exhibit.htm

EX-99.1 3 exhibit.htm THE PRESENTATION WE ARE DISCLOSING IN THIS FILING exhibit.htm

Forward Looking Statements

This presentation contains Forward Looking Statements and other information designed
to convey our projections and expectations regarding future results. There are a number
of factors which could cause our actual results to vary materially from those projected in
this presentation. The principal risk factors that may cause these differences are
described in various documents we file with the Securities and Exchange Commission,
such as our current reports on Form 8-K, and our regular reports on Forms 10-Q and 10-
K, particularly in “Item 1A, Risk Factors.” Please review this presentation in
conjunction with a thorough reading and understanding of these risk factors.

This presentation contains Non-GAAP measures, and we may reference
Non-GAAP measures in our remarks. A reconciliation of these measures to GAAP
measures is available in our latest quarterly news release, which is available in the
Investor Relations section of our website, www.ProAssurance.com, and in
the related Current Reports on Form 8K disclosing that release.

Non-GAAP Measures

ProAssurance: Quick Facts

Market Cap: $1.5 Billion / Equity: $1.4 Billion

Fifth largest1 writer of medical liability

Writing business in 491 jurisdictions

More than 60,0002 policyholders

45,000 physicians and dentists

7,000 ancillary and other healthcare professionals

8,100 attorneys

Majority in small or solo practice

Highly rated by A. M. Best and Fitch

1 Includes PICA 2 Includes PICA and Georgia
Lawyers

ProAssurance: Long-Term Success

Successful performance in a challenging financial
market and a difficult line of insurance

Maintaining profitability

Completion of three M&A transactions in 2009
that will allow us to grow the top line

ProAssurance: Long-Term Success

Our Balance Sheet remains strong

Conservative investments

Little debt

Low leverage

Solid stock performance over time

Growing organically and through M & A

Adding over $100 million in annualized premium
to our top line in 2009 through M & A

Diversifying our risk profile

ProAssurance: Long-Term Success

Book Value per Share

Book Value Growth

Cumulative

CAGR

10 year

67%

13%

5 year

51%

10%

1 year

10%

Measured through Year-End 2008

Opportunities & Strategies

Key Opportunities

New insurance buyers will emerge as
healthcare reform evolves

The outcome of medical liability claims will
become more transparent

Financial issues will highlight the need for
successful, long-term companies with superior
balance sheets strength and outstanding ratings

Strategy: Targeted M & A

Podiatry Insurance Company of America (PICA)

Dominant (70%), profitable, national company

~$96 million Direct Premium in 2008

Podiatry is growing in importance as a specialty

Involved in treating complications in a population with an
increasing prevalence of diabetes

Increases our understanding of policies that are
higher volume, lower cost

Strategy: Targeted M & A

Mid-Continent General Agency

Large writer of ancillary healthcare

Healthcare reform will emphasize care delivery from a
larger array of lower-cost providers

Home health care

Physician-extenders

~$26 million in total premium in 2008

$20 million healthcare related—most will come to PRA

Strategy: We Dare to Defend

Our balance sheet strength and deep expertise
ensures our insureds have the option of an
uncompromising defense of their claim

We defend our insureds at trial more often
than any other company in our line

Provides a long-term financial and marketing
advantage

A key differentiating factor in the market
as claims data becomes public

Claims Trends Remain Favorable

Frequency trends are
stable after declining
since 2005/2006

The results is fewer
cases to try

Severity trends also stable

Trends are much the same
in states with or without
Tort Reform

ProAssurance Claims Tried

The Tort Reform Question

Obama signaled a willingness to consider
limited reforms in his speech on Monday

Unlikely that Washington will provide the full
reforms physicians seek

Major decisions likely left up to each state

Illinois, Florida and Ohio rulings expected this year

We set prices and reserves as if there is no tort
reform, until results reflect otherwise

We are prepared, operationally and financially,
if reforms are struck down in our states

Strategy: Respond to Transparency

Board / Discipline / Med Mal

Med Mal disclosure
legislation proposed

Strategy: Maintain Discipline

Pricing Discipline

Using credits allows us to maintain existing
rate filings

Pricing developed using multiple years

Not unduly influenced by current market
conditions

Rates on renewing physician business down
less than 10% from peak pricing in 2006

Rates down 2% in 2007

Rates down 6% in 2008

Strategy: Actuarial Conservatism

Consistent and conservative reserving
practices throughout the market cycle

Initial Accident Year Loss Ratios

2008 Industry is
A. M. Best Data
Through Q3 2008

Strategy: Actuarial Conservatism

Reserve History
(billions)

2008

$ 2.4

2007

$ 2.6

2006

$ 2.6

2005

$ 2.2

2004

$ 1.8

Strategy: Treated Fairly

Treated Fairly is our brand enhancement initiative

Affirms our existing, enduring commitment to
every stakeholder

Insureds

Agents

Investors

The public

We run our business as owners who are
rewarded for long-term success

Financial Highlights

Strategy: Enduring Financial Strength

Emphasizing an appropriate balance of risk vs. return

Committed to enduring balance sheet strength

Responding to the low interest rate environment

$ amounts
in Billions

Strategy: Use Capital Prudently

Using capital to build through M&A

Preserving capital for future opportunities

Enhancing shareholder value by repurchasing shares
at prices that build Book Value

Source: SNL Financial

Strategy: Investment Discipline

The choice: Chase yield or extend duration

We are maintaining duration, looking for opportunities

Loss in value assuming a 100 basis point shift in the yield curve

Yields based on Single A composite corporate debt

Responding to Low Interest Rates

Assumes a 1:1 premium to surplus ratio for physicians professional
liability claims-made coverages

Loss ratio required
to generate a 13%
after-tax ROE

(in millions)

Prepared for an
improving market

Prudent capital
management

Premiums to Surplus
for Each year

Excess Capital vs. Excess Capacity

“A” Rating
Threshold

Projected A. M. Best BCAR Scores if

Premiums Increase

Surplus is Reduced

Little Dependence on Debt

Low Debt to Cap Ratio

Little strain on cash flow

Repurchased additional
$23 million of debt in Q4

$25 million debt added in
the PICA transaction

Includes $7 million in
surplus notes

Evaluating potential call
later this year

3/31/2009

Strategy: Balance Risk vs. Return

We will reduce cash and short-term
balances as we see improving
credit environment

Low equity allocation helps mute
the impact of the volatile equity
markets

Complete portfolio disclosure on
our website:
www.proassurance.com/investorrelations/supplemental.aspx

$3.6 Billion
Portfolio

Fixed Income: 85%

Short Term: 10%

Equity and Other Investments: 3%

BOLI: 2%

3/31/2009

Fixed Income: $3.1 Billion

3/31/2009

Summary

ProAssurance

Producing sustainable shareholder value

Growing Book Value per Share

Finding the right M & A opportunities

Significant share ownership at all levels

Focusing on long-term

Preparing for a changing market

Leveraging financial strength

Protecting the balance sheet

Maintain our leading market position

Building strength for the next cycle turn

Appendix: Claims

Why Claims Strategy Matters

Favorable
Outcomes:
82%

Favorable
Outcomes:
74%

Why Claims Strategy Matters

Our ability and willingness to defend claims
allows us to achieve better results

81.4%

ProAssurance Stand Alone

2005 - 2007

76.0%

64.3%

Appendix: Investments

Portfolio Overview: Equities

$106 million in Equities & Other Investments

3/31/09

Equities & Other Investments

$ in 000’s

Performance Q1, 2005 - Q1, 2009

3/31/09

Alt-A LTV: 63%

Whole Loan LTV: 56%

Further Details Provided
on Sub-Prime and CMBS
on following pages

Bloomberg Data
3/31/09

Portfolio Overview: Sub-Prime

$8.1 million market value in AFS portfolio

$4.4 million unrealized loss

$5.0 million market value in
high-yield LP rated BB

LP’s focus is distressed ABS)

At 3/31/09

Vintage

$4.8 Mln

2004 & Prior

$2.4 Mln

2005

$0.9 Mln

2006

Quality & Vintage information only on direct holdings at 3/31/09

At 3/31/09

Type

Quality

$4.2 Mln

Mortgage-Backed

AA+ avg - LTV 70%

$3.9 Mln

Home Equity

AA avg

Portfolio Overview: CMBS

$163 million Fair Value in non-agency CMBS

Book Value: $186 Book Value

5% of fixed income portfolio

At 3/31/09

Quality

$161 Mln

AAA

$2 Mln

At 3/31/09

Wtd Avg LTV

94%

<70%

<72%

At 3/31/09

Credit Support

30%

>30%

48%

20% - 30%

20%

10% - 20%

Less than 10%

At 3/31/09

Deal Cumulative Delinquencies

23%

None

21%

0% - 0.5%

28%

0.5% - 1.0%

20%

1.0% - 2.0%

2.0% - 3.9%

At 3/31/09

Debt Service Coverage

93%

>1.5x

>1.4x

AT
3/31/09

Portfolio Overview: CMBS

Top Property Types

Retail-Anchored: 47% of CMBS portfolio

Exposure: 23% - 40% of individual security value

Office: 39% of CMBS portfolio

Exposure: 23% - 46% of individual security value

Retail-Unanchored: 7% of CMBS portfolio

Mixed Use: 3% of CMBS portfolio

Multi Family: 2% of CMBS portfolio

3/31/09

Portfolio: Corporate-Financials

Top 20 Largest Banks/Financials: $ 210 million

$52 mm FDIC backing

M Stanley $26 ($6)

Natl Rural Util $6

Amer Exp $23 ($12)

HSBC $6 ($1)

BoA/ML $20 ($1)

Deutsche Bank $5

JPM Chase $20 ($13)

John Deere Cap $5 ($1)

Wells/Wachovia $19

BONY $5

Citi $15($5)

Fifth Third $5

PNC $13 ($1)

Uniliver Cap $4

Key $13 ($13)

Depfa Bank $4

Goldman $9

FMCC $4

Credit Suisse $7

BP Capital $3

FDIC backed amounts listed in parentheses

3/31/2009

Portfolio: Treasury/GSE

$209 million

Average Rating: AAA

3/31/09

Portfolio: FRE and FNM

$476 million

Average Rating: AAA

3/31/09

Portfolio Overview: Short Term

3/31/09

Appendix: Industry History

Appendix: Our M & A History

Profitable Growth Through M & A

ProAssurance has been built through M & A

ProAssurance was formed by
the combination of two
successful companies with a
history of M & A

Profitable Growth Through M & A

ProAssurance has been built through M & A

We have continued to grow
through M & A

NCRIC in the mid-Atlantic

PIC-Wisconsin in the upper
Midwest

PICA Nationwide

Denovo Growth Also Plays a Role

We have added states as opportunities arose

We carefully evaluate the
medical and legal climate of
each state before entering

We are the market leaders in
AL, DE, DC, OH, & WI