding long-term debt
Outstanding long-term debt			$ 49,769,000	$ 49,687,000	$ 22,992,000	$ 22,992,000		$ 12,000,000	$ 12,000,000	$ 14,777,000		$ 14,180,000	$ 515,000	$ 0
Long-term Debt (Textual) [Abstract]
Commitment to Repay Long Term Debt					22,992,000		12,000,000
Adjusted quarterly interest rate of long term debt					3.85%			3.85%		0.70%
Expiration period of revolving credit facility														2014
Description of variable rate basis					LIBOR			LIBOR		LIBOR
Variable interest rate of long term debt					4.30%			4.30%		0.70%
Scheduled repayment of 2019 Note Payable											16,900,000
Long-term debt, principal amount										16,900,000		17,100,000
Interest rate, related swap agreement										6.60%
Fair value of interest rate swaps										4,700,000		4,700,000
Fair value of available for sale securities			25,400,000							25,400,000
Current Revolving credit capacity														150,000,000
Terminated the Swap for cash settlement	5,100,000
Aggregate loss on the extinguishment		$ 2,500,000

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Investments (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Fixed maturities, available for sale
Amortized Cost	$ 3,373,804		$ 3,465,726
Gross Unrealized Gains	220,620		210,153
Gross Unrealized Losses	(5,150)		(10,091)
Estimated Fair Value	3,589,274		3,665,788
U.S. Treasury obligations [Member]
Fixed maturities, available for sale
Amortized Cost	216,909		267,120
Gross Unrealized Gains	14,884		16,748
Gross Unrealized Losses	(17)		(3)
Estimated Fair Value	231,776		283,865
U.S. Agency obligations [Member]
Fixed maturities, available for sale
Amortized Cost	65,635		62,520
Gross Unrealized Gains	5,386		5,584
Gross Unrealized Losses	(13)
Estimated Fair Value	71,008		68,104
State and municipal bonds [Member]
Fixed maturities, available for sale
Amortized Cost	1,126,525		1,145,025
Gross Unrealized Gains	84,871		83,568
Gross Unrealized Losses	(169)		(206)
Estimated Fair Value	1,211,227		1,228,387
Corporate debt [Member]
Fixed maturities, available for sale
Amortized Cost	1,356,759		1,307,504
Gross Unrealized Gains	80,898		68,105
Gross Unrealized Losses	(2,913)		(7,661)
Estimated Fair Value	1,434,744		1,367,948
Residential mortgage-backed securities [Member]
Fixed maturities, available for sale
Amortized Cost	451,226		514,412
Gross Unrealized Gains	27,688		30,270
Gross Unrealized Losses	(1,977)	[1]	(2,131)	[1]
Estimated Fair Value	476,937		542,551
Commercial mortgage-backed securities [Member]
Fixed maturities, available for sale
Amortized Cost	68,707		76,366
Gross Unrealized Gains	5,591		4,881
Gross Unrealized Losses	(58)		(59)
Estimated Fair Value	74,240		81,188
Other asset-backed securities [Member]
Fixed maturities, available for sale
Amortized Cost	88,043		92,773
Gross Unrealized Gains	1,302		978
Gross Unrealized Losses	(3)		(31)
Estimated Fair Value	89,342		93,720
Debt Securities [Member]
Fixed maturities, available for sale
Amortized Cost	3,373,804		3,465,720
Gross Unrealized Gains	220,620		210,134
Gross Unrealized Losses	(5,150)		(10,091)
Estimated Fair Value	3,589,274		3,665,763
Equity Securities [Member]
Fixed maturities, available for sale
Amortized Cost			6
Gross Unrealized Gains			19
Estimated Fair Value			$ 25

[1] Includes other-than-temporary impairments recognized in accumulated other comprehensive income of $3.1 million at June 30, 2012 and $3.3 million December 31, 2011.

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Fair Value Measurement (Details 5) (Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Carrying Value [Member]
Financial assets:
Other Investments, fair value disclosure	$ 21,842	$ 22,351
Investment in Unconsolidated Subsidiaries, fair value disclosure	89,314	87,483
BOLI, fair value disclosure	53,571	52,651
Other Assets, fair value disclosure	10,906	9,636
Financial liabilities:
Other liabilities, fair value disclosure	14,224	15,076
Estimated Fair Value [Member]
Financial assets:
Other Investments, fair value disclosure	28,568	28,226
Investment in Unconsolidated Subsidiaries, fair value disclosure	99,279	96,443
BOLI, fair value disclosure	53,571	52,651
Other Assets, fair value disclosure	10,850	9,636
Financial liabilities:
Other liabilities, fair value disclosure	14,110	14,946
Trust Preferred Securities Due 2034 [Member] | Carrying Value [Member]
Financial liabilities:
Notes payable, fair value disclosure	22,992	22,992
Trust Preferred Securities Due 2034 [Member] | Estimated Fair Value [Member]
Financial liabilities:
Notes payable, fair value disclosure	22,992	22,992
Surplus Notes Due 2034 [Member] | Carrying Value [Member]
Financial liabilities:
Notes payable, fair value disclosure	12,000	12,000
Surplus Notes Due 2034 [Member] | Estimated Fair Value [Member]
Financial liabilities:
Notes payable, fair value disclosure	12,000	12,000
Note Payable Due 2012 [Member] | Carrying Value [Member]
Financial liabilities:
Notes payable, fair value disclosure		515
Note Payable Due 2012 [Member] | Estimated Fair Value [Member]
Financial liabilities:
Notes payable, fair value disclosure		$ 519

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Shareholders' Equity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Reclassification adjustments related to available-for-sale securities
Net realized investment gains (losses) included in the calculation of net income	$ 1,754	$ 4,119	$ 4,473	$ 7,485
Tax effect (at 35%)	(614)	(1,442)	(1,566)	(2,620)
Net realized investment gains (losses) reclassified from other comprehensive income	$ 1,140	$ 2,677	$ 2,907	$ 4,865

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Investments (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fixed maturities, available for sale
Amortized Cost	$ 3,373,804	$ 3,465,726
Total Fair Value	3,589,274	3,665,788
U.S. Treasury obligations [Member]
Fixed maturities, available for sale
Amortized Cost	216,909	267,120
Available-for-sale Securities, Debt Maturities, within one year or less	35,562
Available-for-sale Securities, Debt Maturities, after One Through Five Years	118,492
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years	73,654
Available-for-sale Securities, Debt Maturities, after Ten Years	4,068
Total Fair Value	231,776	283,865
U.S. Agency obligations [Member]
Fixed maturities, available for sale
Amortized Cost	65,635	62,520
Available-for-sale Securities, Debt Maturities, within one year or less	5,700
Available-for-sale Securities, Debt Maturities, after One Through Five Years	52,293
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years	12,758
Available-for-sale Securities, Debt Maturities, after Ten Years	257
Total Fair Value	71,008	68,104
State and municipal bonds [Member]
Fixed maturities, available for sale
Amortized Cost	1,126,525	1,145,025
Available-for-sale Securities, Debt Maturities, within one year or less	29,760
Available-for-sale Securities, Debt Maturities, after One Through Five Years	371,190
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years	541,666
Available-for-sale Securities, Debt Maturities, after Ten Years	268,611
Total Fair Value	1,211,227	1,228,387
Corporate debt [Member]
Fixed maturities, available for sale
Amortized Cost	1,356,759	1,307,504
Available-for-sale Securities, Debt Maturities, within one year or less	74,089
Available-for-sale Securities, Debt Maturities, after One Through Five Years	685,847
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years	633,546
Available-for-sale Securities, Debt Maturities, after Ten Years	41,262
Total Fair Value	1,434,744	1,367,948
Residential mortgage-backed securities [Member]
Fixed maturities, available for sale
Amortized Cost	451,226	514,412
Total Fair Value	476,937	542,551
Commercial mortgage-backed securities [Member]
Fixed maturities, available for sale
Amortized Cost	68,707	76,366
Total Fair Value	74,240	81,188
Other asset-backed securities [Member]
Fixed maturities, available for sale
Amortized Cost	88,043	92,773
Total Fair Value	89,342	93,720
Debt Securities [Member]
Fixed maturities, available for sale
Amortized Cost	3,373,804	3,465,720
Total Fair Value	$ 3,589,274	$ 3,665,763

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Investments (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Other Investments
Other investments	$ 21,842	$ 38,224
Investment in LLC, at NAV [Member]
Other Investments
Other investments		15,900
Investments in LPs/LLCs, at cost [Member]
Other Investments
Other investments	15,900	16,200
Investment in FHLB Stock [Member]
Other Investments
Other investments	4,300	4,400
Investments other at cost [Member]
Other Investments
Other investments	$ 1,600	$ 1,700

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Fair Value Measurement

6 Months Ended

Jun. 30, 2012

Fair Value Measurement [Abstract]

Fair Value Measurement

2. Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level hierarchy has been established for valuing assets and liabilities based on how transparent (observable) the inputs are that are used to determine fair value, with the inputs considered most observable categorized as Level 1 and those that are the least observable categorized as Level 3. Hierarchy levels are defined as follows:

Level 1: quoted (unadjusted) market prices in active markets for identical assets and liabilities. For ProAssurance, Level 1 inputs are generally quotes for debt or equity securities actively traded in exchange or over-the-counter markets.

Level 2: market data obtained from sources independent of the reporting entity (observable inputs). For ProAssurance, Level 2 inputs generally include quoted prices in markets that are not active, quoted prices for similar assets or liabilities, and results from pricing models that use observable inputs such as interest rates and yield curves that are generally available at commonly quoted intervals.

Level 3: the reporting entity’s own assumptions about market participant assumptions based on the best information available in the circumstances (non-observable inputs). For ProAssurance, Level 3 inputs are used in situations where little or no Level 1 or 2 inputs are available or are inappropriate given the particular circumstances. Level 3 inputs include results from pricing models for which some or all of the inputs are not observable, discounted cash flow methodologies, single non-binding broker quotes and adjustments to externally quoted prices that are based on management judgment or estimation.

The following tables present information about assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011 and indicate the fair value hierarchy of the valuation techniques utilized to determine such value. For some assets, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When this is the case, the asset is categorized based on the level of the most significant input to the fair value measurement. Assessments of the significance of a particular input to the fair value measurement requires judgment and consideration of factors specific to the assets being valued.

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, including financial instruments for which ProAssurance has elected fair value accounting, are as follows:

	June 30, 2012
	Fair Value Measurements Using						Total
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Fixed maturities, available for sale
U.S. Treasury obligations	$	—	$	231,776	$	—	$	231,776
U.S. Agency obligations		—		71,008		—		71,008
State and municipal bonds		—		1,204,052		7,175		1,211,227
Corporate debt, multiple observable inputs		—		1,424,234		—		1,424,234
Corporate debt, limited observable inputs:
Private placement senior notes		—		—		599		599
Other corporate debt, NRSRO ratings available		—		—		8,787		8,787
Other corporate debt, NRSRO ratings not available		—		—		1,124		1,124
Residential mortgage-backed securities		—		476,937		—		476,937
Commercial mortgage-backed securities		—		74,240		—		74,240
Other asset-backed securities		—		87,547		1,795		89,342
Equity securities
Financial		54,086		—		—		54,086
Utilities/Energy		23,938		—		—		23,938
Consumer oriented		39,176		—		—		39,176
Technology		9,718		—		—		9,718
Industrial		14,555		—		—		14,555
All other		13,115		—		—		13,115
Short-term investments		134,945		32,969		—		167,914
Financial instruments carried at fair value, classified as a part of:
Investment in unconsolidated subsidiaries		—		—		24,028		24,028
Total assets	$	289,533	$	3,602,763	$	43,508	$	3,935,804
Liabilities:
2019 Note payable		—		—		14,777		14,777
Interest rate swap agreement		—		—		4,734		4,734
Total liabilities	$	—	$	—	$	19,511	$	19,511

	December 31, 2011
	Fair Value Measurements Using						Total
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Fixed maturities, available for sale
U.S. Treasury obligations	$	—	$	283,865	$	—	$	283,865
U.S. Agency obligations		—		68,104		—		68,104
State and municipal bonds		—		1,221,187		7,200		1,228,387
Corporate debt, multiple observable inputs		—		1,359,866		—		1,359,866
Corporate debt, limited observable inputs:
Private placement senior notes		—		—		612		612
Other corporate debt, NRSRO ratings available		—		—		6,310		6,310
Other corporate debt, NRSRO ratings not available		—		—		1,160		1,160
Residential mortgage-backed securities		—		542,551		—		542,551
Commercial mortgage-backed securities		—		81,188		—		81,188
Other asset-backed securities		—		93,720		—		93,720
Equity securities
Financial		25,281		—		—		25,281
Utilities/Energy		18,748		—		—		18,748
Consumer oriented		29,711		—		—		29,711
Technology		7,556		—		—		7,556
Industrial		9,185		—		—		9,185
All other		12,677		—		—		12,677
Short-term investments		111,359		8,062		—		119,421
Financial instruments carried at fair value, classified as a part of:
Investment in unconsolidated subsidiaries		—		—		23,841		23,841
Other investments		—		—		15,873		15,873
Total assets	$	214,517	$	3,658,543	$	54,996	$	3,928,056
Liabilities:
2019 Note payable		—		—		14,180		14,180
Interest rate swap agreement		—		—		4,659		4,659
Total liabilities	$	—	$	—	$	18,839	$	18,839

The fair values for securities included in the Level 2 category, with the few exceptions described below, have been developed by third party, nationally recognized pricing services. These services use complex methodologies to determine values for securities and subject the values they develop to quality control reviews. Management reviews service-provided values for reasonableness by comparing data among pricing services and to available market and trade data. Values that appear inconsistent are further reviewed for appropriateness. If a value does not appear reasonable, the valuation is discussed with the service that provided the value and would be adjusted, if necessary. No such adjustments have been necessary in 2012 or 2011.

Level 2 Valuations

Below is a summary description of the valuation methodologies primarily used by the pricing services for securities in the Level 2 category, by security type:

U.S. Treasury obligations are valued based on quoted prices for identical assets, or, in markets that are not active, quotes for similar assets, taking into consideration adjustments for variations in contractual cash flows and yields to maturity.

U.S. Agency obligations are valued using pricing models that consider current and historical market data, normal trading conventions, credit ratings, and the particular structure and characteristics of the security being valued, such as yield to maturity, redemption options, and contractual cash flows. Adjustments to model inputs or model results are included in the valuation process when necessary to reflect recent events, such as regulatory, government or corporate actions or significant economic, industry or geographic events that would affect the security’s fair value.

State and municipal bonds are valued using a series of matrices that consider credit ratings, the structure of the security, the sector in which the security falls, yields, and contractual cash flows. Valuations are further adjusted, when necessary, to reflect recent events such as significant economic or geographic events or ratings changes that would affect the security’s fair value.

Corporate debt with multiple observable inputs consists primarily of corporate bonds, but also includes a small number of bank loans. The methodology used to value Level 2 corporate bonds is the same as the methodology previously described for U.S. agency obligations. Bank loans are valued by an outside vendor based upon a widely distributed, loan-specific listing of average bid and ask prices published daily by an investment industry group. The publisher of the listing derives the averages from data received from multiple market-makers for bank loans.

Residential and commercial mortgage backed securities. Agency pass-through securities are valued by a matrix, considering the issuer type, coupon rate and longest cash flows outstanding. The matrix is developed daily based on available market information. Agency and non-agency collateralized mortgage obligations are both valued using models that consider the structure of the security, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Evaluations of Alt-A and subprime mortgages include a review of collateral performance data, which is generally updated monthly.

Other asset-backed securities are valued using models that consider the structure of the security, monthly payment information, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Spreads and prepayment speeds consider collateral type.

Short-term investments included in the Level 2 category are commercial paper and certificates of deposit maturing within one year, carried at cost which approximates the fair value of the security due to the short term to maturity.

Level 3 Valuations

Below is a summary description of the valuation processes and methodologies used as well as quantitative information regarding securities in the Level 3 category.

Level 3 Valuation Processes

• Level 3 securities are priced by the Company’s Vice President of Investments, who reports to the Chief Financial Officer.

• Level 3 valuations are computed quarterly. Prices are evaluated quarterly against prior period prices and the expected change in price.

• The Company’s Level 3 valuations are not overly sensitive to changes in the unobservable inputs used. The securities noted in the disclosure are primarily investment grade debt where comparable market inputs are commonly available for evaluating the securities in question.

Level 3 Valuation Methodologies

State and municipal bonds consists of auction rate municipal bonds valued internally using published quotes for similar securities or by using a model based on discounted cash flows using yields currently available on fixed rate securities with a similar term and collateral, adjusted to consider the effect of a floating rate and a premium for illiquidity. All are rated A- or better.

Corporate debt with limited observable inputs consists of private placement senior notes guaranteed by large regional banks and corporate bonds. Valuations are determined using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities having like terms and payment features that are of comparable credit quality. Assessments of credit quality are based on NRSRO ratings, if available, or are subjectively determined by management if not available. At June 30, 2012, the average NRSRO rating of rated securities is BBB.

Investments in unconsolidated subsidiaries and Other investments consist of limited partnership (LP) and limited liability company (LLC) interests valued using the net asset value (NAV) provided by the LP/LLC, which approximates the fair value of the interest. Such interests include the following:

	Fair Value				Unfunded Commitments
(In thousands)	June 30,       2012		December 31, 2011		June 30, 2012
Investment in unconsolidated subsidiaries:
LP primarily invested in long/short equities (1)	$	17,107	$	17,123	None
LP primarily invested in non-public equities (2)		6,921		6,718	3,500
		24,028		23,841
Other investments:
LLC primarily invested in private equity and debt (3)		—		15,873	None
	$	24,028	$	39,714

(1) The LP holds both long and short U.S. and North American equities, and targets absolute returns using a strategy designed to take advantage of event-driven market opportunities. Redemptions are allowed with a notice requirement of up to 45 days and are paid within 30 days of the redemption date, unless the redemption request is for 90% or more of the requestor’s capital balance. Redemptions at the 90% and above level will be paid at 90%, with the remainder paid after the LP’s annual audit.

(2) The LP is structured to provide capital appreciation through diversified investments in private equity, including investments in buyout, venture capital, mezzanine debt, distressed debt and other private equity-oriented LPs. Redemptions are not allowed, except by special permission of the LP. Income and capital are to be periodically distributed at the discretion of the LP over an anticipated time frame that spans 3 to 5 years.

(3) The LLC converted into a publicly traded investment fund during the second quarter of 2012. Prior to conversion, the LLC was structured to provide income through diversified investments in private equity, including mezzanine debt, distressed debt, syndicated bank loans and other private equity-oriented investments.

Liabilities (the 2019 Note payable and the Interest rate swap agreement) are valued using the present value of expected underlying cash flows of the instrument, discounted at rates available on the valuation date for similar instruments issued by entities with a similar credit standing to ProAssurance.

Quantitative Information Regarding Level 3 Valuations

Quantitative Information about Level 3 Fair Value Measurements
(in millions)	Fair Value at June 30, 2012		Valuation Technique	Unobservable Input	Range (Weighted Average)
Assets:
State and municipal bonds	$	7.2	Market Comparable Securities	Comparability Adjustment	0% - 10% (5%)
			Discounted Cash Flows	Comparability Adjustment	0% - 10% (5%)
Corporate debt with limited observable inputs	$	10.5	Market Comparable Securities	Comparability Adjustment	0% - 5% (2.5%)
			Discounted Cash Flows	Comparability Adjustment	0% - 5% (2.5%)
Liabilities:
2019 Note payable, Interest rate swap agreement	$	19.5	Discounted Cash Flows	Comparability Adjustment	0% - 5% (2.5%)

The significant unobservable inputs used in the fair value measurement of the entity’s corporate bonds are the valuations of comparable securities with similar issuer, credit quality and maturity. Changes in the availability of comparable securities could result in changes in the fair value measurements.

The following tables (the Level 3 Tables) present summary information regarding changes in the fair value of assets and liabilities measured at fair value using Level 3 inputs, including financial instruments for which ProAssurance has elected fair value accounting.

	June 30, 2012
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds		Corporate Debt			Asset- backed Securities		Investment in Unconsolidated Subsidiaries			Other Investments			Total
Balance March 31, 2012	$	7,175	$	8,689		$	—	$	24,430		$	15,742		$	56,036
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—		—			—		180			—			180
Net realized investment gains (losses)		—		—			—		—			—			—
Included in other comprehensive income		—		(28	)		—		—			—			(28	)
Purchases		—		1,937			1,795		—			—			3,732
Sales		—		(88	)		—		(582	)		—			(670	)
Transfers in		—		—			—		—			—			—
Transfers out		—		—			—		—			(15,742	)		(15,742	)
Balance June 30, 2012	$	7,175	$	10,510		$	1,795	$	24,028		$	—		$	43,508
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—	$	—		$	—	$	180		$	—		$	180

	June 30, 2012
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds			Corporate Debt			Asset- backed Securities		Investment in Unconsolidated Subsidiaries			Other Investments			Total
Balance December 31, 2011	$	7,200		$	8,082		$	—	$	23,841		$	15,873		$	54,996
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—			—			—		770			—			770
Net realized investment gains (losses)		—			—			—		—			(131	)		(131	)
Included in other comprehensive income		—			578			—		—			—			578
Purchases		—			1,937			1,795		—			—			3,732
Sales		(25	)		(87	)		—		(583	)		—			(695	)
Transfers in		—			—			—		—			—			—
Transfers out		—			—			—		—			(15,742	)		(15,742	)
Balance June 30, 2012	$	7,175		$	10,510		$	1,795	$	24,028		$	—		$	43,508
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—		$	—		$	—	$	770		$	—		$	770

	June 30, 2011
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds			Corporate Debt			Asset- backed Securities		Investment in Unconsolidated Subsidiaries			Other Investments		Total
Balance March 31, 2011	$	7,450		$	16,880		$	—	$	25,662		$	—	$	49,992
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—			—			—		(535	)		—		(535	)
Net realized investment gains (losses)		—			—			—		—			—		—
Included in other comprehensive income		—			(534	)		—		—			—		(534	)
Purchases		—			—			1,684		—			—		1,684
Sales		(125	)		(3,311	)		—		—			—		(3,436	)
Transfers in		—			—			—		—			—		—
Transfers out		—			(5,205	)		—		—			—		(5,205	)
Balance June 30, 2011	$	7,325		$	7,830		$	1,684	$	25,127		$	—	$	41,966
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—		$	—		$	—	$	(535	)	$	—	$	(535	)

	June 30, 2011
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds			Corporate Debt			Asset- backed Securities			Investment in Unconsolidated Subsidiaries		Other Investments		Total
Balance December 31, 2010	$	7,550		$	21,229		$	2,220		$	25,112	$	—	$	56,111
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—			—			—			15		—		15
Net realized investment gains (losses)		—			—			314			—		—		314
Included in other comprehensive income		—			(714	)		(15	)		—		—		(729	)
Purchases		—			—			1,684			—		—		1,684
Sales		(225	)		(8,505	)		(1,921	)		—		—		(10,651	)
Transfers in		—			3,447			—			—		—		3,447
Transfers out		—			(7,627	)		(598	)		—		—		(8,225	)
Balance June 30, 2011	$	7,325		$	7,830		$	1,684		$	25,127	$	—	$	41,966
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—		$	—		$	—		$	15	$	—	$	15

Transfers

There were no transfers between the Level 1 and Level 2 categories during the three and six months ended June 30, 2012 or 2011.

The transfer reported in the Level 3 Tables for the three- and six-month periods of 2012 relates to an interest in an LLC that was valued at the beginning of both periods using the NAV of the LLC. The LLC converted into a publicly traded investment fund during the second quarter of 2012. The interest in the converted fund was valued using Level 1 inputs at June 30, 2012.

The transfers shown during the three and six months ended June 30, 2011 relate to securities held for which there was little market activity for identical or nearly identical securities during the period and represent transfers to or from Level 2. Such securities are valued using multiple observable inputs when those inputs are available; otherwise the securities are valued using limited observable inputs.

	June 30, 2012
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance March 31, 2012	$	14,962		$	4,415	$	19,377
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		(99	)		319		220
Settlements		(86	)		—		(86	)
Balance June 30, 2012	$	14,777		$	4,734	$	19,511
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	(99	)	$	319	$	220

	June 30, 2012
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance December 31, 2011	$	14,180		$	4,659	$	18,839
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		769			75		844
Settlements		(172	)		—		(172	)
Balance June 30, 2012	$	14,777		$	4,734	$	19,511
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	769		$	75	$	844

	June 30, 2011
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance March 31, 2011	$	15,555		$	3,415	$	18,970
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		389			437		826
Settlements		(81	)		—		(81	)
Balance June 30, 2011	$	15,863		$	3,852	$	19,715
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	389		$	437	$	826
	June 30, 2011
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance December 31, 2010	$	15,616		$	3,658	$	19,274
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		408			194		602
Settlements		(161	)		—		(161	)
Balance June 30, 2011	$	15,863		$	3,852	$	19,715
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	408		$	194	$	602

Fair Value Option Elections

The 2019 Note Payable (the Note) and a related interest rate swap agreement (the Swap) are measured at fair value on a recurring basis, with changes in the fair value of each liability recorded in net realized gains (losses). ProAssurance assumed both liabilities as part of a previous acquisition. The fair value option was elected for the Note and the Swap because valuation at fair value better reflects the economics of the related liabilities and eliminates the inconsistency that would otherwise result from carrying the Note on an amortized cost basis and the Swap at fair value. As discussed in Note 8, ProAssurance repaid both the Note and the Swap in July 2012.

Financial Instruments Not Measured At Fair Value

The following table provides the estimated fair value of our financial instruments that are not carried at fair value. All fair values provided fall within the Level 3 fair value category.

	June 30, 2012				December 31, 2011
(In thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets:
Other Investments	$	21,842	$	28,568	$	22,351	$	28,226
Investment in Unconsolidated Subsidiaries		89,314		99,279		87,483		96,443
BOLI		53,571		53,571		52,651		52,651
Other Assets		10,906		10,850		9,636		9,636
Financial liabilities:
Trust Preferred Securities	$	22,992	$	22,992	$	22,992	$	22,992
Surplus Notes due May 2034		12,000		12,000		12,000		12,000
Note Payable due February 2012		—		—		515		519
Other Liabilities		14,224		14,110		15,076		14,946

Other Investments listed in the table above include interests in certain investment fund LPs/LLCs accounted for using the cost method, investments in Federal Home Loan Bank (FHLB) common stock carried at cost, and an annuity investment carried at amortized cost. The estimated fair value of the LP/LLC interests is based on the NAV provided by the LP/LLC managers. The estimated fair value of the FHLB common stock is based on the amount ProAssurance would receive if its membership were cancelled, as the membership cannot be sold. The fair value of the annuity is the present value of the expected future cash flows discounted using a rate available in active markets for similarly structured instruments.

Investment in Unconsolidated Subsidiaries consists of investments in tax credit partnerships and a non-controlling interest in a limited liability company. Fair values of investments in tax credit partnerships are based on the present value of the cash flows expected to be generated by the partnerships discounted at rates for investments with similar risk structures and repayment periods. The fair value of the LLC interest is estimated as the proceeds ProAssurance would receive upon liquidation of the LLC.

The fair value of the BOLI is the cash surrender value associated with the policies on the valuation date.

Other Assets and Other Liabilities primarily consist of related investment assets and liabilities associated with funded deferred compensation agreements. Other Liabilities also includes certain contractual liabilities related to prior business combinations. Fair values of the funded deferred compensation assets and liabilities are based on the NAVs of the underlying securities. The fair values of the business combination liabilities are based on the present value of the expected cash flows, discounted at ProAssurance’s assumed incremental borrowing rate on the valuation date for unsecured liabilities with similar repayment structures.

The fair value of the long-term debt is the present value of expected underlying cash flows of the debt, discounted at rates available on the valuation date for similar debt issued by entities with a similar credit standing to ProAssurance or, if issued by an insurance subsidiary, the subsidiary issuing the debt.

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Investments (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Unconsolidated Subsidiaries
Investment in unconsolidated subsidiaries	$ 113,342	$ 111,324
Unfunded Commitments	36,200
Tax Credit Partnerships [Member]
Unconsolidated Subsidiaries
Investment in unconsolidated subsidiaries	89,300	86,800
Unfunded Commitments	32,700
Investment in Unconsolidated Subsidiaries, Ownership Percentage	20.00%
Long/Short Equity Fund [Member]
Unconsolidated Subsidiaries
Investment in unconsolidated subsidiaries	17,100	17,100
Investment in Unconsolidated Subsidiaries, Ownership Percentage	20.00%
Non-Public Equity Fund [Member]
Unconsolidated Subsidiaries
Investment in unconsolidated subsidiaries	6,900	6,700
Unfunded Commitments	3,500
Investment in Unconsolidated Subsidiaries, Ownership Percentage	20.00%
Business LLC [Member]
Unconsolidated Subsidiaries
Investment in unconsolidated subsidiaries		$ 700

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Deferred Policy Acquisition Costs (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Deferred Policy Acquisition Costs (Textual) [Abstract]
Policy acquisitions costs capitalized	$ 13.2		$ 30.3
Policy acquisition costs capitalized had the guidance not been revised	12.1		28.1
Amortization of deferred policy acquisition costs	$ 14.5	$ 14.6	$ 29.6	$ 29.0

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Investments
Fixed maturities, available for sale, at fair value; amortized cost, $3,373,804 and $3,465,720, respectively	$ 3,589,274	$ 3,665,763
Equity securities, available for sale, at fair value; cost, $0 and $6, respectively		25
Equity securities, trading, at fair value; cost, $147,628 and $101,078, respectively	154,588	103,133
Short-term investments	167,914	119,421
Business owned life insurance	53,571	52,651
Investment in unconsolidated subsidiaries	113,342	111,324
Other investments	21,842	38,224
Total Investments	4,100,531	4,090,541
Cash and cash equivalents	132,190	130,400
Premiums receivable	112,333	120,220
Receivable from reinsurers on paid losses and loss adjustment expenses	15,464	4,175
Receivable from reinsurers on unpaid losses and loss adjustment expenses	239,225	247,658
Prepaid reinsurance premiums	17,287	12,568
Deferred policy acquisition costs	25,129	26,626
Deferred taxes	22,587	30,989
Real estate, net	40,900	40,432
Intangible assets	51,333	53,703
Goodwill	159,625	159,625
Other assets	79,155	81,941
Total Assets	4,995,759	4,998,878
Policy liabilities and accruals
Reserve for losses and loss adjustment expenses	2,193,042	2,247,772
Unearned premiums	238,291	251,155
Reinsurance premiums payable	81,967	82,039
Total Policy Liabilities	2,513,300	2,580,966
Other liabilities	154,547	203,772
Long-term debt, $34,992 and $35,507, at amortized cost, respectively; $14,777 and $14,180 at fair value, respectively	49,769	49,687
Total Liabilities	2,717,616	2,834,425
Shareholders' Equity
Common shares, par value $0.01 per share, 100,000,000 shares authorized, 34,661,113 and 34,551,494 shares issued, respectively	347	346
Additional paid-in capital	543,531	538,625
Accumulated other comprehensive income (loss), net of deferred tax expense (benefit) of $ 75,414 and $70,022, respectively	140,051	130,037
Retained earnings	1,798,622	1,699,853
Total Shareholders' Equity Before Treasury Shares	2,482,551	2,368,861
Treasury shares, at cost, 3,997,951 shares	(204,408)	(204,408)
Total Shareholders' Equity	2,278,143	2,164,453
Total Liabilities and Shareholders' Equity	$ 4,995,759	$ 4,998,878

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Shareholders' Equity (Details Textual) (USD $)	1 Months Ended				3 Months Ended			6 Months Ended
	Jul. 31, 2012	Apr. 30, 2012	Feb. 29, 2012	Feb. 28, 2011	Jun. 30, 2012	Mar. 31, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Shareholders Equity (Textual) [Abstract]
Common shares, shares authorized					100,000,000			100,000,000		100,000,000
Performance Shares grants range, Minimum			75.00%
Performance Shares grants range, Maximum			125.00%
Authorized preferred stock					50,000,000			50,000,000		50,000,000
Quarterly dividend declared, per share					$ 0.25	$ 0.25		$ 0.50
Dividend Declared					$ 7,700,000	$ 7,700,000
Cash Payment of Dividend	7,700,000	7,700,000
Total authorizations which remain available for use								153,500,000
Repurchased common shares									259,000
Common shares reacquired									(15,437,000)
Forfeited match shares reacquired shares									6,900
Forfeited match shares reacquired value									400,000
Share-based compensation expense					2,900,000		2,000,000	5,100,000	3,700,000
Tax benefits from share-based compensation expense					$ 1,000,000		$ 700,000	$ 1,800,000	$ 1,300,000
Performance shares as percentage of target			125.00%
Bonus compensation shares issued			19,000	20,000
Effective tax rate								35.00%
Restricted Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted			25,000
Weighted Average Grant Date Fair Value			89.28
Vesting period of restricted stock units granted			3 years
Shares issued for vested performance share units			50,000
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted			100,000
Weighted Average Grant Date Fair Value			89.28
Vesting period of restricted stock units granted			3 years
Shares issued for vested performance share units			17,000

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Operating Activities
Net income	$ 114,098	$ 102,790
Depreciation and amortization	20,402	17,954
Net realized investment (gains) losses	(9,130)	(6,324)
Share-based compensation	5,072	3,714
Deferred income taxes	3,010	13,728
Other	(2,936)	226
Changes in assets and liabilities:
Premiums receivable	7,887	1,219
Other assets	364	(1,549)
Reserve for losses and loss adjustment expenses	(54,730)	(11,836)
Unearned premiums	(12,864)	(6,814)
Reinsurance related assets and liabilities	(7,647)	(12,795)
Other liabilities	(30,821)	(47,261)
Net cash provided by operating activities	32,705	53,052
Purchases of:
Fixed maturities, available for sale	(347,146)	(452,833)
Equity securities, trading	(53,001)	(31,325)
Other investments	(158)	(429)
Funding of tax credit limited partnerships	(23,470)	(17,232)
(Investments in) distributions from unconsolidated subsidiaries, net	582
Proceeds from sale or maturities of:
Fixed maturities, available for sale	432,667	449,364
Equity securities, available for sale		3,704
Equity securities, trading	22,921	33,908
Other investments	565	432
Net sales or maturities (purchases) of short-term investments	(48,654)	39,537
Unsettled security transactions, net	6,712	1,228
Cash received (paid) for other assets	(4,620)	(11,428)
Net cash provided (used) by investing activities	(13,602)	14,926
Financing Activities
Repurchase of common stock		(14,993)
Dividends to shareholders	(15,270)
Other	(2,043)	(2,610)
Net cash provided (used) by financing activities	(17,313)	(17,603)
Increase (decrease) in cash and cash equivalents	1,790	50,375
Cash and cash equivalents at beginning of period	130,400	50,851
Cash and cash equivalents at end of period	$ 132,190	$ 101,226

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Investments (Details 6) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Total other-than-temporary impairment losses:
Other-than-temporary impairment (OTTI) losses	$ (218)	$ (1,065)	$ (1,424)	$ (2,902)
Portion recognized in (reclassified from) Other Comprehensive Income:
Net impairment losses recognized in earnings	(419)	(1,178)	(1,625)	(3,583)
Gross realized gains, available-for-sale securities	2,262	5,664	6,150	10,292
Gross realized (losses), available-for-sale securities	(89)	(1,113)	(183)	(1,357)
Net realized gains (losses), trading securities	(50)	223	727	2,915
Change in unrealized holding gains (losses), trading securities	(3,032)	(570)	4,905	(1,341)
Decrease (increase) in the fair value of liabilities carried at fair value	(220)	(826)	(844)	(602)
Net realized investment gains (losses)	(1,548)	2,200	9,130	6,324
Other investments [Member]
Total other-than-temporary impairment losses:
Other-than-temporary impairment (OTTI) losses	0	(746)	(131)	(2,133)
Residential mortgage-backed securities [Member]
Total other-than-temporary impairment losses:
Other-than-temporary impairment (OTTI) losses	(218)	(319)	(463)	(769)
Portion recognized in (reclassified from) Other Comprehensive Income:
Portion of OTTI losses recognized in (reclassified from) other comprehensive income before taxes	(201)	(113)	(201)	(681)
Corporate debt [Member]
Total other-than-temporary impairment losses:
Other-than-temporary impairment (OTTI) losses	$ 0		$ (830)

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Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2012

Shareholders' Equity [Abstract]

Reclassification adjustments related to available-for-sale securities

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Net realized investment gains (losses) included in the calculation of net income	$	1,754		$	4,119		$	4,473		$	7,485
Tax effect (at 35%)		(614	)		(1,442	)		(1,566	)		(2,620	)
Net realized investment gains (losses) reclassified from other comprehensive income	$	1,140		$	2,677		$	2,907		$	4,865

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Investments (Details 7) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Cumulative credit losses recorded in earnings related to impaired debt securities
Accumulated credit losses related to impaired debt securities, Beginning Balance	$ 5,937	$ 5,334	$ 5,870	$ 4,446
Additional credit losses recognized during the period, related to securities for which OTTI has been previously recognized	201	394	268	1,282
Accumulated credit losses related to impaired debt securities, Ending Balance	$ 6,138	$ 5,728	$ 6,138	$ 5,728

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Fair Value Measurement (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Investments in private funds [Abstract]
Investments in limited liability companies and limited partnerships fair value	$ 24,028		$ 39,714
Investments in limited liability companies and limited partnerships unfunded commitments	36,200
Long/short equities [Member]
Investments in private funds [Abstract]
Investments in limited liability companies and limited partnerships fair value	17,107	[1]	17,123	[1]
Investments in limited liability companies and limited partnerships unfunded commitments		[1]
LP invested in non-public equities [Member]
Investments in private funds [Abstract]
Investments in limited liability companies and limited partnerships fair value	6,921	[2]	6,718	[2]
Investments in limited liability companies and limited partnerships unfunded commitments	3,500	[2]
Investment in unconsolidated subsidiaries [Member]
Investments in private funds [Abstract]
Investments in limited liability companies and limited partnerships fair value	24,028		23,841
LLC primarily invested in private equity and debt [Member]
Investments in private funds [Abstract]
Investments in limited liability companies and limited partnerships fair value		[3]	15,873	[3]
Investments in limited liability companies and limited partnerships unfunded commitments		[3]

[1] The LP holds both long and short U.S. and North American equities, and targets absolute returns using a strategy designed to take advantage of event-driven market opportunities. Redemptions are allowed with a notice requirement of up to 45 days and are paid within 30 days of the redemption date, unless the redemption request is for 90% or more of the requestor's capital balance. Redemptions at the 90% and above level will be paid at 90%, with the remainder paid after the LP's annual audit.

[2] The LP is structured to provide capital appreciation through diversified investments in private equity, including investments in buyout, venture capital, mezzanine debt, distressed debt and other private equity-oriented LPs. Redemptions are not allowed, except by special permission of the LP. Income and capital are to be periodically distributed at the discretion of the LP over an anticipated time frame that spans 3 to 5 years

[3] The LLC converted into a publicly traded investment fund during the second quarter of 2012. Prior to conversion, the LLC was structured to provide income through diversified investments in private equity, including mezzanine debt, distressed debt, syndicated bank loans and other private equity-oriented investments.

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of ProAssurance Corporation and its consolidated subsidiaries (ProAssurance or PRA). The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting of normal recurring adjustments, have been included. ProAssurance’s results for the three- and six-month periods ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes contained in ProAssurance’s December 31, 2011 report on Form 10-K. In connection with its preparation of the Condensed Consolidated Financial Statements, ProAssurance evaluated events that occurred subsequent to June 30, 2012 for recognition or disclosure in its financial statements and notes to financial statements.

Accounting Changes Not Yet Adopted

Disclosures About Offsetting Assets and Liabilities

Effective for fiscal years beginning on or after January 1, 2013, the Financial Accounting Standards Board (FASB) revised guidance related to disclosures about certain assets and liabilities in an entity’s financial statements. The guidance requires disclosures related to the net and gross positions of certain financial instruments and transactions that are either eligible for offset in accordance with existing GAAP guidance or subject to an agreement that requires such offset. The guidance must be applied retrospectively for all prior periods presented. ProAssurance plans to adopt the guidance beginning January 1, 2013. Adoption of this guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position.

Accounting Changes

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

Effective for fiscal years beginning after December 15, 2011, the FASB revised guidance regarding the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral. The guidance permits deferral of qualifying costs only when associated with successful contract acquisitions. Internal selling agent and underwriter salary and benefit costs allocated to unsuccessful contracts, as well as advertising costs, are excluded. The guidance must be applied prospectively, but may be applied retrospectively for all prior periods. ProAssurance prospectively adopted the guidance on January 1, 2012. Adoption of this guidance had no material effect on ProAssurance’s results of operations or financial position.

Fair Value Measurements

Effective for interim and annual reporting periods beginning after December 15, 2011, the FASB revised guidance related to fair value measurements and disclosures, all of which are to be applied prospectively. The new guidance increases disclosure requirements regarding valuation methods used to determine fair value measurements categorized as Level 3, as well as the sensitivity to change of those measurements, and requires additional disclosures regarding the consideration given to highest and best use in fair value measurements of nonfinancial assets. The guidance also requires that when fair value measurements of items not carried at fair value are disclosed, the fair value measurements are to be categorized by level of the fair value hierarchy. Additionally, the guidance also clarifies or revises certain fair value measurement principles related to the valuation of financial instruments managed within a portfolio, the valuation of instruments classified as a part of shareholders’ equity, the appropriate application of the highest and best use valuation premise, and the consideration of premium and discounts in a fair value measurement. ProAssurance adopted the guidance on January 1, 2012. Adoption of this guidance had no material effect on ProAssurance’s results of operations or financial position.

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Fixed maturities, available for sale, amortized cost	$ 3,373,804	$ 3,465,720
Equity securities, available for sale, cost	0	6
Equity securities, trading, cost	147,628	101,078
Long-term debt at amortized cost	34,992	35,507
Long-term debt at fair value	14,777	14,180
Common shares, par value	$ 0.01	$ 0.01
Common shares, shares authorized	100,000,000	100,000,000
Common shares, shares issued	34,661,113	34,551,494
Deferred tax expense (benefit) on accumulated other comprehensive income (loss)	$ 75,414	$ 70,022
Treasury shares, number of shares	3,997,951	3,997,951

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Earnings Per Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Share

11. Earnings Per Share

Diluted weighted average shares is calculated as basic weighted average shares plus the effect, calculated using the treasury stock method, of assuming that dilutive stock options have been exercised and that performance share awards and restricted stock units have vested.

Stock options are not dilutive when the option exercise price exceeds the average price of a common share during the period or when the result from assuming an option is exercised is a net decrease to outstanding shares. All outstanding options were dilutive for the three- and six-month periods ended June 30, 2012 and 2011.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Jul. 26, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	PROASSURANCE CORP
Entity Central Index Key	0001127703
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		30,663,443

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Accounting Changes Not Yet Adopted

Accounting Changes Not Yet Adopted

Disclosures About Offsetting Assets and Liabilities

Effective for fiscal years beginning on or after January 1, 2013, the Financial Accounting Standards Board (FASB) revised guidance related to disclosures about certain assets and liabilities in an entity’s financial statements. The guidance requires disclosures related to the net and gross positions of certain financial instruments and transactions that are either eligible for offset in accordance with existing GAAP guidance or subject to an agreement that requires such offset. The guidance must be applied retrospectively for all prior periods presented. ProAssurance plans to adopt the guidance beginning January 1, 2013. Adoption of this guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position.

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

Accounting Changes

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

Effective for fiscal years beginning after December 15, 2011, the FASB revised guidance regarding the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral. The guidance permits deferral of qualifying costs only when associated with successful contract acquisitions. Internal selling agent and underwriter salary and benefit costs allocated to unsuccessful contracts, as well as advertising costs, are excluded. The guidance must be applied prospectively, but may be applied retrospectively for all prior periods. ProAssurance prospectively adopted the guidance on January 1, 2012. Adoption of this guidance had no material effect on ProAssurance’s results of operations or financial position.

Fair Value Measurements

Fair Value Measurements

Effective for interim and annual reporting periods beginning after December 15, 2011, the FASB revised guidance related to fair value measurements and disclosures, all of which are to be applied prospectively. The new guidance increases disclosure requirements regarding valuation methods used to determine fair value measurements categorized as Level 3, as well as the sensitivity to change of those measurements, and requires additional disclosures regarding the consideration given to highest and best use in fair value measurements of nonfinancial assets. The guidance also requires that when fair value measurements of items not carried at fair value are disclosed, the fair value measurements are to be categorized by level of the fair value hierarchy. Additionally, the guidance also clarifies or revises certain fair value measurement principles related to the valuation of financial instruments managed within a portfolio, the valuation of instruments classified as a part of shareholders’ equity, the appropriate application of the highest and best use valuation premise, and the consideration of premium and discounts in a fair value measurement. ProAssurance adopted the guidance on January 1, 2012. Adoption of this guidance had no material effect on ProAssurance’s results of operations or financial position.

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Condensed Consolidated Statements of Changes in Capital (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Beginning Balance			$ 2,164,453	$ 1,855,863
Net income	58,453	55,096	114,098	102,790
Dividends to shareholders			(15,329)
Change in net unrealized gains (losses) on investments, after tax, net of reclassification adjustments			10,014	19,933
Common shares reacquired				(15,437)
Common shares issued for compensation and net effect of restricted and performance shares issued and stock options exercised			(165)	(499)
Share-based compensation			5,072	3,714
Ending Balance	2,278,143	1,966,364	2,278,143	1,966,364
Accumulated Other Comprehensive Income (Loss)
Beginning Balance			130,037	79,124
Change in net unrealized gains (losses) on investments, after tax, net of reclassification adjustments			10,014	19,933
Ending Balance	140,051	99,057	140,051	99,057
Retained Earnings
Beginning Balance			1,699,853	1,428,026
Net income			114,098	102,790
Dividends to shareholders			(15,329)
Ending Balance	1,798,622	1,530,816	1,798,622	1,530,816
Other Capital Accounts [Member]
Beginning Balance			334,563	348,713
Common shares reacquired				(15,437)
Common shares issued for compensation and net effect of restricted and performance shares issued and stock options exercised			(165)	(499)
Share-based compensation			5,072	3,714
Ending Balance	$ 339,470	$ 336,491	$ 339,470	$ 336,491

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Reserve for Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2012

Insurance [Abstract]

Reserve for Losses and Loss Adjustment Expenses

6. Reserve for Losses and Loss Adjustment Expenses

The reserve for losses is established based on estimates of individual claims and actuarially determined estimates of future losses based on ProAssurance’s past loss experience, available industry data and projections as to future claims frequency, severity, inflationary trends and settlement patterns. Estimating reserves, and particularly liability reserves, is a complex process. Claims may be resolved over an extended period of time, often five years or more, and may be subject to litigation. Estimating losses for liability claims requires ProAssurance to make and revise judgments and assessments regarding multiple uncertainties over an extended period of time. As a result, reserve estimates may vary significantly from the eventual outcome. The assumptions used in establishing ProAssurance’s reserves are regularly reviewed and updated by management as new data becomes available. Changes to estimates of previously established reserves are included in earnings in the period in which the estimate is changed.

ProAssurance recognized favorable net loss development of $60.1 million and $107.5 million related to previously established reserves for the three and six months ended June 30, 2012, respectively. The favorable net loss development reflects reductions in the Company’s estimates of claims severity, principally for the 2004 through 2009 accident years.

For the three and six months ended June 30, 2011, ProAssurance recognized favorable net loss development of $50.2 million and $90.2 million, respectively, to reflect reductions in estimated claim severity principally for accident years 2004 through 2009.

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Deferred Policy Acquisition Costs

6 Months Ended

Jun. 30, 2012

Insurance [Abstract]

Deferred Policy Acquisition Costs

5. Deferred Policy Acquisition Costs

Policy acquisition costs, most significantly commissions, premium taxes, and underwriting salaries, that are primarily and directly related to the successful production of new and renewal insurance contracts are capitalized as policy acquisition costs and amortized to expense as the related premium revenues are earned.

As of January 1, 2012, policy acquisition costs related to unsuccessful contracts are expensed immediately as a result of the revised FASB guidance as discussed in Note 1. ProAssurance adopted the revised guidance on a prospective basis. Under prior guidance, policy acquisition costs capitalized during the three and six months ended June 30, 2012 would have been $13.2 million and $30.3 million, respectively, as compared to $12.1 million and $28.1 million, respectively, capitalized under the current guidance.

Amortization of deferred policy acquisition costs is $14.5 million and $29.6 million for the three and six months ended June 30, 2012, respectively, and $14.6 million and $29.0 million for the three and six months ended June 30, 2011, respectively.

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Fair Value Measurement (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fair Value, Inputs, Level 3 [Member] | State and municipal bonds [Member]
Financial instruments carried at fair value, classified as a part of:
Total assets	$ 7,200
Fair Value, Measurements, Recurring [Member]
Financial instruments carried at fair value, classified as a part of:
Investment in Unconsolidated Subsidiaries, fair value disclosure	24,028	23,841
Other investments		15,873
Total assets	3,935,804	3,928,056
Liabilities:
2019 Note payable	14,777	14,180
Interest rate swap agreement	4,734	4,659
Total liabilities	19,511	18,839
Fair Value, Measurements, Recurring [Member] | U.S. Treasury obligations [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	231,776	283,865
Fair Value, Measurements, Recurring [Member] | U.S. Agency obligations [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	71,008	68,104
Fair Value, Measurements, Recurring [Member] | State and municipal bonds [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	1,211,227	1,228,387
Fair Value, Measurements, Recurring [Member] | Corporate debt, multiple observable inputs [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	1,424,234	1,359,866
Fair Value, Measurements, Recurring [Member] | Private placement senior notes [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	599	612
Fair Value, Measurements, Recurring [Member] | Other corporate debt, NRSRO ratings available [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	8,787	6,310
Fair Value, Measurements, Recurring [Member] | Other corporate debt, NRSRO ratings not available [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	1,124	1,160
Fair Value, Measurements, Recurring [Member] | Residential mortgage-backed securities [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	476,937	542,551
Fair Value, Measurements, Recurring [Member] | Commercial mortgage-backed securities [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	74,240	81,188
Fair Value, Measurements, Recurring [Member] | Other asset-backed securities [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	89,342	93,720
Fair Value, Measurements, Recurring [Member] | Financial [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	54,086	25,281
Fair Value, Measurements, Recurring [Member] | Utilities/Energy [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	23,938	18,748
Fair Value, Measurements, Recurring [Member] | Consumer oriented [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	39,176	29,711
Fair Value, Measurements, Recurring [Member] | Technology [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	9,718	7,556
Fair Value, Measurements, Recurring [Member] | Industrial [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	14,555	9,185
Fair Value, Measurements, Recurring [Member] | All other [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	13,115	12,677
Fair Value, Measurements, Recurring [Member] | Short-term Investments [Member]
Assets:
Short-term investments	167,914	119,421
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Financial instruments carried at fair value, classified as a part of:
Total assets	289,533	214,517
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Financial [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	54,086	25,281
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Utilities/Energy [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	23,938	18,748
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Consumer oriented [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	39,176	29,711
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Technology [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	9,718	7,556
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Industrial [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	14,555	9,185
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | All other [Member]
Assets:
Fair Value, Measured on Recurring Basis, Trading	13,115	12,677
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Short-term Investments [Member]
Assets:
Short-term investments	134,945	111,359
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Financial instruments carried at fair value, classified as a part of:
Other investments
Total assets	3,602,763	3,658,543
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | U.S. Treasury obligations [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	231,776	283,865
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | U.S. Agency obligations [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	71,008	68,104
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | State and municipal bonds [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	1,204,052	1,221,187
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Corporate debt, multiple observable inputs [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	1,424,234	1,359,866
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Residential mortgage-backed securities [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	476,937	542,551
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Commercial mortgage-backed securities [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	74,240	81,188
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Other asset-backed securities [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	87,547	93,720
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Short-term Investments [Member]
Assets:
Short-term investments	32,969	8,062
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Financial instruments carried at fair value, classified as a part of:
Investment in Unconsolidated Subsidiaries, fair value disclosure	24,028	23,841
Other investments		15,873
Total assets	43,508	54,996
Liabilities:
2019 Note payable	14,777	14,180
Interest rate swap agreement	4,734	4,659
Total liabilities	19,511	18,839
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | State and municipal bonds [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	7,175	7,200
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Private placement senior notes [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	599	612
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Other corporate debt, NRSRO ratings available [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	8,787	6,310
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Other corporate debt, NRSRO ratings not available [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	1,124	1,160
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Other asset-backed securities [Member]
Assets:
Fair Value, Measured on Recurring Basis, Investments	$ 1,795

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Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Measurement [Abstract]

Assets and liabilities measured at fair value

	June 30, 2012
	Fair Value Measurements Using						Total
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Fixed maturities, available for sale
U.S. Treasury obligations	$	—	$	231,776	$	—	$	231,776
U.S. Agency obligations		—		71,008		—		71,008
State and municipal bonds		—		1,204,052		7,175		1,211,227
Corporate debt, multiple observable inputs		—		1,424,234		—		1,424,234
Corporate debt, limited observable inputs:
Private placement senior notes		—		—		599		599
Other corporate debt, NRSRO ratings available		—		—		8,787		8,787
Other corporate debt, NRSRO ratings not available		—		—		1,124		1,124
Residential mortgage-backed securities		—		476,937		—		476,937
Commercial mortgage-backed securities		—		74,240		—		74,240
Other asset-backed securities		—		87,547		1,795		89,342
Equity securities
Financial		54,086		—		—		54,086
Utilities/Energy		23,938		—		—		23,938
Consumer oriented		39,176		—		—		39,176
Technology		9,718		—		—		9,718
Industrial		14,555		—		—		14,555
All other		13,115		—		—		13,115
Short-term investments		134,945		32,969		—		167,914
Financial instruments carried at fair value, classified as a part of:
Investment in unconsolidated subsidiaries		—		—		24,028		24,028
Total assets	$	289,533	$	3,602,763	$	43,508	$	3,935,804
Liabilities:
2019 Note payable		—		—		14,777		14,777
Interest rate swap agreement		—		—		4,734		4,734
Total liabilities	$	—	$	—	$	19,511	$	19,511

	December 31, 2011
	Fair Value Measurements Using						Total
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Fixed maturities, available for sale
U.S. Treasury obligations	$	—	$	283,865	$	—	$	283,865
U.S. Agency obligations		—		68,104		—		68,104
State and municipal bonds		—		1,221,187		7,200		1,228,387
Corporate debt, multiple observable inputs		—		1,359,866		—		1,359,866
Corporate debt, limited observable inputs:
Private placement senior notes		—		—		612		612
Other corporate debt, NRSRO ratings available		—		—		6,310		6,310
Other corporate debt, NRSRO ratings not available		—		—		1,160		1,160
Residential mortgage-backed securities		—		542,551		—		542,551
Commercial mortgage-backed securities		—		81,188		—		81,188
Other asset-backed securities		—		93,720		—		93,720
Equity securities
Financial		25,281		—		—		25,281
Utilities/Energy		18,748		—		—		18,748
Consumer oriented		29,711		—		—		29,711
Technology		7,556		—		—		7,556
Industrial		9,185		—		—		9,185
All other		12,677		—		—		12,677
Short-term investments		111,359		8,062		—		119,421
Financial instruments carried at fair value, classified as a part of:
Investment in unconsolidated subsidiaries		—		—		23,841		23,841
Other investments		—		—		15,873		15,873
Total assets	$	214,517	$	3,658,543	$	54,996	$	3,928,056
Liabilities:
2019 Note payable		—		—		14,180		14,180
Interest rate swap agreement		—		—		4,659		4,659
Total liabilities	$	—	$	—	$	18,839	$	18,839

Investments in Limited liability companies and limited partnerships

	Fair Value				Unfunded Commitments
(In thousands)	June 30,       2012		December 31, 2011		June 30, 2012
Investment in unconsolidated subsidiaries:
LP primarily invested in long/short equities (1)	$	17,107	$	17,123	None
LP primarily invested in non-public equities (2)		6,921		6,718	3,500
		24,028		23,841
Other investments:
LLC primarily invested in private equity and debt (3)		—		15,873	None
	$	24,028	$	39,714

Summary of quantitative information about Level 3 fair value measurements

Quantitative Information about Level 3 Fair Value Measurements
(in millions)	Fair Value at June 30, 2012		Valuation Technique	Unobservable Input	Range (Weighted Average)
Assets:
State and municipal bonds	$	7.2	Market Comparable Securities	Comparability Adjustment	0% - 10% (5%)
			Discounted Cash Flows	Comparability Adjustment	0% - 10% (5%)
Corporate debt with limited observable inputs	$	10.5	Market Comparable Securities	Comparability Adjustment	0% - 5% (2.5%)
			Discounted Cash Flows	Comparability Adjustment	0% - 5% (2.5%)
Liabilities:
2019 Note payable, Interest rate swap agreement	$	19.5	Discounted Cash Flows	Comparability Adjustment	0% - 5% (2.5%)

Summary of changes in the fair value of assets measured at fair value

	June 30, 2012
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds		Corporate Debt			Asset- backed Securities		Investment in Unconsolidated Subsidiaries			Other Investments			Total
Balance March 31, 2012	$	7,175	$	8,689		$	—	$	24,430		$	15,742		$	56,036
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—		—			—		180			—			180
Net realized investment gains (losses)		—		—			—		—			—			—
Included in other comprehensive income		—		(28	)		—		—			—			(28	)
Purchases		—		1,937			1,795		—			—			3,732
Sales		—		(88	)		—		(582	)		—			(670	)
Transfers in		—		—			—		—			—			—
Transfers out		—		—			—		—			(15,742	)		(15,742	)
Balance June 30, 2012	$	7,175	$	10,510		$	1,795	$	24,028		$	—		$	43,508
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—	$	—		$	—	$	180		$	—		$	180

	June 30, 2012
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds			Corporate Debt			Asset- backed Securities		Investment in Unconsolidated Subsidiaries			Other Investments			Total
Balance December 31, 2011	$	7,200		$	8,082		$	—	$	23,841		$	15,873		$	54,996
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—			—			—		770			—			770
Net realized investment gains (losses)		—			—			—		—			(131	)		(131	)
Included in other comprehensive income		—			578			—		—			—			578
Purchases		—			1,937			1,795		—			—			3,732
Sales		(25	)		(87	)		—		(583	)		—			(695	)
Transfers in		—			—			—		—			—			—
Transfers out		—			—			—		—			(15,742	)		(15,742	)
Balance June 30, 2012	$	7,175		$	10,510		$	1,795	$	24,028		$	—		$	43,508
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—		$	—		$	—	$	770		$	—		$	770

	June 30, 2011
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds			Corporate Debt			Asset- backed Securities		Investment in Unconsolidated Subsidiaries			Other Investments		Total
Balance March 31, 2011	$	7,450		$	16,880		$	—	$	25,662		$	—	$	49,992
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—			—			—		(535	)		—		(535	)
Net realized investment gains (losses)		—			—			—		—			—		—
Included in other comprehensive income		—			(534	)		—		—			—		(534	)
Purchases		—			—			1,684		—			—		1,684
Sales		(125	)		(3,311	)		—		—			—		(3,436	)
Transfers in		—			—			—		—			—		—
Transfers out		—			(5,205	)		—		—			—		(5,205	)
Balance June 30, 2011	$	7,325		$	7,830		$	1,684	$	25,127		$	—	$	41,966
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—		$	—		$	—	$	(535	)	$	—	$	(535	)

	June 30, 2011
	Level 3 Fair Value Measurements – Assets
(In thousands)	State and Municipal Bonds			Corporate Debt			Asset- backed Securities			Investment in Unconsolidated Subsidiaries		Other Investments		Total
Balance December 31, 2010	$	7,550		$	21,229		$	2,220		$	25,112	$	—	$	56,111
Total gains (losses) realized and unrealized:
Included in earnings, as a part of:
Equity in earnings of unconsolidated subsidiaries		—			—			—			15		—		15
Net realized investment gains (losses)		—			—			314			—		—		314
Included in other comprehensive income		—			(714	)		(15	)		—		—		(729	)
Purchases		—			—			1,684			—		—		1,684
Sales		(225	)		(8,505	)		(1,921	)		—		—		(10,651	)
Transfers in		—			3,447			—			—		—		3,447
Transfers out		—			(7,627	)		(598	)		—		—		(8,225	)
Balance June 30, 2011	$	7,325		$	7,830		$	1,684		$	25,127	$	—	$	41,966
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$	—		$	—		$	—		$	15	$	—	$	15

Summary of changes in the fair value of liabilities measured at fair value

	June 30, 2012
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance March 31, 2012	$	14,962		$	4,415	$	19,377
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		(99	)		319		220
Settlements		(86	)		—		(86	)
Balance June 30, 2012	$	14,777		$	4,734	$	19,511
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	(99	)	$	319	$	220

	June 30, 2012
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance December 31, 2011	$	14,180		$	4,659	$	18,839
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		769			75		844
Settlements		(172	)		—		(172	)
Balance June 30, 2012	$	14,777		$	4,734	$	19,511
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	769		$	75	$	844

	June 30, 2011
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance March 31, 2011	$	15,555		$	3,415	$	18,970
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		389			437		826
Settlements		(81	)		—		(81	)
Balance June 30, 2011	$	15,863		$	3,852	$	19,715
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	389		$	437	$	826
	June 30, 2011
	Level 3 Fair Value Measurements - Liabilities
(In thousands)	2019 Note Payable			Interest rate swap agreement		Total
Balance December 31, 2010	$	15,616		$	3,658	$	19,274
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses		408			194		602
Settlements		(161	)		—		(161	)
Balance June 30, 2011	$	15,863		$	3,852	$	19,715
Change in unrealized (gains) losses included in earnings for the above period for Level 3 liabilities outstanding at period-end	$	408		$	194	$	602

Financial instruments not measured at fair value

	June 30, 2012				December 31, 2011
(In thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets:
Other Investments	$	21,842	$	28,568	$	22,351	$	28,226
Investment in Unconsolidated Subsidiaries		89,314		99,279		87,483		96,443
BOLI		53,571		53,571		52,651		52,651
Other Assets		10,906		10,850		9,636		9,636
Financial liabilities:
Trust Preferred Securities	$	22,992	$	22,992	$	22,992	$	22,992
Surplus Notes due May 2034		12,000		12,000		12,000		12,000
Note Payable due February 2012		—		—		515		519
Other Liabilities		14,224		14,110		15,076		14,946

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Shareholders' Equity

6 Months Ended

Jun. 30, 2012

Shareholders' Equity [Abstract]

Shareholders' Equity

9. Shareholders’ Equity

At June 30, 2012 and December 31, 2011, ProAssurance had 100 million shares of authorized common stock and 50 million shares of authorized preferred stock. The Board of Directors of ProAssurance Corporation (the Board) has the authority to determine provisions for the issuance of preferred shares, including the number of shares to be issued, the designations, powers, preferences and rights, and the qualifications, limitations or restrictions of such shares. To date, the Board has not approved the issuance of preferred stock.

During 2011 the Board of Directors of ProAssurance instituted a cash dividend policy. ProAssurance declared cash dividends of $0.25 per share in both the first and second quarters of 2012; the first quarter dividend totaled $7.7 million and was paid in April 2012; the second quarter dividend totaled $7.7 million and was paid in July 2012. The liability for unpaid dividends is included in Other Liabilities. Any decision to pay future cash dividends is subject to the Board’s final determination after a comprehensive review of financial performance, future expectations and other factors deemed relevant by the Board.

At June 30, 2012, approximately $153.5 million of Board authorizations for the repayment of debt or repurchase of common shares remain available for use, of which $16.9 million was used in July 2012 to repay the 2019 Note Payable. During the 2012 second quarter, Board authorizations totaling $35.0 million were used to notify debt trustees of ProAssurance’s intention to repay debt in August 2012 (see Note 8 for further discussion).

ProAssurance did not repurchase any common shares during the three and six months ended June 30, 2012. ProAssurance repurchased approximately 259,000 common shares, having a total cost of $15.4 million, during the six months ended June 30, 2011, including approximately 6,900 forfeited employer match shares (cost basis of $0.4 million) reacquired due to the termination of the ProAssurance Corporation Stock Ownership Plan.

Share-based compensation expense is $2.9 million and $5.1 million for the three and six months ended June 30, 2012, respectively, and $2.0 million and $3.7 million for the three and six months ended June 30, 2011, respectively. Related tax benefits are $1.0 million and $1.8 million for the three and six months ended June 30, 2012, respectively, and $0.7 million and $1.3 million for the three and six months ended June 30, 2011, respectively.

ProAssurance awarded approximately 25,000 restricted share units and 100,000 (target) performance share units to employees in February 2012. The fair value of each unit awarded was estimated at $89.28, equal to the market value of a ProAssurance common share on the date of grant. All awards are charged to expense as an increase to equity over the service period (generally the vesting period) associated with the award. Restricted share units and performance share units vest in their entirety at the end of a three-year period following the grant date based on a continuous service requirement and, for performance share units, achievement of a performance objective. Partial vesting is permitted for retirees. A ProAssurance common share is issued for each unit once vesting requirements are met, except that units sufficient to satisfy required tax withholdings are paid in cash. The number of common shares issued for performance share units varies from 75% to 125% of base awards depending upon the degree to which stated performance objectives are achieved. ProAssurance issued approximately 17,000 and 50,000 common shares, respectively, to employees in February 2012 related to restricted share units and performance share units granted in 2009. Shares issued for performance share units were awarded at the maximum level (125%).

ProAssurance issued approximately 19,000 and 20,000 common shares to employees in February 2012 and February 2011, respectively, as bonus compensation, as approved by the Compensation Committee of the Board. The shares issued were valued at fair value (the market price of a ProAssurance common share on the date of award).

Other Comprehensive Income

For all periods presented, other comprehensive income is comprised of unrealized gains and losses, including non-credit impairment losses, arising during the period related to available-for-sale securities less reclassification adjustments for gains (losses) from available-for-sale securities recognized in current period net income (net of tax). Accumulated other comprehensive income is comprised entirely of unrealized gains and losses from available for sale securities, net of tax.

Reclassification adjustments related to available-for-sale securities for the three and six months ended June 30, 2012 and 2011 are as follows:

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Net realized investment gains (losses) included in the calculation of net income	$	1,754		$	4,119		$	4,473		$	7,485
Tax effect (at 35%)		(614	)		(1,442	)		(1,566	)		(2,620	)
Net realized investment gains (losses) reclassified from other comprehensive income	$	1,140		$	2,677		$	2,907		$	4,865

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

7. Commitments and Contingencies

ProAssurance is involved in various legal actions related to insurance policies and claims handling including, but not limited to, claims asserted by policyholders. These types of legal actions arise in the Company’s ordinary course of business and, in accordance with GAAP for insurance entities, are considered as a part of the Company’s loss reserving process, which is described in detail under “Accounting Policies – Losses and Loss Adjustment Expenses” in Note 1 of the Notes to the Consolidated Financial Statements in ProAssurance’s 2011 Form 10-K.

ProAssurance has commitments to fund approximately $33 million in capital contributions to tax credit partnerships as of June 30, 2012. Funding of the commitments is primarily expected to occur in 2012 and 2013; additional information regarding tax credit partnership investments is provided in Note 3. ProAssurance has also entered into agreements with several LPs/LLCs, totaling approximately $51 million at June 30, 2012, to be funded within the next five years as requested by the partnership.

On June 26, 2012, ProAssurance entered into an agreement to acquire Medmarc Mutual Insurance Company (Medmarc) through a sponsored demutualization which will provide eligible Medmarc members with cash payments of $146.2 million and future policy credits of $7.5 million. The transaction is subject to customary conditions, including regulatory and Medmarc eligible members’ approval. The transaction is expected to close in early January 2013.

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Long-term Debt

6 Months Ended

Jun. 30, 2012

Long-term Debt [Abstract]

Long-term Debt

8. Long-term Debt

ProAssurance’s outstanding long-term debt consists of the following:

	(In thousands)
	June 30 2012		December 31 2011
Trust Preferred Securities due 2034, unsecured. Bears interest at a variable rate of LIBOR plus 3.85%, adjusted quarterly, set at 4.3% at June 30, 2012.	$	22,992	$	22,992
Surplus Notes due May 2034, unsecured. Bears interest at a variable rate of LIBOR plus 3.85%, adjusted quarterly, set at 4.3% at June 30, 2012.		12,000		12,000
Note Payable due February 2019 (the 2019 Note Payable), carried at fair value, principal of $16.9 million at June 30, 2012 and $17.1 million at December 31, 2011. Secured by available-for-sale securities having a fair value at June 30, 2012 of approximately $25.4 million. Bears interest at a variable rate of LIBOR plus 0.7%. See information below regarding the associated interest rate swap.		14,777		14,180
Note Payable due February 2012. Note was repaid on due date.		—		515
Revolving Credit Agreement, expires in 2014, maximum outstanding borrowing of $150 million, interest rate set at the time funds are borrowed. No borrowings have occurred during the periods shown.		—		—
	$	49,769	$	49,687

Prior to June 30, 2012, ProAssurance obtained required insurance department approvals and notified trustees of its intention to fully redeem the Trust Preferred Securities due 2034 and Surplus Notes due May 2034, for $35.0 million in cash, in August 2012. No gain or loss will be recognized related to the redemption.

2019 Note Payable and Related Interest Rate Swap

As discussed in Note 2 to the Condensed Consolidated Financial Statements, the 2019 Note Payable (the Note) is carried at fair value at both June 30, 2012 and December 31, 2011. Prior to July 2012, see below, a related interest rate swap (the Swap) effectively fixed the interest rate related to the Note at 6.6% and required a monthly exchange of the difference between the fixed Swap rate and the stated variable rate of the Note, referenced against the then outstanding principal balance of the Note. The liability associated with the Swap is carried at fair value at June 30, 2012 and at December 31, 2011, $4.7 million at each date, and is classified as a part of Other Liabilities

In July 2012, ProAssurance repaid without penalty the outstanding principal on the 2019 Note Payable of $16.9 million and terminated the Swap for a cash settlement of $5.1 million. An aggregate loss on the extinguishment of the Note and the Swap of approximately $2.5 million will be recognized in the third quarter of 2012.

Covenant Compliance

ProAssurance is currently in compliance with all covenants.

Additional Information

For additional information regarding the terms of ProAssurance’s outstanding long-term debt, see Note 10 of the Notes to the Consolidated Financial Statements included in ProAssurance’s December 31, 2011 Form 10-K.

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Variable Interest Entities

6 Months Ended

Jun. 30, 2012

Variable Interest Entities [Abstract]

Variable Interest Entities

10. Variable Interest Entities

ProAssurance holds passive interests in a number of LPs/LLCs that are considered to be Variable Interest Entities (VIEs) under GAAP guidance. ProAssurance has not consolidated these entities because it has either very limited or no power to control the activities that most significantly affect the economic performance of these entities and is not the primary beneficiary of any of the entities. ProAssurance’s involvement with each entity is limited to its direct ownership interest in the entity. ProAssurance has no arrangements or agreements of significance with any of the entities to provide other financial support to or on behalf of the entity. At June 30, 2012 ProAssurance’s maximum loss exposure relative to these investments is limited to the carrying value of ProAssurance’s investment in the entity.

The entities consist of 1) investments in LPs/LLCs formed for the purpose of achieving diversified equity and debt returns and 2) a limited liability interest in a development stage business operation classified as Other Investments (carrying value of $15.9 million and $32.1 million at June 30, 2012 and December 31, 2011, respectively) and Investment in Unconsolidated Subsidiaries (carrying value of $24.0 million and $24.5 million at June 30, 2012 and December 31, 2011, respectively).

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Investments (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Net Investment Income
Interest and Dividend Income, Operating	$ 36,239	$ 37,932	$ 71,428	$ 75,623
Investment expenses	(1,729)	(1,635)	(3,425)	(3,166)
Net investment income	34,510	36,297	68,003	72,457
Fixed maturities [Member]
Net Investment Income
Interest and Dividend Income, Operating	34,093	36,682	67,363	72,634
Equities [Member]
Net Investment Income
Interest and Dividend Income, Operating	1,608	186	2,649	416
Short-term Investments [Member]
Net Investment Income
Interest and Dividend Income, Operating	38	17	57	73
Other invested assets [Member]
Net Investment Income
Interest and Dividend Income, Operating	39	575	441	1,564
Business owned life insurance [Member]
Net Investment Income
Interest and Dividend Income, Operating	$ 461	$ 472	$ 918	$ 936

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Long-term Debt (Tables)

6 Months Ended

Jun. 30, 2012

Long-term Debt [Abstract]

Outstanding long-term debt

	(In thousands)
	June 30 2012		December 31 2011
Trust Preferred Securities due 2034, unsecured. Bears interest at a variable rate of LIBOR plus 3.85%, adjusted quarterly, set at 4.3% at June 30, 2012.	$	22,992	$	22,992
Surplus Notes due May 2034, unsecured. Bears interest at a variable rate of LIBOR plus 3.85%, adjusted quarterly, set at 4.3% at June 30, 2012.		12,000		12,000
Note Payable due February 2019 (the 2019 Note Payable), carried at fair value, principal of $16.9 million at June 30, 2012 and $17.1 million at December 31, 2011. Secured by available-for-sale securities having a fair value at June 30, 2012 of approximately $25.4 million. Bears interest at a variable rate of LIBOR plus 0.7%. See information below regarding the associated interest rate swap.		14,777		14,180
Note Payable due February 2012. Note was repaid on due date.		—		515
Revolving Credit Agreement, expires in 2014, maximum outstanding borrowing of $150 million, interest rate set at the time funds are borrowed. No borrowings have occurred during the periods shown.		—		—
	$	49,769	$	49,687

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Fair Value Measurement (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2011 State and municipal bonds [Member]	Jun. 30, 2012 State and municipal bonds [Member]	Jun. 30, 2011 State and municipal bonds [Member]	Mar. 31, 2012 State and municipal bonds [Member]	Jun. 30, 2012 Corporate debt [Member]	Jun. 30, 2011 Corporate debt [Member]	Jun. 30, 2012 Corporate debt [Member]	Jun. 30, 2011 Corporate debt [Member]	Jun. 30, 2012 Asset-backed securities [Member]	Jun. 30, 2011 Asset-backed securities [Member]	Jun. 30, 2012 Asset-backed securities [Member]	Jun. 30, 2011 Asset-backed securities [Member]	Jun. 30, 2012 Investment in unconsolidated subsidiaries [Member]	Jun. 30, 2011 Investment in unconsolidated subsidiaries [Member]	Jun. 30, 2012 Investment in unconsolidated subsidiaries [Member]	Jun. 30, 2011 Investment in unconsolidated subsidiaries [Member]	Jun. 30, 2012 Other Investments [Member]	Jun. 30, 2012 Other Investments [Member]
Assets
Beginning Balance	$ 56,036	$ 49,992	$ 54,996	$ 56,111	$ 7,450	$ 7,200	$ 7,550	$ 7,175	$ 8,689	$ 16,880	$ 8,082	$ 21,229				$ 2,220	$ 24,430	$ 25,662	$ 23,841	$ 25,112	$ 15,742	$ 15,873
Included in Earnings, as a part of
Equity in earnings of unconsolidated subsidiaries	180	(535)	770	15													180	(535)	770	15
Net realized investment gains (losses)			(131)	314												314						(131)
Included in other comprehensive income	(28)	(534)	578	(729)					(28)	(534)	578	(714)				(15)
Purchases	3,732	1,684	3,732	1,684					1,937		1,937		1,795	1,684	1,795	1,684
Sales	(670)	(3,436)	(695)	(10,651)	(125)	(25)	(225)		(88)	(3,311)	(87)	(8,505)				(1,921)	(582)		(583)
Transfers in				3,447								3,447
Transfers out	(15,742)	(5,205)	(15,742)	(8,225)						(5,205)		(7,627)				(598)					(15,742)	(15,742)
Ending Balance	43,508	41,966	43,508	41,966	7,325	7,175	7,325	7,175	10,510	7,830	10,510	7,830	1,795	1,684	1,795	1,684	24,028	25,127	24,028	25,127
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end	$ 180	$ (535)	$ 770	$ 15													$ 180	$ (535)	$ 770	$ 15

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Reserve for Losses and Loss Adjustment Expenses (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Reserve for Losses and Loss Adjustment Expenses (Textual) [Abstract]
Period for claims resolution			5 years or more
Net loss development related to reserves	$ 60.1	$ 50.2	$ 107.5	$ 90.2
Accident Years associated with net loss development			2004 through 2009	2004 through 2009

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Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues
Net premiums earned	$ 131,266	$ 137,063	$ 267,925	$ 269,140
Net investment income	34,510	36,297	68,003	72,457
Equity in earnings (loss) of unconsolidated subsidiaries	(2,227)	(2,416)	(4,293)	(3,780)
Net realized investment gains (losses):
Other-than-temporary impairment (OTTI) losses	(218)	(1,065)	(1,424)	(2,902)
Portion of OTTI losses recognized in (reclassified from) other comprehensive income before taxes	(201)	(113)	(201)	(681)
Net impairment losses recognized in earnings	(419)	(1,178)	(1,625)	(3,583)
Other net realized investment gains (losses)	(1,129)	3,378	10,755	9,907
Total net realized investment gains (losses)	(1,548)	2,200	9,130	6,324
Other income	1,868	1,685	3,675	4,273
Total revenues	163,869	174,829	344,440	348,414
Expenses
Losses and loss adjustment expenses	55,132	69,394	133,437	146,493
Reinsurance recoveries	(7,048)	(5,041)	(15,154)	(11,717)
Net losses and loss adjustment expenses	48,084	64,353	118,283	134,776
Underwriting, policy acquisition and operating expenses	35,405	32,871	69,803	68,578
Interest expense	826	918	1,651	1,713
Total expenses	84,315	98,142	189,737	205,067
Income before income taxes	79,554	76,687	154,703	143,347
Provision for income taxes
Current expense (benefit)	20,614	21,769	37,595	26,829
Deferred expense (benefit)	487	(178)	3,010	13,728
Total income tax expense (benefit)	21,101	21,591	40,605	40,557
Net income	58,453	55,096	114,098	102,790
Other comprehensive income, after tax, net of reclassification adjustments (see Note 9)	7,002	24,224	10,014	19,933
Comprehensive income	$ 65,455	$ 79,320	$ 124,112	$ 122,723
Earnings per share:
Basic	$ 1.91	$ 1.80	$ 3.73	$ 3.36
Diluted	$ 1.89	$ 1.79	$ 3.69	$ 3.33
Weighted average number of common shares outstanding:
Basic	30,658	30,583	30,624	30,600
Diluted	30,916	30,856	30,884	30,855
Cash dividends declared per common share	$ 0.25		$ 0.50

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income Taxes

4. Income Taxes

ProAssurance estimates its annual effective tax rate at the end of each quarterly reporting period which is used to record the provision for income taxes in the interim financial statements. The provision for income taxes is different from that which would be obtained by applying the statutory Federal income tax rate to income before taxes primarily because a portion of ProAssurance’s investment income is tax-exempt.

The Internal Revenue Service has begun but has not completed an examination of the 2009 and 2010 returns. Except for the 2006 tax year, the statutes of limitation are closed for all years prior to 2008. The statute for the 2006 tax year has been extended from May 31, 2012 to September 15, 2013.

ProAssurance’s liability for unrecognized tax benefits, exclusive of accrued interest, is $23.7 million at June 30, 2012 and $18.6 million at December 31, 2011 with the increase in the provision being entirely attributable to unrecognized benefits associated with tax positions taken in a prior year. Unrecognized tax benefits at June 30, 2012 and December 31, 2011, if recognized, would not affect the effective tax rate but would accelerate the payment of tax. As with any uncertain tax position, there is a possibility that the ultimate deduction recognized could differ from the provision ProAssurance has established.

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Fair Value Measurement (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Liabilities
Beginning Balance	$ 19,377	$ 18,970	$ 18,839	$ 19,274
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses	220	826	844	602
Settlements	(86)	(81)	(172)	(161)
Ending Balance	19,511	19,715	19,511	19,715
Change in unrealized gains (losses) included in earnings for the above period for Level 3 liabilities outstanding at period-end	220	826	844	602
2019 Note Payable [Member]
Liabilities
Beginning Balance	14,962	15,555	14,180	15,616
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses	(99)	389	769	408
Settlements	(86)	(81)	(172)	(161)
Ending Balance	14,777	15,863	14,777	15,863
Change in unrealized gains (losses) included in earnings for the above period for Level 3 liabilities outstanding at period-end	(99)	389	769	408
Interest rate swap agreement [Member]
Liabilities
Beginning Balance	4,415	3,415	4,659	3,658
Total (gains) losses realized and unrealized:
Included in earnings as a part of net realized investment (gains) losses	319	437	75	194
Ending Balance	4,734	3,852	4,734	3,852
Change in unrealized gains (losses) included in earnings for the above period for Level 3 liabilities outstanding at period-end	$ 319	$ 437	$ 75	$ 194

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Investments (Details Textual) (USD $) In Millions, unless otherwise specified	6 Months Ended			3 Months Ended		6 Months Ended			3 Months Ended
	Jun. 30, 2012 InvestmentAffiliates DebtSecurities Issuer	Mar. 31, 2012	Dec. 31, 2011 Issuer DebtSecurities	Jun. 30, 2012 Residential mortgage-backed securities [Member]	Jun. 30, 2011 Residential mortgage-backed securities [Member]	Jun. 30, 2012 Residential mortgage-backed securities [Member]	Jun. 30, 2011 Residential mortgage-backed securities [Member]	Dec. 31, 2011 Residential mortgage-backed securities [Member]	Mar. 31, 2012 Corporate debt [Member]
Schedule of Available-for-sale Securities [Line Items]
Credit-related impairments in earnings				$ 0.4	$ 0.4	$ 0.7	$ 1.5		$ 0.8
Other-than-temporary impairments recognized in accumulated other comprehensive income				3.1		3.1		3.3
Investment (Textual) [Abstract]
Pre-refunded state and municipal bonds backed by U.S Treasury obligations	100.00%
Threshold limit of investments based on shareholders' equity		10.00%
Available-for-sale securities on deposit with state insurance departments	21.8
Pledged collateral securities	25.4
Business owned life insurance cost	35
Period for federal home loan bank stock liquidation process	up to five years
Number of debt securities in unrealized loss position	179		251
Number of issuers in unrealized loss position	163		224
Debt securities in unrealized loss position as percentage of total debt securities held	6.90%		9.60%
Single greatest unrealized loss position	0.8		1.2
Number of Investment Affiliates exceeding Shareholders' Equity Ten Percent Threshold Limit	0
Second greatest unrealized loss position	$ 0.5		$ 1.0

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Investments (Tables)

6 Months Ended

Jun. 30, 2012

Investments [Abstract]

Amortized cost and estimated fair value of available-for-sale fixed maturities and equity securities

	June 30, 2012
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed maturities
U.S. Treasury obligations	$	216,909	$	14,884	$	(17	)	$	231,776
U.S. Agency obligations		65,635		5,386		(13	)		71,008
State and municipal bonds		1,126,525		84,871		(169	)		1,211,227
Corporate debt		1,356,759		80,898		(2,913	)		1,434,744
Residential mortgage-backed securities		451,226		27,688		(1,977	)*		476,937
Commercial mortgage-backed securities		68,707		5,591		(58	)		74,240
Other asset-backed securities		88,043		1,302		(3	)		89,342
	$	3,373,804	$	220,620	$	(5,150	)	$	3,589,274
	December 31, 2011
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed maturities
U.S. Treasury obligations	$	267,120	$	16,748	$	(3	)	$	283,865
U.S. Agency obligations		62,520		5,584		—			68,104
State and municipal bonds		1,145,025		83,568		(206	)		1,228,387
Corporate debt		1,307,504		68,105		(7,661	)		1,367,948
Residential mortgage-backed securities		514,412		30,270		(2,131	)*		542,551
Commercial mortgage-backed securities		76,366		4,881		(59	)		81,188
Other asset-backed securities		92,773		978		(31	)		93,720
		3,465,720		210,134		(10,091	)		3,665,763
Equity securities		6		19		—			25
	$	3,465,726	$	210,153	$	(10,091	)	$	3,665,788

* Includes other-than-temporary impairments recognized in accumulated other comprehensive income of $3.1 million at June 30, 2012 and $3.3 million at December 31, 2011.

Schedule of available for sale securities by contractual maturity

(In thousands)	Amortized Cost		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total Fair Value
Fixed maturities, available for sale
U.S. Treasury obligations	$	216,909	$	35,562	$	118,492	$	73,654	$	4,068	$	231,776
U.S. Agency obligations		65,635		5,700		52,293		12,758		257		71,008
State and municipal bonds		1,126,525		29,760		371,190		541,666		268,611		1,211,227
Corporate debt		1,356,759		74,089		685,847		633,546		41,262		1,434,744
Residential mortgage-backed securities		451,226										476,937
Commercial mortgage-backed securities		68,707										74,240
Other asset-backed securities		88,043										89,342
	$	3,373,804									$	3,589,274

Other Investments

(In millions)	June 30,     2012		December 31, 2011
Investment in LLC, at NAV	$	—	$	15.9
Investments in LPs/LLCs, at cost		15.9		16.2
FHLB capital stock, at cost		4.3		4.4
Other, principally an annuity, at amortized cost		1.6		1.7
	$	21.8	$	38.2

Unconsolidated Subsidiaries

	Carrying Value				Unfunded Commitments June 30, 2012		Percentage Ownership June 30, 2012
(In millions)	June 30,     2012		December 31, 2011
Investment LPs/LLCs:
Tax credit partnerships	$	89.3	$	86.8	$	32.7	<20%
Long/Short equity fund		17.1		17.1		—	<20%
Non-public equity fund		6.9		6.7		3.5	<20%
Business LLC		—		0.7		—	See below
	$	113.3	$	111.3	$	36.2

Investments held in an unrealized loss position

	June 30, 2012
	Total					Less than 12 months					More than 12 months
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Loss			Value		Loss			Value		Loss
Fixed maturities, available for sale
U.S. Treasury obligations	$	6,763	$	(17	)	$	6,763	$	(17	)	$	—	$	—
U.S. Agency obligations		2,975		(13	)		2,975		(13	)		—		—
State and municipal bonds		20,884		(169	)		18,715		(108	)		2,169		(61	)
Corporate debt		121,495		(2,913	)		98,390		(1,770	)		23,105		(1,143	)
Residential mortgage-backed securities		40,159		(1,977	)		29,651		(738	)		10,508		(1,239	)
Commercial mortgage-backed securities		1,113		(58	)		—		—			1,113		(58	)
Other asset-backed securities		4,836		(3	)		4,765		(3	)		71		—
	$	198,225	$	(5,150	)	$	161,259	$	(2,649	)	$	36,966	$	(2,501	)
Other investments
Investments in LPs/LLCs carried at cost	$	5,656	$	(875	)	$	4,928	$	(663	)	$	728	$	(212	)

	December 31, 2011
	Total					Less than 12 months					More than 12 months
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Loss			Value		Loss			Value		Loss
Fixed maturities, available for sale
U.S. Treasury obligations	$	8,379	$	(3	)	$	8,379	$	(3	)	$	—	$	—
State and municipal bonds		9,743		(206	)		7,143		(10	)		2,600		(196	)
Corporate debt		205,605		(7,661	)		194,057		(6,691	)		11,548		(970	)
Residential mortgage-backed securities		49,525		(2,131	)		38,146		(488	)		11,379		(1,643	)
Commercial mortgage-backed securities		4,086		(59	)		3,143		(2	)		943		(57	)
Other asset-backed securities		19,031		(31	)		19,031		(31	)		—		—
	$	296,369	$	(10,091	)	$	269,899	$	(7,225	)	$	26,470	$	(2,866	)
Other investments
Investments in LPs/LLCs carried at cost	$	4,198	$	(984	)	$	3,815	$	(856	)	$	383	$	(128	)

Net Investment Income

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Fixed maturities	$	34,093		$	36,682		$	67,363		$	72,634
Equities		1,608			186			2,649			416
Short-term investments		38			17			57			73
Other invested assets		39			575			441			1,564
Business owned life insurance		461			472			918			936
		36,239			37,932			71,428			75,623
Investment expenses		(1,729	)		(1,635	)		(3,425	)		(3,166	)
Net investment income	$	34,510		$	36,297		$	68,003		$	72,457

Net realized investment gains (losses)

	Three Months Ended June 30						Six Months Ended June 30
(In thousands)	2012			2011			2012			2011
Total other-than-temporary impairment losses:
Residential mortgage-backed securities	$	(218	)	$	(319	)	$	(463	)	$	(769	)
Corporate debt		—			—			(830	)		—
Other investments		—			(746	)		(131	)		(2,133	)
Portion recognized in (reclassified from) Other Comprehensive Income:
Residential mortgage-backed securities		(201	)		(113	)		(201	)		(681	)
Net impairment losses recognized in earnings		(419	)		(1,178	)		(1,625	)		(3,583	)
Gross realized gains, available-for-sale securities		2,262			5,664			6,150			10,292
Gross realized (losses), available-for-sale securities		(89	)		(1,113	)		(183	)		(1,357	)
Net realized gains (losses), trading securities		(50	)		223			727			2,915
Change in unrealized holding gains (losses), trading securities		(3,032	)		(570	)		4,905			(1,341	)
Decrease (increase) in the fair value of liabilities carried at fair value		(220	)		(826	)		(844	)		(602	)
Net realized investment gains (losses)	$	(1,548	)	$	2,200		$	9,130		$	6,324

Cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the OTTI has been recorded in OCI

	Three Months Ended June 30				Six Months Ended  June 30
(In thousands)	2012		2011		2012		2011
Balance beginning of period	$	5,937	$	5,334	$	5,870	$	4,446
Additional credit losses recognized during the period, related to securities for which OTTI has been previously recognized		201		394		268		1,282
Balance June 30	$	6,138	$	5,728	$	6,138	$	5,728

Information regarding sales and purchases of available-for-sale securities

	Three Months Ended June 30				Six Months Ended  June 30
(In millions)	2012		2011		2012		2011
Proceeds from sales (exclusive of maturities and paydowns)	$	99.8	$	141.4	$	305.9	$	310.9
Purchases	$	99.5	$	200.7	$	347.1	$	452.7