SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
FORM 8-K |
CURRENT REPORT |
Pursuant to Section 13 or 15(d) of the Securities |
Exchange Act of 1934 |
Date of Report (Date of earliest event reported): October 24, 2016 |
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ProAssurance Corporation |
(Exact name of registrant as specified in its charter) |
Delaware | 001-16533 | 63-1261433 |
(State of Incorporation) | (Commission File No.) | (IRS Employer I.D. No.) |
100 Brookwood Place, Birmingham, Alabama | 35209 |
(Address of Principal Executive Office ) | (Zip code) |
Registrant’s telephone number, including area code: (205) 877-4400 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-(c) under the Exchange Act (17CFR 240.13e-(c)) |
Item 2.02 Results of Operations and Financial Condition On October 24, 2016 ProAssurance announced preliminary financial results for the third quarter of 2016. We expect to report net income of between $0.61 and $0.65 per diluted share and operating earnings of between $0.43 and $0.47 per diluted share when we release final third quarter results on November 2, 2016. We believe gross premiums written in the quarter will be approximately $230 million and net earned premium for the quarter will be approximately $185 million. We expect our consolidated combined ratio to be in a range between 92% and 94% for the quarter. Our current year insurance operations continue to produce results in line with prior quarters. We anticipate favorable loss development will be in the range of $28.5 million to $30.0 million. Our investment in unconsolidated subsidiaries will report a loss expected to be in the range of $3.2 to $3.4 million, primarily due to the accelerated recognition of our estimate of partnership operating losses related to our tax credit investments. Our Workers’ Compensation subsidiary paid $1.3 million in assessments based on prior period loss severity primarily in two southeastern states, which represents an increase of $700,000 over the same period last year. Additionally, we expect our Lloyd's segment to report a pre-tax operating loss of between $1.7 and $1.9 million in the quarter. These results are reported on a one-quarter lag and are unrelated to recent storms. ProAssurance Chairman and Chief Executive Officer W. Stancil Starnes noted, “Given the long tailed nature of the business we write and the inherent uncertainties of ultimate reserve development, we do not forecast earnings on a quarterly basis. However, we recognize that our expected operating results will not reach the projections of some in the investment community. Those projections necessarily include estimates that are difficult to predict with any precision on a quarterly basis, which is why we take such a long-term view of our business. We see nothing in these events to suggest that there are fundamental issues with our business. ProAssurance remains solidly profitable and our long-term strategy continues to allow us to both retain existing business and write new business in a rapidly evolving healthcare delivery environment. We remain confident in the future of our business.” |
Item 7.01 REGULATION FD DISCLOSURES |
On October 24, 2016 ProAssurance announced preliminary financial results for the third quarter of 2016. The full text of the news release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K |
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS |
99.1 News release issued on October 24, 2016, disclosing ProAssurance’s preliminary results for the third quarter of 2016. |
We are furnishing Exhibit 99.1 to this Current Report on Form 8-K solely for the purpose of incorporation by reference into Items 7.01 and 9.01. This exhibit shall not be deemed to be “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing. |
SIGNATURE | |
Pursuant to the requirements of the Securities Exchange act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. | |
Date: October 24, 2016 |
PROASSURANCE CORPORATION |
By: /s/ Frank B. O’Neil |
Frank B. O’Neil |
Senior Vice President |
NEWS RELEASE For More Information: Frank B. O’Neil, IRC Sr. Vice President, Corporate Communications & Investor Relations 800-282-6242 205-877-4461 foneil@ProAssurance.com | ![]() |
NEWS RELEASE CONTINUES | ![]() |
| changes in general economic conditions, including the impact of inflation or deflation and unemployment; |
| 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 insurance entities providing coverages now offered by ProAssurance which could remove or add sizable numbers of insureds from or to the private insurance market; |
| 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 requirements or accounting policies and practices that may be adopted by our regulatory agencies, the FASB, the SEC, the PCAOB, or the NYSE that may affect our business; |
| changes in laws or government regulations affecting the financial services industry, the property and casualty insurance industry or particular insurance lines underwritten by our subsidiaries; |
| the effect on our insureds, particularly the insurance needs of our insureds, and our loss costs, of changes in the healthcare delivery system, including changes attributable to the Patient Protection and Affordable Care Act; |
| consolidation of our insureds into or under larger entities which may be insured by competitors, or may not have a risk profile that meets our underwriting criteria or which may not use external providers for insuring or otherwise managing substantial portions of their liability risk; |
| uncertainties inherent in the estimate of our loss and loss adjustment expense reserve and reinsurance recoverable; |
| changes in the availability, cost, quality, or collectability of insurance/reinsurance; |
| the results of litigation, including pre- or post-trial motions, trials and/or appeals we undertake; |
NEWS RELEASE CONTINUES | ![]() |
| effects on our claims costs from mass tort litigation that are different from that anticipated by us; |
| allegations of bad faith which may arise from our handling of any particular claim, including failure to settle; |
| loss or consolidation of independent agents, agencies, brokers, or brokerage firms; |
| changes in our organization, compensation and benefit plans; |
| changes in the business or competitive environment may limit the effectiveness of our business strategy and impact our revenues; |
| our ability to retain and recruit senior management; |
| the availability, integrity and security of our technology infrastructure or that of our third-party providers of technology infrastructure, including any susceptibility to cyber-attacks which might result in a loss of information or operating capability; |
| the impact of a catastrophic event, as it relates to both our operations and our insured risks; |
| the impact of acts of terrorism and acts of war; |
| the effects of terrorism-related insurance legislation and laws; |
| assessments from guaranty funds; |
| our ability to achieve continued growth through expansion into new markets 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 laws 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 legal and accounting costs and, if our defense is not successful, additional tax costs, including interest and penalties; 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 or 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 arise from our membership in the Lloyd's of London market and our participation in Syndicate 1729 include, but are not limited to, the following: | |
| members of Lloyd's are subject to levies by the Council of Lloyd's based on a percentage of the member's underwriting capacity, currently a maximum of 3%, but can be increased by Lloyd's; |
| Syndicate operating results can be affected by decisions made by the Council of Lloyd's over which the management of Syndicate 1729 has little ability to control, such as a decision to not approve the business plan of Syndicate 1729, or a decision to increase the capital required to continue operations, and by our obligation to pay levies to Lloyd's; |
| Lloyd's insurance and reinsurance relationships and distribution channels could be disrupted or Lloyd's trading licenses could be revoked making it more difficult for Syndicate 1729 to distribute and market its products; |
| rating agencies could downgrade their ratings of Lloyd's as a whole; and |
| Syndicate 1729 operations are dependent on a small, specialized management team and the loss of their services could adversely affect the Syndicate’s business. The inability to identify, hire and retain other highly qualified personnel in the future, could adversely affect the quality and profitability of Syndicate 1729’s business. |
NEWS RELEASE CONTINUES | ![]() |
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