ý | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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) |
Large accelerated filer | ý | Accelerated filer | ¨ | ||||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
Term | Meaning |
AOCI | Accumulated other comprehensive income (loss) |
Board | Board of Directors of ProAssurance Corporation |
BOLI | Business owned life insurance |
Council of Lloyd's | The governing body for Lloyd's of London |
DPAC | Deferred policy acquisition costs |
Eastern Re | Eastern Re, LTD, S.P.C. |
EBUB | Earned, but unbilled premium |
FAL | Funds at Lloyd's |
FASB | Financial Accounting Standards Board |
FHLB | Federal Home Loan Bank |
FHLMC | Federal Home Loan Mortgage Corporation |
FNMA | Federal National Mortgage Association |
GAAP | Generally accepted accounting principles in the United States of America |
GNMA | Government National Mortgage Association |
HCPL | Healthcare professional liability |
IRS | Internal Revenue Service |
LLC | Limited liability company |
Lloyd's | Lloyd's of London market |
LP | Limited partnership |
Medical technology liability | Medical technology and life sciences products liability |
NAV | Net asset value |
NRSRO | Nationally recognized statistical rating organization |
NYSE | New York Stock Exchange |
OCI | Other comprehensive income (loss) |
OTTI | Other-than-temporary impairment |
PCAOB | Public Company Accounting Oversight Board |
Revolving Credit Agreement | ProAssurance's $250 million revolving credit agreement |
ROE | Return on equity |
SEC | Securities and Exchange Commission |
SPC | Segregated portfolio cell |
Specialty P&C | Specialty Property and Casualty |
Syndicate 1729 | Lloyd's of London Syndicate 1729 |
Syndicate Credit Agreement | Unconditional revolving credit agreement with the Premium Trust Fund of Syndicate 1729 |
U.K. | United Kingdom of Great Britain and Northern Ireland |
ULAE | Unallocated loss adjustment expense |
VIE | Variable interest entity |
| 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 and tax rate environment; |
| resolution of uncertain tax matters and changes in tax laws; |
| 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 and/or changes in the U.S. political climate that may affect healthcare policy or our business; |
| 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; |
| 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; |
| guaranty funds and other state assessments; |
| 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, assumptions and uncertainties 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 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. |
TABLE OF CONTENTS | ||
September 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Investments | |||||||
Fixed maturities, available for sale, at fair value; amortized cost, $2,429,092 and $2,586,821, respectively | $ | 2,468,350 | $ | 2,613,406 | |||
Equity securities, trading, at fair value; cost, $376,074 and $353,744, respectively | 411,796 | 387,274 | |||||
Short-term investments | 294,379 | 442,084 | |||||
Business owned life insurance | 61,652 | 60,134 | |||||
Investment in unconsolidated subsidiaries | 331,897 | 340,906 | |||||
Other investments, $51,789 and $31,501 at fair value, respectively, otherwise at cost or amortized cost | 103,764 | 81,892 | |||||
Total Investments | 3,671,838 | 3,925,696 | |||||
Cash and cash equivalents | 119,005 | 117,347 | |||||
Premiums receivable | 262,686 | 223,480 | |||||
Receivable from reinsurers on paid losses and loss adjustment expenses | 7,408 | 5,446 | |||||
Receivable from reinsurers on unpaid losses and loss adjustment expenses | 313,876 | 273,475 | |||||
Prepaid reinsurance premiums | 47,529 | 39,723 | |||||
Deferred policy acquisition costs | 51,691 | 46,809 | |||||
Deferred tax asset, net | 13,957 | 10,256 | |||||
Real estate, net | 32,305 | 31,814 | |||||
Intangible assets | 84,496 | 84,406 | |||||
Goodwill | 210,725 | 210,725 | |||||
Other assets | 109,638 | 96,004 | |||||
Total Assets | $ | 4,925,154 | $ | 5,065,181 | |||
Liabilities and Shareholders’ Equity | |||||||
Liabilities | |||||||
Policy liabilities and accruals | |||||||
Reserve for losses and loss adjustment expenses | $ | 2,040,698 | $ | 1,993,428 | |||
Unearned premiums | 422,009 | 372,563 | |||||
Reinsurance premiums payable | 34,769 | 30,001 | |||||
Total Policy Liabilities | 2,497,476 | 2,395,992 | |||||
Other liabilities | 176,328 | 422,285 | |||||
Debt less debt issuance costs | 400,460 | 448,202 | |||||
Total Liabilities | 3,074,264 | 3,266,479 | |||||
Shareholders’ Equity | |||||||
Common shares, par value $0.01 per share, 100,000,000 shares authorized, 62,822,376 and 62,660,234 shares issued, respectively | 628 | 627 | |||||
Additional paid-in capital | 380,595 | 376,518 | |||||
Accumulated other comprehensive income (loss), net of deferred tax expense (benefit) of $13,985 and $9,894, respectively | 25,459 | 17,399 | |||||
Retained earnings | 1,864,136 | 1,824,088 | |||||
Treasury shares, at cost, 9,408,925 shares and 9,408,977 shares, respectively | (419,928 | ) | (419,930 | ) | |||
Total Shareholders’ Equity | 1,850,890 | 1,798,702 | |||||
Total Liabilities and Shareholders’ Equity | $ | 4,925,154 | $ | 5,065,181 |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total | ||||||||||||||||||
Balance at December 31, 2016 | $ | 627 | $ | 376,518 | $ | 17,399 | $ | 1,824,088 | $ | (419,930 | ) | $ | 1,798,702 | ||||||||||
Cumulative-effect adjustment- ASU 2016-09 adoption* | — | 425 | — | (276 | ) | — | 149 | ||||||||||||||||
Common shares reacquired | — | — | — | — | — | — | |||||||||||||||||
Common shares issued for compensation and effect of shares reissued to stock purchase plan | — | 1,873 | — | — | 2 | 1,875 | |||||||||||||||||
Share-based compensation | — | 7,110 | — | — | — | 7,110 | |||||||||||||||||
Net effect of restricted and performance shares issued and stock options exercised | 1 | (5,331 | ) | — | — | — | (5,330 | ) | |||||||||||||||
Dividends to shareholders | — | — | — | (49,598 | ) | — | (49,598 | ) | |||||||||||||||
Other comprehensive income (loss) | — | — | 8,060 | — | — | 8,060 | |||||||||||||||||
Net income | — | — | — | 89,922 | — | 89,922 | |||||||||||||||||
Balance at September 30, 2017 | $ | 628 | $ | 380,595 | $ | 25,459 | $ | 1,864,136 | $ | (419,928 | ) | $ | 1,850,890 | ||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total | ||||||||||||||||||
Balance at December 31, 2015 | $ | 625 | $ | 365,399 | $ | 23,855 | $ | 1,988,035 | $ | (419,560 | ) | $ | 1,958,354 | ||||||||||
Common shares reacquired | — | — | — | — | (2,106 | ) | (2,106 | ) | |||||||||||||||
Common shares issued for compensation and effect of shares reissued to stock purchase plan | 1 | 2,147 | — | — | — | 2,148 | |||||||||||||||||
Share-based compensation | — | 7,458 | — | — | — | 7,458 | |||||||||||||||||
Net effect of restricted and performance shares issued and stock options exercised | 1 | (3,011 | ) | — | — | — | (3,010 | ) | |||||||||||||||
Dividends to shareholders | — | — | — | (49,370 | ) | — | (49,370 | ) | |||||||||||||||
Other comprehensive income (loss) | — | — | 32,460 | — | — | 32,460 | |||||||||||||||||
Net income | — | — | — | 96,233 | — | 96,233 | |||||||||||||||||
Balance at September 30, 2016 | $ | 627 | $ | 371,993 | $ | 56,315 | $ | 2,034,898 | $ | (421,666 | ) | $ | 2,042,167 | ||||||||||
* See Note 1 of the Notes to Condensed Consolidated Financial Statements for discussion of accounting guidance adopted during the period. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | |||||||||||||||
Net premiums earned | $ | 192,303 | $ | 185,275 | $ | 555,559 | $ | 539,587 | |||||||
Net investment income | 23,729 | 25,261 | 69,592 | 75,284 | |||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries | 4,164 | (3,349 | ) | 8,489 | (6,607 | ) | |||||||||
Net realized investment gains (losses): | |||||||||||||||
OTTI losses | — | (100 | ) | (419 | ) | (10,834 | ) | ||||||||
Portion of OTTI losses recognized in other comprehensive income before taxes | — | — | 248 | 1,068 | |||||||||||
Net impairment losses recognized in earnings | — | (100 | ) | (171 | ) | (9,766 | ) | ||||||||
Other net realized investment gains (losses) | 7,749 | 15,837 | 18,981 | 28,080 | |||||||||||
Total net realized investment gains (losses) | 7,749 | 15,737 | 18,810 | 18,314 | |||||||||||
Other income | 510 | 1,428 | 4,581 | 5,963 | |||||||||||
Total revenues | 228,455 | 224,352 | 657,031 | 632,541 | |||||||||||
Expenses | |||||||||||||||
Net losses and loss adjustment expenses | 129,356 | 118,082 | 364,058 | 335,936 | |||||||||||
Underwriting, policy acquisition and operating expenses | |||||||||||||||
Operating expense | 32,606 | 34,060 | 102,062 | 101,862 | |||||||||||
DPAC amortization | 24,505 | 21,752 | 70,044 | 64,873 | |||||||||||
Segregated portfolio cells dividend expense (income) | 2,891 | 3,196 | 14,076 | 5,895 | |||||||||||
Interest expense | 4,124 | 3,748 | 12,402 | 11,285 | |||||||||||
Total expenses | 193,482 | 180,838 | 562,642 | 519,851 | |||||||||||
Income before income taxes | 34,973 | 43,514 | 94,389 | 112,690 | |||||||||||
Provision for income taxes | |||||||||||||||
Current expense (benefit) | 13,690 | 13,736 | 12,111 | 16,407 | |||||||||||
Deferred expense (benefit) | (7,666 | ) | (4,056 | ) | (7,644 | ) | 50 | ||||||||
Total income tax expense (benefit) | 6,024 | 9,680 | 4,467 | 16,457 | |||||||||||
Net income | 28,949 | 33,834 | 89,922 | 96,233 | |||||||||||
Other comprehensive income (loss), after tax, net of reclassification adjustments | (605 | ) | (4,974 | ) | 8,060 | 32,460 | |||||||||
Comprehensive income | $ | 28,344 | $ | 28,860 | $ | 97,982 | $ | 128,693 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.54 | $ | 0.64 | $ | 1.68 | $ | 1.81 | |||||||
Diluted | $ | 0.54 | $ | 0.63 | $ | 1.68 | $ | 1.80 | |||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 53,413 | 53,222 | 53,377 | 53,199 | |||||||||||
Diluted | 53,614 | 53,456 | 53,586 | 53,419 | |||||||||||
Cash dividends declared per common share | $ | 0.31 | $ | 0.31 | $ | 0.93 | $ | 0.93 |
Nine Months Ended September 30 | |||||||
2017 | 2016 | ||||||
Operating Activities | |||||||
Net income | $ | 89,922 | $ | 96,233 | |||
Adjustments to reconcile income to net cash provided by operating activities: | |||||||
Depreciation and amortization, net of accretion | 21,024 | 25,509 | |||||
(Increase) decrease in cash surrender value of BOLI | (1,518 | ) | (1,537 | ) | |||
Net realized investment (gains) losses | (18,810 | ) | (18,314 | ) | |||
Share-based compensation | 7,110 | 7,458 | |||||
Deferred income taxes | (7,644 | ) | 50 | ||||
Policy acquisition costs, net of amortization (net deferral) | (4,882 | ) | (5,221 | ) | |||
Equity in (earnings) loss of unconsolidated subsidiaries | (8,489 | ) | 6,607 | ||||
Other | (548 | ) | (689 | ) | |||
Other changes in assets and liabilities: | |||||||
Premiums receivable | (39,206 | ) | (23,873 | ) | |||
Reinsurance related assets and liabilities | (45,401 | ) | (19,049 | ) | |||
Other assets | 1,188 | 16,411 | |||||
Reserve for losses and loss adjustment expenses | 47,270 | (7,307 | ) | ||||
Unearned premiums | 49,446 | 44,418 | |||||
Other liabilities | 8,569 | 8,296 | |||||
Net cash provided (used) by operating activities | 98,031 | 128,992 | |||||
Investing Activities | |||||||
Purchases of: | |||||||
Fixed maturities, available for sale | (449,717 | ) | (540,370 | ) | |||
Equity securities, trading | (127,916 | ) | (76,838 | ) | |||
Other investments | (35,445 | ) | (15,832 | ) | |||
Funding of qualified affordable housing tax credit limited partnerships | (394 | ) | (963 | ) | |||
Investment in unconsolidated subsidiaries | (30,530 | ) | (39,051 | ) | |||
Proceeds from sales or maturities of: | |||||||
Fixed maturities, available for sale | 599,374 | 582,379 | |||||
Equity securities, trading | 116,833 | 56,670 | |||||
Other investments | 16,479 | 10,952 | |||||
Distributions from unconsolidated subsidiaries | 47,364 | 7,720 | |||||
Net sales or maturities (purchases) of short-term investments | 141,538 | (135,743 | ) | ||||
Unsettled security transactions, net change | (10,935 | ) | 16,665 | ||||
Purchases of capital assets | (8,620 | ) | (7,797 | ) | |||
Purchases of intangible assets | (2,984 | ) | — | ||||
Other | (2,745 | ) | (1,520 | ) | |||
Net cash provided (used) by investing activities | 252,302 | (143,728 | ) | ||||
Continued on following page. |
Nine Months Ended September 30 | |||||||
2017 | 2016 | ||||||
Financing Activities | |||||||
Repayments under revolving credit agreement | (48,000 | ) | — | ||||
Repurchase of common stock | — | (2,106 | ) | ||||
Dividends to shareholders | (298,704 | ) | (102,354 | ) | |||
External capital contribution received for segregated portfolio cells | 2,989 | 9,703 | |||||
Other | (4,960 | ) | (2,704 | ) | |||
Net cash provided (used) by financing activities | (348,675 | ) | (97,461 | ) | |||
Increase (decrease) in Cash and cash equivalents | 1,658 | (112,197 | ) | ||||
Cash and cash equivalents at beginning of period | 117,347 | 241,100 | |||||
Cash and cash equivalents at end of period | $ | 119,005 | $ | 128,903 | |||
Significant non-cash transactions | |||||||
Dividends declared and not yet paid | $ | 16,558 | $ | 16,462 |
(In thousands) | September 30, 2017 | December 31, 2016 | ||||||
SPC dividends payable | $ | 46,353 | $ | 34,289 | ||||
Unpaid dividends | 16,558 | 265,659 | ||||||
All other | 113,417 | 122,337 | ||||||
Total other liabilities | $ | 176,328 | $ | 422,285 |
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. |
September 30, 2017 | |||||||||||||||
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 | $ | — | $ | 148,372 | $ | — | $ | 148,372 | |||||||
U.S. Government-sponsored enterprise obligations | — | 18,772 | — | 18,772 | |||||||||||
State and municipal bonds | — | 693,398 | — | 693,398 | |||||||||||
Corporate debt, multiple observable inputs | 2,406 | 1,255,413 | — | 1,257,819 | |||||||||||
Corporate debt, limited observable inputs | — | — | 14,963 | 14,963 | |||||||||||
Residential mortgage-backed securities | — | 201,691 | — | 201,691 | |||||||||||
Agency commercial mortgage-backed securities | — | 11,835 | — | 11,835 | |||||||||||
Other commercial mortgage-backed securities | — | 16,190 | — | 16,190 | |||||||||||
Other asset-backed securities | — | 101,770 | 3,540 | 105,310 | |||||||||||
Equity securities | |||||||||||||||
Financial | 75,274 | — | — | 75,274 | |||||||||||
Utilities/Energy | 53,553 | — | — | 53,553 | |||||||||||
Consumer oriented | 53,569 | — | — | 53,569 | |||||||||||
Industrial | 51,002 | — | — | 51,002 | |||||||||||
Bond funds | 119,155 | — | — | 119,155 | |||||||||||
All other | 59,243 | — | — | 59,243 | |||||||||||
Short-term investments | 288,796 | 5,583 | — | 294,379 | |||||||||||
Other investments | 747 | 30,614 | 428 | 31,789 | |||||||||||
Total assets categorized within the fair value hierarchy | $ | 703,745 | $ | 2,483,638 | $ | 18,931 | 3,206,314 | ||||||||
LP/LLC and investment fund interests carried at NAV which approximates fair value. These interests, reported as a part of Investment in unconsolidated subsidiaries and Other investments, respectively, are not categorized within the fair value hierarchy. | 222,541 | ||||||||||||||
Total assets at fair value | $ | 3,428,855 |
December 31, 2016 | |||||||||||||||
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 | $ | — | $ | 146,539 | $ | — | $ | 146,539 | |||||||
U.S. Government-sponsored enterprise obligations | — | 30,235 | — | 30,235 | |||||||||||
State and municipal bonds | — | 800,463 | — | 800,463 | |||||||||||
Corporate debt, multiple observable inputs | 2,339 | 1,261,842 | — | 1,264,181 | |||||||||||
Corporate debt, limited observable inputs | — | — | 14,810 | 14,810 | |||||||||||
Residential mortgage-backed securities | — | 217,906 | — | 217,906 | |||||||||||
Agency commercial mortgage-backed securities | — | 12,783 | — | 12,783 | |||||||||||
Other commercial mortgage-backed securities | — | 19,611 | — | 19,611 | |||||||||||
Other asset-backed securities | — | 103,871 | 3,007 | 106,878 | |||||||||||
Equity securities | |||||||||||||||
Financial | 81,749 | — | — | 81,749 | |||||||||||
Utilities/Energy | 52,869 | — | — | 52,869 | |||||||||||
Consumer oriented | 61,284 | — | — | 61,284 | |||||||||||
Industrial | 54,265 | — | — | 54,265 | |||||||||||
Bond funds | 79,843 | 10,159 | — | 90,002 | |||||||||||
All other | 27,181 | 19,924 | — | 47,105 | |||||||||||
Short-term investments | 437,580 | 4,504 | — | 442,084 | |||||||||||
Other investments | 1,956 | 29,542 | 3 | 31,501 | |||||||||||
Total assets categorized within the fair value hierarchy | $ | 799,066 | $ | 2,657,379 | $ | 17,820 | 3,474,265 | ||||||||
LP/LLC and investment fund interests carried at NAV which approximates fair value. These interests, reported as a part of Investment in unconsolidated subsidiaries and Other investments, respectively, are not categorized within the fair value hierarchy. | 204,719 | ||||||||||||||
Total assets at fair value | $ | 3,678,984 |
• | Level 3 securities are priced by the Chief Investment Officer. |
• | Level 3 valuations are computed quarterly. Prices are evaluated quarterly against prior period prices and the expected change in prices. |
• | ProAssurance's Level 3 securities are primarily NRSRO rated debt instruments for which comparable market inputs are commonly available for evaluating the securities in question. Valuation of these debt instruments is not overly sensitive to changes in the unobservable inputs used. |
Fair Value at | ||||||||||
(In thousands) | September 30, 2017 | December 31, 2016 | Valuation Technique | Unobservable Input | Range (Weighted Average) | |||||
Assets: | ||||||||||
Corporate debt, limited observable inputs | $14,963 | $14,810 | Market Comparable Securities | Comparability Adjustment | 0% - 5% (2.5%) | |||||
Discounted Cash Flows | Comparability Adjustment | 0% - 5% (2.5%) | ||||||||
Other asset-backed securities | $3,540 | $3,007 | Market Comparable Securities | Comparability Adjustment | 0% - 5% (2.5%) | |||||
Discounted Cash Flows | Comparability Adjustment | 0% - 5% (2.5%) | ||||||||
Other investments | $428 | $3 | Discounted Cash Flows | Comparability Adjustment | 0% - 10% (5%) |
September 30, 2017 | |||||||||||||||
Level 3 Fair Value Measurements – Assets | |||||||||||||||
(In thousands) | Corporate Debt | Asset-backed Securities | All other investments | Total | |||||||||||
Balance June 30, 2017 | $ | 17,849 | $ | 3,005 | $ | 5 | $ | 20,859 | |||||||
Total gains (losses) realized and unrealized: | |||||||||||||||
Included in earnings, as a part of: | |||||||||||||||
Net investment income | (52 | ) | — | — | (52 | ) | |||||||||
Included in other comprehensive income | (18 | ) | (45 | ) | — | (63 | ) | ||||||||
Purchases | 1 | 580 | — | 581 | |||||||||||
Sales | (858 | ) | — | — | (858 | ) | |||||||||
Transfers in | 989 | — | 423 | 1,412 | |||||||||||
Transfers out | (2,948 | ) | — | — | (2,948 | ) | |||||||||
Balance September 30, 2017 | $ | 14,963 | $ | 3,540 | $ | 428 | $ | 18,931 | |||||||
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | $ | — | $ | — | $ | — | $ | — |
September 30, 2017 | |||||||||||||||
Level 3 Fair Value Measurements – Assets | |||||||||||||||
(In thousands) | Corporate Debt | Asset-backed Securities | All other investments | Total | |||||||||||
Balance December 31, 2016 | $ | 14,810 | $ | 3,007 | $ | 3 | $ | 17,820 | |||||||
Total gains (losses) realized and unrealized: | |||||||||||||||
Included in earnings, as a part of: | |||||||||||||||
Net investment income | (125 | ) | — | — | (125 | ) | |||||||||
Net realized investment gains (losses) | 13 | — | (124 | ) | (111 | ) | |||||||||
Included in other comprehensive income | (296 | ) | (47 | ) | 140 | (203 | ) | ||||||||
Purchases | 11,890 | 580 | — | 12,470 | |||||||||||
Sales | (4,418 | ) | — | (912 | ) | (5,330 | ) | ||||||||
Transfers in | 999 | — | 1,321 | 2,320 | |||||||||||
Transfers out | (7,910 | ) | — | — | (7,910 | ) | |||||||||
Balance September 30, 2017 | $ | 14,963 | $ | 3,540 | $ | 428 | $ | 18,931 | |||||||
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | $ | — | $ | — | $ | — | $ | — |
September 30, 2016 | |||||||||||||||||||
Level 3 Fair Value Measurements – Assets | |||||||||||||||||||
(In thousands) | State and Municipal Bonds | Corporate Debt | Asset-backed Securities | All other investments | Total | ||||||||||||||
Balance June 30, 2016 | $ | — | $ | 17,810 | $ | 755 | $ | 1,556 | $ | 20,121 | |||||||||
Total gains (losses) realized and unrealized: | |||||||||||||||||||
Included in earnings, as a part of: | |||||||||||||||||||
Net investment income | — | (28 | ) | — | (3 | ) | (31 | ) | |||||||||||
Included in other comprehensive income | — | 324 | (2 | ) | 8 | 330 | |||||||||||||
Purchases | — | — | — | 193 | 193 | ||||||||||||||
Sales | — | (709 | ) | — | — | (709 | ) | ||||||||||||
Transfers in | 900 | — | 1,000 | 919 | 2,819 | ||||||||||||||
Transfers out | — | (5,110 | ) | — | — | (5,110 | ) | ||||||||||||
Balance September 30, 2016 | $ | 900 | $ | 12,287 | $ | 1,753 | $ | 2,673 | $ | 17,613 | |||||||||
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | $ | — | $ | — | $ | — | $ | — | $ | — |
September 30, 2016 | |||||||||||||||||||
Level 3 Fair Value Measurements – Assets | |||||||||||||||||||
(In thousands) | State and Municipal Bonds | Corporate Debt | Asset-backed Securities | All other investments | Total | ||||||||||||||
Balance December 31, 2015 | $ | — | $ | 14,500 | $ | 757 | $ | — | $ | 15,257 | |||||||||
Total gains (losses) realized and unrealized: | |||||||||||||||||||
Included in earnings, as a part of: | |||||||||||||||||||
Net investment income | — | (64 | ) | — | (7 | ) | (71 | ) | |||||||||||
Net realized investment gains (losses) | — | (75 | ) | — | — | (75 | ) | ||||||||||||
Included in other comprehensive income | — | 453 | 3 | 8 | 464 | ||||||||||||||
Purchases | — | 5,995 | 3,500 | 1,753 | 11,248 | ||||||||||||||
Sales | — | (3,406 | ) | (702 | ) | — | (4,108 | ) | |||||||||||
Transfers in | 900 | — | 1,000 | 919 | 2,819 | ||||||||||||||
Transfers out | — | (5,116 | ) | (2,805 | ) | — | (7,921 | ) | |||||||||||
Balance September 30, 2016 | $ | 900 | $ | 12,287 | $ | 1,753 | $ | 2,673 | $ | 17,613 | |||||||||
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | $ | — | $ | — | $ | — | $ | — | $ | — |
Unfunded Commitments | Fair Value | ||||||||
(In thousands) | September 30, 2017 | September 30, 2017 | December 31, 2016 | ||||||
Investments in LPs/LLCs: | |||||||||
Private debt funds (1) | $12,006 | $ | 42,650 | $ | 55,637 | ||||
Long equity fund (2) | None | 7,396 | 6,268 | ||||||
Long/short equity funds (3) | None | 30,904 | 28,926 | ||||||
Non-public equity funds (4) | $86,985 | 92,887 | 89,691 | ||||||
Multi-strategy fund of funds (5) | None | 8,966 | 8,448 | ||||||
Structured credit fund (6) | None | 6,394 | 4,273 | ||||||
Long/short commodities fund (7) | None | 12,648 | 11,476 | ||||||
Strategy focused fund (8) | $4,304 | 696 | — | ||||||
Other investments: | |||||||||
Mortgage fund (9) | None | 20,000 | — | ||||||
$ | 222,541 | $ | 204,719 |
(1) | The investment is comprised of interests in two unrelated LP funds that are structured to provide interest distributions primarily through diversified portfolios of private debt instruments. One LP allows redemption by special consent; the other does not permit redemption. Income and capital are to be periodically distributed at the discretion of the LPs over an anticipated time frame that spans from three to eight years. |
(2) | The fund is a LP that holds long equities of public international companies. Redemptions are allowed at the end of any calendar month with a prior notice requirement of 15 days and are paid within 10 days of the end of the calendar month of the redemption request. |
(3) | The investment is comprised of interests in multiple unrelated LP funds. The funds hold primarily long and short North American equities and target absolute returns using strategies designed to take advantage of market opportunities. The funds generally permit quarterly or semi-annual capital redemptions subject to notice requirements of 30 to 90 days. For some funds, redemptions above specified thresholds (lowest threshold is 90%) may be only partially payable until after a fund audit is completed and are then payable within 30 days. |
(4) | The investment is comprised of interests in multiple unrelated LP funds, each structured to provide capital appreciation through diversified investments in private equity, which can include investments in buyout, venture capital, debt including senior, second lien and mezzanine, distressed debt, and other private equity-oriented LPs. Two of the LPs allow redemption by terms set forth in the LP agreements; the others do not permit redemption. Income and capital are to be periodically distributed at the discretion of the LP over time frames that are anticipated to span up to nine years. |
(5) | This fund is a LLC structured to build and manage low volatility, multi-manager portfolios that have little or no correlation to the broader fixed income and equity security markets. Redemptions are not permitted but offers to repurchase units of the LLC may be extended periodically. |
(6) | This fund is a LP seeking to obtain superior risk-adjusted absolute returns by acquiring and actively managing a diversified portfolio of debt securities, including bonds, loans and other asset-backed instruments. Redemptions are allowed at any quarter-end with a prior notice requirement of 90 days. |
(7) | This fund is a LLC invested across a broad range of commodities and focuses primarily on market neutral, relative value strategies, seeking to generate absolute returns with low correlation to broad commodity, equity and fixed income markets. Following an initial one-year lock-up period, redemptions are allowed with a prior notice requirement of 30 days and are payable within 30 days. |
(8) | This fund is a LLC focused exclusively on investing in consumer product companies. The fund will invest exclusively in North American companies, comprised of equity and equity-related securities, as well as debt instruments. Redemptions are not permitted. |
(9) | This investment fund is focused on the structured mortgage market. The fund will primarily invest in U.S. Agency mortgage-backed securities. Redemptions are allowed at the end of any calendar quarter with a prior notice requirement of 65 days and are paid within 45 days at the end of the redemption dealing day. |
September 30, 2017 | December 31, 2016 | ||||||||||||||
(In thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||
Financial assets: | |||||||||||||||
BOLI | $ | 61,652 | $ | 61,652 | $ | 60,134 | $ | 60,134 | |||||||
Other investments | $ | 51,975 | $ | 60,713 | $ | 50,391 | $ | 58,757 | |||||||
Other assets | $ | 34,412 | $ | 34,311 | $ | 29,111 | $ | 28,960 | |||||||
Financial liabilities: | |||||||||||||||
Senior notes due 2023* | $ | 250,000 | $ | 273,923 | $ | 250,000 | $ | 270,898 | |||||||
Revolving Credit Agreement* | $ | 152,000 | $ | 152,000 | $ | 200,000 | $ | 200,000 | |||||||
Other liabilities | $ | 19,858 | $ | 19,858 | $ | 17,033 | $ | 17,011 | |||||||
* Carrying value excludes debt issuance costs. |
September 30, 2017 | |||||||||||||||
(In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
Fixed maturities | |||||||||||||||
U.S. Treasury obligations | $ | 148,194 | $ | 954 | $ | 776 | $ | 148,372 | |||||||
U.S. Government-sponsored enterprise obligations | 18,756 | 119 | 103 | 18,772 | |||||||||||
State and municipal bonds | 675,012 | 20,086 | 1,700 | 693,398 | |||||||||||
Corporate debt | 1,254,878 | 22,427 | 4,523 | 1,272,782 | |||||||||||
Residential mortgage-backed securities | 199,110 | 3,401 | 820 | 201,691 | |||||||||||
Agency commercial mortgage-backed securities | 11,841 | 63 | 69 | 11,835 | |||||||||||
Other commercial mortgage-backed securities | 16,135 | 126 | 71 | 16,190 | |||||||||||
Other asset-backed securities | 105,166 | 303 | 159 | 105,310 | |||||||||||
$ | 2,429,092 | $ | 47,479 | $ | 8,221 | $ | 2,468,350 | ||||||||
December 31, 2016 | |||||||||||||||
(In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
Fixed maturities | |||||||||||||||
U.S. Treasury obligations | $ | 146,186 | $ | 1,264 | $ | 911 | $ | 146,539 | |||||||
U.S. Government-sponsored enterprise obligations | 30,038 | 388 | 191 | 30,235 | |||||||||||
State and municipal bonds | 790,154 | 17,261 | 6,952 | 800,463 | |||||||||||
Corporate debt | 1,264,812 | 22,659 | 8,480 | 1,278,991 | |||||||||||
Residential mortgage-backed securities | 216,285 | 3,667 | 2,046 | 217,906 | |||||||||||
Agency commercial mortgage-backed securities | 12,837 | 89 | 143 | 12,783 | |||||||||||
Other commercial mortgage-backed securities | 19,571 | 177 | 137 | 19,611 | |||||||||||
Other asset-backed securities | 106,938 | 207 | 267 | 106,878 | |||||||||||
$ | 2,586,821 | $ | 45,712 | $ | 19,127 | $ | 2,613,406 |
(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 | $ | 148,194 | $ | 30,655 | $ | 93,222 | $ | 21,495 | $ | 3,000 | $ | 148,372 | |||||||||||
U.S. Government-sponsored enterprise obligations | 18,756 | 249 | 8,362 | 10,020 | 141 | 18,772 | |||||||||||||||||
State and municipal bonds | 675,012 | 57,500 | 233,506 | 295,098 | 107,294 | 693,398 | |||||||||||||||||
Corporate debt | 1,254,878 | 124,057 | 737,639 | 390,103 | 20,983 | 1,272,782 | |||||||||||||||||
Residential mortgage-backed securities | 199,110 | 201,691 | |||||||||||||||||||||
Agency commercial mortgage-backed securities | 11,841 | 11,835 | |||||||||||||||||||||
Other commercial mortgage-backed securities | 16,135 | 16,190 | |||||||||||||||||||||
Other asset-backed securities | 105,166 | 105,310 | |||||||||||||||||||||
$ | 2,429,092 | $ | 2,468,350 |
Carrying Value | |||||||
(In thousands) | September 30, 2017 | December 31, 2016 | |||||
Investment in LPs/LLCs: | |||||||
Qualified affordable housing tax credit partnerships | $ | 91,598 | $ | 102,313 | |||
Other tax credit partnerships | 8,355 | 11,459 | |||||
All other LPs/LLCs | 231,944 | 227,134 | |||||
$ | 331,897 | $ | 340,906 |
(In thousands) | September 30, 2017 | December 31, 2016 | |||||
Investments in LPs/LLCs, at cost | $ | 48,505 | $ | 46,852 | |||
Convertible securities, at fair value | 31,789 | 31,501 | |||||
Investment funds, at fair value | 20,000 | — | |||||
Other, principally FHLB capital stock, at cost | 3,470 | 3,539 | |||||
$ | 103,764 | $ | 81,892 |
September 30, 2017 | |||||||||||||||||||||||
Total | Less than 12 months | 12 months or longer | |||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
(In thousands) | Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||
Fixed maturities, available for sale | |||||||||||||||||||||||
U.S. Treasury obligations | $ | 93,684 | $ | 776 | $ | 77,679 | $ | 410 | $ | 16,005 | $ | 366 | |||||||||||
U.S. Government-sponsored enterprise obligations | 9,958 | 103 | 4,048 | 20 | 5,910 | 83 | |||||||||||||||||
State and municipal bonds | 104,279 | 1,700 | 69,891 | 406 | 34,388 | 1,294 | |||||||||||||||||
Corporate debt | 354,309 | 4,523 | 238,877 | 1,286 | 115,432 | 3,237 | |||||||||||||||||
Residential mortgage-backed securities | 65,541 | 820 | 52,366 | 499 | 13,175 | 321 | |||||||||||||||||
Agency commercial mortgage-backed securities | 4,515 | 69 | 4,138 | 41 | 377 | 28 | |||||||||||||||||
Other commercial mortgage-backed securities | 8,753 | 71 | 5,217 | 38 | 3,536 | 33 | |||||||||||||||||
Other asset-backed securities | 47,229 | 159 | 39,552 | 110 | 7,677 | 49 | |||||||||||||||||
$ | 688,268 | $ | 8,221 | $ | 491,768 | $ | 2,810 | $ | 196,500 | $ | 5,411 |
December 31, 2016 | |||||||||||||||||||||||
Total | Less than 12 months | 12 months or longer | |||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
(In thousands) | Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||
Fixed maturities, available for sale | |||||||||||||||||||||||
U.S. Treasury obligations | $ | 79,833 | $ | 911 | $ | 79,833 | $ | 911 | $ | — | $ | — | |||||||||||
U.S. Government-sponsored enterprise obligations | 11,746 | 191 | 11,746 | 191 | — | — | |||||||||||||||||
State and municipal bonds | 224,884 | 6,952 | 219,276 | 6,444 | 5,608 | 508 | |||||||||||||||||
Corporate debt | 469,632 | 8,480 | 424,721 | 5,662 | 44,911 | 2,818 | |||||||||||||||||
Residential mortgage-backed securities | 103,680 | 2,046 | 100,542 | 1,982 | 3,138 | 64 | |||||||||||||||||
Agency commercial mortgage-backed securities | 4,579 | 143 | 4,192 | 114 | 387 | 29 | |||||||||||||||||
Other commercial mortgage-backed securities | 9,822 | 137 | 9,179 | 134 | 643 | 3 | |||||||||||||||||
Other asset-backed securities | 44,343 | 267 | 39,079 | 256 | 5,264 | 11 | |||||||||||||||||
$ | 948,519 | $ | 19,127 | $ | 888,568 | $ | 15,694 | $ | 59,951 | $ | 3,433 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Fixed maturities | $ | 18,924 | $ | 21,024 | $ | 57,885 | $ | 64,808 | |||||||
Equities | 4,495 | 3,779 | 12,437 | 10,983 | |||||||||||
Short-term and Other investments | 1,147 | 1,466 | 2,926 | 2,550 | |||||||||||
BOLI | 620 | 639 | 1,517 | 1,537 | |||||||||||
Investment fees and expenses | (1,457 | ) | (1,647 | ) | (5,173 | ) | (4,594 | ) | |||||||
Net investment income | $ | 23,729 | $ | 25,261 | $ | 69,592 | $ | 75,284 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Total OTTI losses: | |||||||||||||||
State and municipal bonds | $ | — | $ | (100 | ) | $ | — | $ | (100 | ) | |||||
Corporate debt | — | — | (419 | ) | (7,604 | ) | |||||||||
Other investments | — | — | — | (3,130 | ) | ||||||||||
Portion of OTTI losses recognized in other comprehensive income before taxes: | |||||||||||||||
Corporate debt | — | — | 248 | 1,068 | |||||||||||
Net impairment losses recognized in earnings | — | (100 | ) | (171 | ) | (9,766 | ) | ||||||||
Gross realized gains, available-for-sale securities | 1,724 | 3,898 | 4,323 | 8,969 | |||||||||||
Gross realized (losses), available-for-sale securities | (262 | ) | (370 | ) | (1,730 | ) | (5,628 | ) | |||||||
Net realized gains (losses), Short-term investments | (1 | ) | — | (1 | ) | 18 | |||||||||
Net realized gains (losses), trading securities | 3,603 | 1,276 | 10,958 | 5,244 | |||||||||||
Net realized gains (losses), Other investments | 478 | 335 | 2,197 | 833 | |||||||||||
Change in unrealized holding gains (losses), trading securities | 2,182 | 9,816 | 2,606 | 17,663 | |||||||||||
Change in unrealized holding gains (losses), Other investments, carried at fair value | 23 | 880 | 621 | 976 | |||||||||||
Other | 2 | 2 | 7 | 5 | |||||||||||
Net realized investment gains (losses) | $ | 7,749 | $ | 15,737 | $ | 18,810 | $ | 18,314 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Balance beginning of period | $ | 1,313 | $ | 3,319 | $ | 1,158 | $ | 5,751 | |||||||
Additional credit losses recognized during the period, related to securities for which: | |||||||||||||||
No OTTI has been previously recognized | — | — | 171 | 2,398 | |||||||||||
OTTI has been previously recognized | — | — | — | 2,154 | |||||||||||
Reductions due to: | |||||||||||||||
Securities sold during the period (realized) | — | (1,799 | ) | (16 | ) | (8,783 | ) | ||||||||
Balance September 30 | $ | 1,313 | $ | 1,520 | $ | 1,313 | $ | 1,520 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Proceeds from sales (exclusive of maturities and paydowns) | $ | 74.1 | $ | 114.9 | $ | 309.6 | $ | 306.8 | |||||||
Purchases | $ | 90.6 | $ | 167.2 | $ | 449.7 | $ | 540.4 |
(In thousands) | Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | Year Ended December 31, 2016 | ||||||||
Balance, beginning of year | $ | 1,993,428 | $ | 2,005,326 | $ | 2,005,326 | |||||
Less reinsurance recoverables on unpaid losses and loss adjustment expenses | 273,475 | 249,350 | 249,350 | ||||||||
Net balance, beginning of year | 1,719,953 | 1,755,976 | 1,755,976 | ||||||||
Net losses: | |||||||||||
Current year | 454,121 | 430,422 | 587,007 | ||||||||
Favorable development of reserves established in prior years, net | (90,063 | ) | (94,486 | ) | (143,778 | ) | |||||
Total | 364,058 | 335,936 | 443,229 | ||||||||
Paid related to: | |||||||||||
Current year | (63,667 | ) | (55,349 | ) | (96,190 | ) | |||||
Prior years | (293,522 | ) | (293,321 | ) | (383,062 | ) | |||||
Total paid | (357,189 | ) | (348,670 | ) | (479,252 | ) | |||||
Net balance, end of period | 1,726,822 | 1,743,242 | 1,719,953 | ||||||||
Plus reinsurance recoverables on unpaid losses and loss adjustment expenses | 313,876 | 254,777 | 273,475 | ||||||||
Balance, end of period | $ | 2,040,698 | $ | 1,998,019 | $ | 1,993,428 |
(In thousands) | September 30, 2017 | December 31, 2016 | |||||
Senior notes due 2023, unsecured, interest at 5.3% annually | $ | 250,000 | $ | 250,000 | |||
Revolving Credit Agreement, outstanding borrowings are fully secured, see Note 3, and carried at a weighted average interest rate of 1.73% and 1.35%, respectively. Outstanding borrowings are not permitted to exceed $250 million aggregately; Revolving Credit Agreement expires in 2020. The interest rate on the borrowings is set at the time the respective borrowing is initiated or renewed. The current borrowings can be repaid or renewed in the fourth quarter 2017. If renewed, the interest rate will be reset. | 152,000 | 200,000 | |||||
Total principal | 402,000 | 450,000 | |||||
Less debt issuance costs | 1,540 | 1,798 | |||||
Debt less debt issuance costs | $ | 400,460 | $ | 448,202 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Share-based compensation expense | $ | 1,018 | $ | 1,645 | $ | 7,110 | $ | 7,458 | |||||||
Related tax benefits | $ | 356 | $ | 576 | $ | 2,489 | $ | 2,610 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Reclassifications from AOCI to Net income: | |||||||||||||||
Realized investment gains (losses) | $ | 1,462 | $ | 3,852 | $ | 2,425 | $ | 145 | |||||||
Non-credit impairment losses reclassified to earnings, due to sale of securities or reclassification as a credit loss | — | (423 | ) | (3 | ) | (3,441 | ) | ||||||||
Total amounts reclassified, before tax effect | 1,462 | 3,429 | 2,422 | (3,296 | ) | ||||||||||
Tax effect (at 35%) | (512 | ) | (1,200 | ) | (848 | ) | 1,154 | ||||||||
Net reclassification adjustments | $ | 950 | $ | 2,229 | $ | 1,574 | $ | (2,142 | ) | ||||||
Deferred tax expense (benefit) included in OCI | $ | (373 | ) | $ | (2,687 | ) | $ | 4,091 | $ | 17,114 |
(In thousands, except per share data) | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Weighted average number of common shares outstanding, basic | 53,413 | 53,222 | 53,377 | 53,199 | |||||||||||
Dilutive effect of securities: | |||||||||||||||
Restricted Share Units | 87 | 75 | 81 | 71 | |||||||||||
Performance Share Units | 88 | 132 | 105 | 124 | |||||||||||
Purchase Match Units | 26 | 27 | 23 | 25 | |||||||||||
Weighted average number of common shares outstanding, diluted | 53,614 | 53,456 | 53,586 | 53,419 | |||||||||||
Effect of dilutive shares on earnings per share | $ | — | $ | (0.01 | ) | $ | — | $ | (0.01 | ) |
Three Months Ended September 30, 2017 | |||||||||||||||||||||||
(In thousands) | Specialty P&C | Workers' Compensation | Lloyd's Syndicate | Corporate | Inter-segment Eliminations | Consolidated | |||||||||||||||||
Net premiums earned | $ | 118,331 | $ | 57,654 | $ | 16,318 | $ | — | $ | — | $ | 192,303 | |||||||||||
Net investment income | — | — | 412 | 23,317 | — | 23,729 | |||||||||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries | — | — | — | 4,164 | — | 4,164 | |||||||||||||||||
Net realized gains (losses) | — | — | 31 | 7,718 | — | 7,749 | |||||||||||||||||
Other income (expense) | 1,276 | 164 | (1,881 | ) | 1,023 | (72 | ) | 510 | |||||||||||||||
Net losses and loss adjustment expenses | (73,831 | ) | (35,081 | ) | (20,444 | ) | — | — | (129,356 | ) | |||||||||||||
Underwriting, policy acquisition and operating expenses | (27,037 | ) | (18,434 | ) | (6,723 | ) | (4,989 | ) | 72 | (57,111 | ) | ||||||||||||
Segregated portfolio cells dividend (expense) income (1) | 65 | (1,722 | ) | — | (1,234 | ) | — | (2,891 | ) | ||||||||||||||
Interest expense | — | — | — | (4,124 | ) | — | (4,124 | ) | |||||||||||||||
Income tax benefit (expense) | — | — | (61 | ) | (5,963 | ) | — | (6,024 | ) | ||||||||||||||
Segment operating results | $ | 18,804 | $ | 2,581 | $ | (12,348 | ) | $ | 19,912 | $ | — | $ | 28,949 | ||||||||||
Significant non-cash items: | |||||||||||||||||||||||
Depreciation and amortization, net of accretion | $ | 1,933 | $ | 848 | $ | (6 | ) | $ | 4,300 | $ | — | $ | 7,075 |
Nine Months Ended September 30, 2017 | |||||||||||||||||||||||
(In thousands) | Specialty P&C | Workers' Compensation | Lloyd's Syndicate | Corporate | Inter-segment Eliminations | Consolidated | |||||||||||||||||
Net premiums earned | $ | 340,394 | $ | 169,791 | $ | 45,374 | $ | — | $ | — | $ | 555,559 | |||||||||||
Net investment income | — | — | 1,194 | 68,398 | — | 69,592 | |||||||||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries | — | — | — | 8,489 | — | 8,489 | |||||||||||||||||
Net realized gains (losses) | — | — | 105 | 18,705 | — | 18,810 | |||||||||||||||||
Other income (expense) | 3,943 | 519 | (1,641 | ) | 1,974 | (214 | ) | 4,581 | |||||||||||||||
Net losses and loss adjustment expenses | (220,123 | ) | (103,217 | ) | (40,718 | ) | — | — | (364,058 | ) | |||||||||||||
Underwriting, policy acquisition and operating expenses | (79,252 | ) | (52,220 | ) | (19,786 | ) | (21,062 | ) | 214 | (172,106 | ) | ||||||||||||
Segregated portfolio cells dividend (expense) income (1)(2) | (5,026 | ) | (5,593 | ) | — | (3,457 | ) | — | (14,076 | ) | |||||||||||||
Interest expense | — | — | — | (12,402 | ) | — | (12,402 | ) | |||||||||||||||
Income tax benefit (expense)(2) | — | — | 495 | (4,962 | ) | — | (4,467 | ) | |||||||||||||||
Segment operating results | $ | 39,936 | $ | 9,280 | $ | (14,977 | ) | $ | 55,683 | $ | — | $ | 89,922 | ||||||||||
Significant non-cash items: | |||||||||||||||||||||||
Depreciation and amortization, net of accretion | $ | 5,350 | $ | 2,516 | $ | (14 | ) | $ | 13,172 | $ | — | $ | 21,024 |
Three Months Ended September 30, 2016 | |||||||||||||||||||||||
(In thousands) | Specialty P&C | Workers' Compensation | Lloyd's Syndicate | Corporate | Inter-segment Eliminations | Consolidated | |||||||||||||||||
Net premiums earned | $ | 116,199 | $ | 54,498 | $ | 14,578 | $ | — | $ | — | $ | 185,275 | |||||||||||
Net investment income | — | — | 351 | 24,910 | — | 25,261 | |||||||||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries | — | — | — | (3,349 | ) | — | (3,349 | ) | |||||||||||||||
Net realized gains (losses) | — | — | 50 | 15,687 | — | 15,737 | |||||||||||||||||
Other income (expense) | 1,012 | 86 | 734 | 15 | (419 | ) | 1,428 | ||||||||||||||||
Net losses and loss adjustment expenses | (72,311 | ) | (34,472 | ) | (11,299 | ) | — | — | (118,082 | ) | |||||||||||||
Underwriting, policy acquisition and operating expenses | (26,563 | ) | (18,331 | ) | (6,251 | ) | (5,086 | ) | 419 | (55,812 | ) | ||||||||||||
Segregated portfolio cells dividend (expense) income (1) | (94 | ) | (1,449 | ) | — | (1,653 | ) | — | (3,196 | ) | |||||||||||||
Interest expense | — | — | — | (3,748 | ) | — | (3,748 | ) | |||||||||||||||
Income tax benefit (expense) | — | — | (1,352 | ) | (8,328 | ) | — | (9,680 | ) | ||||||||||||||
Segment operating results | $ | 18,243 | $ | 332 | $ | (3,189 | ) | $ | 18,448 | $ | — | $ | 33,834 | ||||||||||
Significant non-cash items: | |||||||||||||||||||||||
Depreciation and amortization, net of accretion | $ | 1,979 | $ | 1,396 | $ | 23 | $ | 5,140 | $ | — | $ | 8,538 |
Nine Months Ended September 30, 2016 | |||||||||||||||||||||||
(In thousands) | Specialty P&C | Workers' Compensation | Lloyd's Syndicate | Corporate | Inter-segment Eliminations | Consolidated | |||||||||||||||||
Net premiums earned | $ | 335,080 | $ | 163,974 | $ | 40,533 | $ | — | $ | — | $ | 539,587 | |||||||||||
Net investment income | — | — | 1,004 | 74,280 | — | 75,284 | |||||||||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries | — | — | — | (6,607 | ) | — | (6,607 | ) | |||||||||||||||
Net realized gains (losses) | — | — | 59 | 18,255 | — | 18,314 | |||||||||||||||||
Other income (expense) | 4,021 | 696 | 1,174 | 758 | (686 | ) | 5,963 | ||||||||||||||||
Net losses and loss adjustment expenses | (205,787 | ) | (104,160 | ) | (25,989 | ) | — | — | (335,936 | ) | |||||||||||||
Underwriting, policy acquisition and operating expenses | (77,519 | ) | (52,494 | ) | (16,660 | ) | (20,748 | ) | 686 | (166,735 | ) | ||||||||||||
Segregated portfolio cells dividend (expense) income (1) | (94 | ) | (3,440 | ) | — | (2,361 | ) | — | (5,895 | ) | |||||||||||||
Interest expense | — | — | — | (11,285 | ) | — | (11,285 | ) | |||||||||||||||
Income tax benefit (expense) | — | — | (2,248 | ) | (14,209 | ) | — | (16,457 | ) | ||||||||||||||
Segment operating results | $ | 55,701 | $ | 4,576 | $ | (2,127 | ) | $ | 38,083 | $ | — | $ | 96,233 | ||||||||||
Significant non-cash items: | |||||||||||||||||||||||
Depreciation and amortization, net of accretion | $ | 5,475 | $ | 4,193 | $ | 132 | $ | 15,709 | $ | — | $ | 25,509 | |||||||||||
(1) During the first quarter of 2017, ProAssurance began reporting in the Corporate segment the portion of the SPC dividend (expense) income that is attributable to the investment results of the SPCs, all of which are reported in the Corporate segment, to better align the expense with the related investment results of the SPCs. For comparative purposes, ProAssurance has reflected the SPC dividend expense for 2016 in the same manner. | |||||||||||||||||||||||
(2) During the second quarter of 2017, ProAssurance recognized a $5.2 million pre-tax expense related to previously unrecognized SPC dividend expense for the cumulative earnings of unrelated parties that have owned segregated portfolio cells at various periods since 2003 in a Bermuda captive insurance operation managed by the Company's HCPL line of business within the Specialty P&C segment. The expense recorded in the second quarter of 2017 related to periods prior to the current period and is unrelated to the captive operations of the Company's Eastern Re subsidiary. The $1.8 million tax impact of the expense recognized in the second quarter of 2017 is included in the Corporate segment's income tax benefit (expense) for the 2017 nine-month period. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Specialty P&C Segment | |||||||||||||||
Gross premiums earned: | |||||||||||||||
Healthcare professional liability | $ | 125,377 | $ | 119,833 | $ | 358,209 | $ | 345,520 | |||||||
Legal professional liability | 6,483 | 6,492 | 19,217 | 19,599 | |||||||||||
Medical technology liability | 8,459 | 8,756 | 25,160 | 25,549 | |||||||||||
Other | 108 | 140 | 311 | 562 | |||||||||||
Ceded premiums earned | (22,096 | ) | (19,022 | ) | (62,503 | ) | (56,150 | ) | |||||||
Segment net premiums earned | 118,331 | 116,199 | 340,394 | 335,080 | |||||||||||
Workers' Compensation Segment | |||||||||||||||
Gross premiums earned: | |||||||||||||||
Traditional business | 43,492 | 42,582 | 127,761 | 127,426 | |||||||||||
Alternative market business | 20,200 | 18,502 | 59,855 | 55,601 | |||||||||||
Ceded premiums earned | (6,038 | ) | (6,586 | ) | (17,825 | ) | (19,053 | ) | |||||||
Segment net premiums earned | 57,654 | 54,498 | 169,791 | 163,974 | |||||||||||
Lloyd's Syndicate Segment | |||||||||||||||
Gross premiums earned: | |||||||||||||||
Property and casualty* | 18,790 | 16,387 | 52,935 | 43,619 | |||||||||||
Ceded premiums earned | (2,472 | ) | (1,809 | ) | (7,561 | ) | (3,086 | ) | |||||||
Segment net premiums earned | 16,318 | 14,578 | 45,374 | 40,533 | |||||||||||
Consolidated Net premiums earned | $ | 192,303 | $ | 185,275 | $ | 555,559 | $ | 539,587 |
Distribution by GAAP Fair Value Hierarchy | |||||||||
Level 1 | Level 2 | Level 3 | Not Categorized | Total Investments | |||||
Investments recorded at: | |||||||||
Fair value | 19% | 68% | 1% | 5% | 93% | ||||
Other valuations | 7% | ||||||||
Total Investments | 100% |
(In millions) | Carrying Value | GAAP Measurement Method | |||
Other investments: | |||||
Investments in LPs | $ | 48.5 | Cost | ||
Other, principally FHLB capital stock | 3.5 | Principally Cost | |||
52.0 | |||||
Investment in unconsolidated subsidiaries: | |||||
Investments in tax credit partnerships | 100.0 | Equity | |||
Equity method LPs/LLCs | 29.4 | Equity | |||
129.4 | |||||
BOLI | 61.7 | Cash surrender value | |||
Total investments - Other valuation methodologies | $ | 243.1 |
• | if there is intent to sell the security; |
• | if it is more likely than not that the security will be required to be sold before full recovery of its amortized cost basis; and |
• | if the entire amortized basis of the security is not expected to be recovered. |
• | third-party research and credit rating reports; |
• | the current credit standing of the issuer, including credit rating downgrades, whether before or after the balance sheet date; |
• | the extent to which the decline in fair value is attributable to credit risk specifically associated with the security or its issuer; |
• | internal assessments and the assessments of external portfolio managers regarding specific circumstances surrounding an investment, which indicate the investment is more or less likely to recover its amortized cost 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; and |
• | recoveries or additional declines in fair value subsequent to the balance sheet date. |
Nine Months Ended September 30 | |||||||
(In thousands) | 2017 vs 2016 | 2016 vs 2015 | |||||
Increase (decrease) in net cash provided (used) by: | |||||||
Operating activities | $ | (30,961 | ) | $ | 23,469 | ||
Investing activities | 396,030 | (314,046 | ) | ||||
Financing activities | (251,214 | ) | 174,078 | ||||
Increase (decrease) in Cash and cash equivalents | $ | 113,855 | $ | (116,499 | ) |
Professional Liability | Medical Technology & Life Sciences Products | Workers' Compensation - Traditional |
Per Occurrence Coverage | Aggregate Coverage |
• | Reinsurance is utilized on a per risk basis for the property insurance and casualty coverages in order to mitigate risk volatility. |
• | Catastrophic protection is utilized on both our property insurance and casualty coverages to protect against losses in excess of policy limits as well as natural catastrophes. |
• | Both quota share reinsurance and excess of loss reinsurance are utilized to manage the net loss exposure on our property reinsurance coverages. |
• | Property umbrella excess of loss reinsurance is utilized for peak catastrophe and frequency of catastrophe exposures. |
September 30, 2017 | December 31, 2016 | ||||||||||
($ in thousands) | Carrying Value | % of Total Investment | Carrying Value | % of Total Investment | |||||||
Fixed Maturities, Available for Sale | |||||||||||
U.S. Treasury obligations | $ | 148,372 | 4 | % | $ | 146,539 | 4 | % | |||
U.S. Government-sponsored enterprise obligations | 18,772 | 1 | % | 30,235 | 1 | % | |||||
State and municipal bonds | 693,398 | 19 | % | 800,463 | 20 | % | |||||
Corporate debt | 1,272,782 | 34 | % | 1,278,991 | 33 | % | |||||
Residential mortgage-backed securities | 201,691 | 5 | % | 217,906 | 5 | % | |||||
Commercial mortgage-backed securities | 28,025 | 1 | % | 32,394 | 1 | % | |||||
Other asset-backed securities | 105,310 | 3 | % | 106,878 | 3 | % | |||||
Total fixed maturities securities, available for sale | 2,468,350 | 67 | % | 2,613,406 | 67 | % | |||||
Equity securities, trading | 411,796 | 11 | % | 387,274 | 10 | % | |||||
Short-term investments | 294,379 | 8 | % | 442,084 | 11 | % | |||||
BOLI | 61,652 | 2 | % | 60,134 | 1 | % | |||||
Investment in unconsolidated subsidiaries | 331,897 | 9 | % | 340,906 | 9 | % | |||||
Other investments | 103,764 | 3 | % | 81,892 | 2 | % | |||||
Total Investments | $ | 3,671,838 | 100 | % | $ | 3,925,696 | 100 | % |
($ in thousands) | September 30, 2017 | December 31, 2016 | |||||||||
Rating* | Carrying Value | % of Fixed Maturities | Carrying Value | % of Fixed Maturities | |||||||
AAA | $ | 630,286 | 26 | % | $ | 676,815 | 26 | % | |||
AA+ | 199,761 | 8 | % | 213,892 | 8 | % | |||||
AA | 188,781 | 8 | % | 227,076 | 9 | % | |||||
AA- | 225,674 | 9 | % | 243,562 | 9 | % | |||||
A+ | 283,201 | 11 | % | 271,534 | 10 | % | |||||
A | 303,659 | 12 | % | 282,530 | 11 | % | |||||
A- | 196,333 | 8 | % | 221,139 | 9 | % | |||||
BBB+ | 123,972 | 5 | % | 132,705 | 5 | % | |||||
BBB | 112,461 | 5 | % | 115,867 | 4 | % | |||||
BBB- | 47,709 | 2 | % | 54,366 | 2 | % | |||||
Below investment grade | 124,605 | 5 | % | 146,071 | 6 | % | |||||
Not rated | 31,908 | 1 | % | 27,849 | 1 | % | |||||
Total | $ | 2,468,350 | 100 | % | $ | 2,613,406 | 100 | % | |||
*Average of three NRSRO sources, presented as an S&P equivalent. Source: S&P, Copyright ©2017, S&P Global Market Intelligence |
Carrying Value | September 30, 2017 | ||||||||||
($ in thousands, except expected funding period) | September 30, 2017 | December 31, 2016 | Unfunded Commitment | Expected funding period in years | |||||||
Qualified affordable housing project tax credit partnerships (1) | $ | 91,598 | $ | 102,313 | $ | 1,325 | 6 | ||||
Historic tax credit partnerships (2) | 8,355 | 11,459 | 3,642 | 2 | |||||||
Investment fund LPs/LLCs (2) | 280,449 | 273,986 | 165,947 | 6 | |||||||
Total | $ | 380,402 | $ | 387,758 | $ | 170,914 | |||||
(1) The carrying value reflects our total commitments (both funded and unfunded) to the partnerships, less any amortization, since our initial investment. We fund these investments based on funding schedules maintained by the partnerships. | |||||||||||
(2) The carrying value reflects our funded commitments less any amortization. |
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||
($ in thousands, except per share data) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||
Revenues: | ||||||||||||||||||||
Net premiums written | $ | 216,706 | $ | 205,775 | $ | 10,931 | $ | 596,584 | $ | 573,071 | $ | 23,513 | ||||||||
Net premiums earned | $ | 192,303 | $ | 185,275 | $ | 7,028 | $ | 555,559 | $ | 539,587 | $ | 15,972 | ||||||||
Net investment result | 27,893 | 21,912 | 5,981 | 78,081 | 68,677 | 9,404 | ||||||||||||||
Net realized investment gains (losses) | 7,749 | 15,737 | (7,988 | ) | 18,810 | 18,314 | 496 | |||||||||||||
Other income | 510 | 1,428 | (918 | ) | 4,581 | 5,963 | (1,382 | ) | ||||||||||||
Total revenues | 228,455 | 224,352 | 4,103 | 657,031 | 632,541 | 24,490 | ||||||||||||||
Expenses: | ||||||||||||||||||||
Net losses and loss adjustment expenses | 129,356 | 118,082 | 11,274 | 364,058 | 335,936 | 28,122 | ||||||||||||||
Underwriting, policy acquisition and operating expenses | 57,111 | 55,812 | 1,299 | 172,106 | 166,735 | 5,371 | ||||||||||||||
Segregated portfolio cells dividend expense (income) | 2,891 | 3,196 | (305 | ) | 14,076 | 5,895 | 8,181 | |||||||||||||
Interest expense | 4,124 | 3,748 | 376 | 12,402 | 11,285 | 1,117 | ||||||||||||||
Total expenses | 193,482 | 180,838 | 12,644 | 562,642 | 519,851 | 42,791 | ||||||||||||||
Income before income taxes | 34,973 | 43,514 | (8,541 | ) | 94,389 | 112,690 | (18,301 | ) | ||||||||||||
Income tax expense (benefit) | 6,024 | 9,680 | (3,656 | ) | 4,467 | 16,457 | (11,990 | ) | ||||||||||||
Net income | $ | 28,949 | $ | 33,834 | $ | (4,885 | ) | $ | 89,922 | $ | 96,233 | $ | (6,311 | ) | ||||||
Operating income | $ | 24,263 | $ | 24,437 | $ | (174 | ) | $ | 79,020 | $ | 85,398 | $ | (6,378 | ) | ||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ | 0.54 | $ | 0.64 | $ | (0.10 | ) | $ | 1.68 | $ | 1.81 | $ | (0.13 | ) | ||||||
Diluted | $ | 0.54 | $ | 0.63 | $ | (0.09 | ) | $ | 1.68 | $ | 1.80 | $ | (0.12 | ) | ||||||
Operating earnings per share: | ||||||||||||||||||||
Basic | $ | 0.45 | $ | 0.46 | $ | (0.01 | ) | $ | 1.48 | $ | 1.61 | $ | (0.13 | ) | ||||||
Diluted | $ | 0.45 | $ | 0.46 | $ | (0.01 | ) | $ | 1.47 | $ | 1.60 | $ | (0.13 | ) | ||||||
Net loss ratio | 67.3 | % | 63.7 | % | 3.6 | pts | 65.5 | % | 62.3 | % | 3.2 | pts | ||||||||
Underwriting expense ratio | 29.7 | % | 30.1 | % | (0.4 | ) | pts | 31.0 | % | 30.9 | % | 0.1 | pts | |||||||
Combined ratio | 97.0 | % | 93.8 | % | 3.2 | pts | 96.5 | % | 93.2 | % | 3.3 | pts | ||||||||
Operating ratio | 84.7 | % | 80.2 | % | 4.5 | pts | 84.0 | % | 79.2 | % | 4.8 | pts | ||||||||
Effective tax rate | 17.2 | % | 22.2 | % | (5.0 | ) | pts | 4.7 | % | 14.6 | % | (9.9 | ) | pts | ||||||
Return on equity* | 6.3 | % | 6.6 | % | (0.3 | ) | pts | 6.6 | % | 6.4 | % | 0.2 | pts | |||||||
*Annualized | ||||||||||||||||||||
In all tables that follow, the abbreviation "nm" indicates that the information or the percentage change is not meaningful. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Net premiums earned | |||||||||||||||||||||||||||||
Specialty P&C | $ | 118,331 | $ | 116,199 | $ | 2,132 | 1.8 | % | $ | 340,394 | $ | 335,080 | $ | 5,314 | 1.6 | % | |||||||||||||
Workers' Compensation | 57,654 | 54,498 | 3,156 | 5.8 | % | 169,791 | 163,974 | 5,817 | 3.5 | % | |||||||||||||||||||
Lloyd's Syndicate | 16,318 | 14,578 | 1,740 | 11.9 | % | 45,374 | 40,533 | 4,841 | 11.9 | % | |||||||||||||||||||
Consolidated total | $ | 192,303 | $ | 185,275 | $ | 7,028 | 3.8 | % | $ | 555,559 | $ | 539,587 | $ | 15,972 | 3.0 | % |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Net investment income | $ | 23,729 | $ | 25,261 | $ | (1,532 | ) | (6.1 | %) | $ | 69,592 | $ | 75,284 | $ | (5,692 | ) | (7.6 | %) | |||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries | 4,164 | (3,349 | ) | 7,513 | 224.3 | % | 8,489 | (6,607 | ) | 15,096 | 228.5 | % | |||||||||||||||||
Net investment result | $ | 27,893 | $ | 21,912 | $ | 5,981 | 27.3 | % | $ | 78,081 | $ | 68,677 | $ | 9,404 | 13.7 | % |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||
($ in millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||
Current accident year net loss ratio | |||||||||||||||||||||||||
Consolidated ratio | 84.1 | % | 79.4 | % | 4.7 | pts | 81.7 | % | 79.8 | % | 1.9 | pts | |||||||||||||
Specialty P&C | 87.8 | % | 88.1 | % | (0.3 | ) | pts | 88.7 | % | 88.3 | % | 0.4 | pts | ||||||||||||
Workers' Compensation | 64.8 | % | 66.6 | % | (1.8 | ) | pts | 65.3 | % | 65.9 | % | (0.6 | ) | pts | |||||||||||
Lloyd's Syndicate | 124.6 | % | 58.1 | % | 66.5 | pts | 91.0 | % | 65.0 | % | 26.0 | pts | |||||||||||||
Calendar year net loss ratio | |||||||||||||||||||||||||
Consolidated ratio | 67.3 | % | 63.7 | % | 3.6 | pts | 65.5 | % | 62.3 | % | 3.2 | pts | |||||||||||||
Specialty P&C | 62.4 | % | 62.2 | % | 0.2 | pts | 64.7 | % | 61.4 | % | 3.3 | pts | |||||||||||||
Workers' Compensation | 60.8 | % | 63.3 | % | (2.5 | ) | pts | 60.8 | % | 63.5 | % | (2.7 | ) | pts | |||||||||||
Lloyd's Syndicate | 125.3 | % | 77.5 | % | 47.8 | pts | 89.7 | % | 64.1 | % | 25.6 | pts | |||||||||||||
Favorable (unfavorable) net loss development, prior accident years | |||||||||||||||||||||||||
Consolidated | $ | 32.3 | $ | 29.0 | $ | 3.3 | $ | 90.1 | $ | 94.5 | $ | (4.4 | ) | ||||||||||||
Specialty P&C | $ | 30.1 | $ | 30.0 | $ | 0.1 | $ | 81.9 | $ | 90.2 | $ | (8.3 | ) | ||||||||||||
Workers' Compensation | $ | 2.3 | $ | 1.8 | $ | 0.5 | $ | 7.6 | $ | 3.9 | $ | 3.7 | |||||||||||||
Lloyd's Syndicate | $ | (0.1 | ) | $ | (2.8 | ) | $ | 2.7 | $ | 0.6 | $ | 0.4 | $ | 0.2 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||
Underwriting Expense Ratio | |||||||||||||||||||
Consolidated | 29.7 | % | 30.1 | % | (0.4 | ) | pts | 31.0 | % | 30.9 | % | 0.1 | pts | ||||||
Specialty P&C | 22.8 | % | 22.9 | % | (0.1 | ) | pts | 23.3 | % | 23.1 | % | 0.2 | pts | ||||||
Workers' Compensation | 32.0 | % | 33.6 | % | (1.6 | ) | pts | 30.8 | % | 32.0 | % | (1.2 | ) | pts | |||||
Lloyd's Syndicate | 41.2 | % | 42.9 | % | (1.7 | ) | pts | 43.6 | % | 41.1 | % | 2.5 | pts | ||||||
Corporate* | 2.6 | % | 2.7 | % | (0.1 | ) | pts | 3.8 | % | 3.8 | % | — | pts | ||||||
* There are no Net premiums earned associated with the Corporate segment. Ratio shown is the contribution of the Corporate segment to the consolidated ratio (Corporate operating expenses divided by consolidated Net premium earned). |
Book Value Per Share | |||
Book Value Per Share at December 31, 2016 | $ | 33.78 | |
Increase (decrease) to book value per share during the nine months ended September 30, 2017 attributable to: | |||
Dividends declared | (0.93 | ) | |
Net income | 1.68 | ||
Increase in AOCI | 0.15 | ||
Other | (0.03 | ) | |
Book Value Per Share at September 30, 2017 | $ | 34.65 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income | $ | 28,949 | $ | 33,834 | $ | 89,922 | $ | 96,233 | |||||||
Items excluded in the calculation of operating income: | |||||||||||||||
Net realized investment (gains) losses | (7,749 | ) | (15,737 | ) | (18,810 | ) | (18,314 | ) | |||||||
Net realized gains (losses) attributable to SPCs which no profit/loss is retained (1) | 764 | 1,189 | 2,191 | 1,502 | |||||||||||
Guaranty fund assessments (recoupments) | (225 | ) | 91 | (154 | ) | 143 | |||||||||
Pre-tax effect of exclusions | (7,210 | ) | (14,457 | ) | (16,773 | ) | (16,669 | ) | |||||||
Tax effect, at 35% (2) | 2,524 | 5,060 | 5,871 | 5,834 | |||||||||||
Operating income | $ | 24,263 | $ | 24,437 | $ | 79,020 | $ | 85,398 | |||||||
Per diluted common share: | |||||||||||||||
Net income | $ | 0.54 | $ | 0.63 | $ | 1.68 | $ | 1.80 | |||||||
Effect of exclusions | (0.09 | ) | (0.17 | ) | (0.21 | ) | (0.20 | ) | |||||||
Operating income per diluted common share | $ | 0.45 | $ | 0.46 | $ | 1.47 | $ | 1.60 | |||||||
(1) Net realized investment gains (losses) on investments related to our SPCs are recognized in the earnings of our Corporate segment and the portion of earnings related to the gain or loss, net of our participation, is distributed back to the cells through our SPC dividend expense (income). To be consistent with our exclusion of Net realized investment gains (losses) recognized in earnings, we are excluding the portion of Net realized investment gains (losses) that is included in SPC dividend expense (income). | |||||||||||||||
(2) The 35% rate above is the annual expected incremental tax rate associated with the taxable or tax deductible items listed. We record the provision for income taxes in our interim financial statements based upon our estimated annual effective tax rate. The effective tax rate for the period was applied to these items in calculating Net income. See previous discussion in this section under the heading "Taxes." |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||
Net premiums written | $ | 143,286 | $ | 134,989 | $ | 8,297 | 6.1 | % | $ | 367,112 | $ | 354,510 | $ | 12,602 | 3.6 | % | |||||||||
Net premiums earned | $ | 118,331 | $ | 116,199 | $ | 2,132 | 1.8 | % | $ | 340,394 | $ | 335,080 | $ | 5,314 | 1.6 | % | |||||||||
Other income | 1,276 | 1,012 | 264 | 26.1 | % | 3,943 | 4,021 | (78 | ) | (1.9 | %) | ||||||||||||||
Net losses and loss adjustment expenses | (73,831 | ) | (72,311 | ) | (1,520 | ) | 2.1 | % | (220,123 | ) | (205,787 | ) | (14,336 | ) | 7.0 | % | |||||||||
Underwriting, policy acquisition and operating expenses | (27,037 | ) | (26,563 | ) | (474 | ) | 1.8 | % | (79,252 | ) | (77,519 | ) | (1,733 | ) | 2.2 | % | |||||||||
Segregated portfolio cells dividend (expense) income | 65 | (94 | ) | 159 | (169.1 | %) | (5,026 | ) | (94 | ) | (4,932 | ) | 5,246.8 | % | |||||||||||
Segment operating results | $ | 18,804 | $ | 18,243 | $ | 561 | 3.1 | % | $ | 39,936 | $ | 55,701 | $ | (15,765 | ) | (28.3 | %) | ||||||||
Net loss ratio | 62.4% | 62.2% | 0.2 | pts | 64.7% | 61.4% | 3.3 | pts | |||||||||||||||||
Underwriting expense ratio | 22.8% | 22.9% | (0.1 | ) | pts | 23.3% | 23.1% | 0.2 | pts |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Gross premiums written | $ | 166,284 | $ | 155,838 | $ | 10,446 | 6.7 | % | $ | 428,032 | $ | 410,201 | $ | 17,831 | 4.3 | % | |||||||||||||
Less: Ceded premiums written | 22,998 | 20,849 | 2,149 | 10.3 | % | 60,920 | 55,691 | 5,229 | 9.4 | % | |||||||||||||||||||
Net premiums written | $ | 143,286 | $ | 134,989 | $ | 8,297 | 6.1 | % | $ | 367,112 | $ | 354,510 | $ | 12,602 | 3.6 | % |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Professional liability | |||||||||||||||||||||||||||||
Physicians (1)(7) | |||||||||||||||||||||||||||||
Twelve month term | $ | 112,980 | $ | 105,524 | $ | 7,456 | 7.1 | % | $ | 277,975 | $ | 268,401 | $ | 9,574 | 3.6 | % | |||||||||||||
Twenty-four month term | 8,229 | 5,561 | 2,668 | 48.0 | % | 23,726 | 18,665 | 5,061 | 27.1 | % | |||||||||||||||||||
Total Physicians | 121,209 | 111,085 | 10,124 | 9.1 | % | 301,701 | 287,066 | 14,635 | 5.1 | % | |||||||||||||||||||
Healthcare facilities (2)(7) | 11,213 | 13,056 | (1,843 | ) | (14.1 | %) | 36,821 | 36,827 | (6 | ) | — | % | |||||||||||||||||
Other healthcare providers (3) | 9,844 | 9,686 | 158 | 1.6 | % | 25,416 | 25,033 | 383 | 1.5 | % | |||||||||||||||||||
Legal professionals (4) | 6,381 | 6,402 | (21 | ) | (0.3 | %) | 20,787 | 20,824 | (37 | ) | (0.2 | %) | |||||||||||||||||
Tail coverages (5) | 9,434 | 6,845 | 2,589 | 37.8 | % | 17,600 | 14,722 | 2,878 | 19.5 | % | |||||||||||||||||||
Total professional liability | 158,081 | 147,074 | 11,007 | 7.5 | % | 402,325 | 384,472 | 17,853 | 4.6 | % | |||||||||||||||||||
Medical technology liability (6) | 8,082 | 8,625 | (543 | ) | (6.3 | %) | 25,401 | 25,358 | 43 | 0.2 | % | ||||||||||||||||||
Other | 121 | 139 | (18 | ) | (12.9 | %) | 306 | 371 | (65 | ) | (17.5 | %) | |||||||||||||||||
Total | $ | 166,284 | $ | 155,838 | $ | 10,446 | 6.7 | % | $ | 428,032 | $ | 410,201 | $ | 17,831 | 4.3 | % |
(1) | Physician policies were our greatest source of premium revenues in both 2017 and 2016. The increase in twelve month term policies during the 2017 three- and nine-month periods was driven by timing differences related to the renewal of a few large policies during the current quarter. After removing the impact of those renewal timing differences, gross premiums written were slightly down for the 2017 three-month period and higher for the 2017 nine-month period as compared to the same respective periods of 2016. The remaining increase in the 2017 nine-month period was primarily due to new business written and the growth in exposure of one large insured during the first quarter of 2017, largely offset by retention losses. In addition, written premium in both periods reflected an increase in renewal pricing, driven by an increase in exposures for a few large policies. We offer twenty-four month term policies to our physician insureds in one selected jurisdiction. The increase in twenty-four month premium, as compared to 2016, primarily reflected the normal cycle of renewals (policies subject to renewal in 2017 were previously written in 2015 rather than in 2016). |
(2) | Our healthcare facilities premium (which includes hospitals, surgery centers and other facilities) for the 2017 three-month period was increased by new business written, somewhat offset by retention losses. However, gross premiums written declined slightly for the 2017 three-month period due to the impact of timing differences related to when new business was recorded in 2016 related to more complex policies. The slight decline during the 2017 nine-month period was primarily due to the timing difference for the renewal of one large policy. After removing the impact of this renewal timing difference, gross premiums written was higher for the 2017 nine-month period as compared to the same respective period of 2016. The remaining increase was primarily due to new business written, including one large policy during the second quarter of 2017, largely offset by retention losses. Renewal pricing increased during the 2017 three- and nine-month periods due to changes in loss experience related to a few large policies. |
(3) | Our other healthcare providers are primarily dentists, chiropractors and allied health professionals. |
(4) | Our legal professionals policies are primarily individual and small group policies in select areas of practice. The slight decline during the 2017 three- and nine-month periods was primarily due to retention losses, offset by new business written and, to a lesser extent, an increase in the rate charged for certain renewed policies. Retention losses in both periods are primarily driven by competitive market conditions. |
(5) | We offer extended reporting endorsement or "tail" coverage to insureds who discontinue or otherwise modify aspects of their claims-made coverage with us. The amount of tail coverage premium written can vary widely from period to period. The increase during the 2017 three- and nine-month periods was driven by the purchase of tail coverage for a few large claims-made policies in one jurisdiction that were rewritten to occurrence coverage during the current quarter. These policies are a part of one of our shared risk arrangements and therefore, a large portion of the premium written was ceded during the current quarter (see further discussion in the Ceded Premiums Written section that follows). |
(6) | Our medical technology liability business is marketed throughout the U.S.; coverage is offered on a primary basis, within specified limits, to manufacturers and distributors of medical technology and life sciences products including entities conducting human clinical trials. In addition to the previously listed factors that affect our premium volume, our medical |
(7) | During 2016, we expanded our alternative market solutions by writing new healthcare premium in certain SPCs at Eastern Re. We wrote approximately $1.2 million of healthcare professional liability premium in our physicians line of business in each of the 2017 and 2016 nine-month periods. We wrote healthcare professional liability premium in our healthcare facilities line of business of approximately $0.4 million and $3.0 million in the 2017 three- and nine-month periods, respectively, and approximately $0.4 million and $2.3 million in the 2016 three- and nine-month periods, respectively. All or a portion of the premium written was ceded to the SPCs at our wholly owned Cayman Islands reinsurance subsidiary, Eastern Re. Under the SPC structure, the operating results of each cell, net of any participation we have taken in the SPCs, accrue to the benefit of the external owners of that cell. Our Specialty P&C segment does not currently participate in the cells that write HCPL premium, and therefore retains no underwriting profit or loss. Additional information regarding the SPCs is included in the Underwriting, Policy Acquisition and Operating Expense section that follows. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Physicians | $ | 7.0 | $ | 6.9 | $ | 17.9 | $ | 23.6 | |||||||
Healthcare facilities | 1.9 | 0.9 | 5.0 | 9.1 | |||||||||||
Other healthcare providers | 0.7 | 0.6 | 1.8 | 1.9 | |||||||||||
Legal professionals | 1.0 | 0.9 | 2.8 | 3.3 | |||||||||||
Medical technology liability | 0.8 | 0.8 | 3.5 | 3.8 | |||||||||||
Total | $ | 11.4 | $ | 10.1 | $ | 31.0 | $ | 41.7 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Physicians | 90 | % | 89 | % | 90 | % | 89 | % | |||
Healthcare facilities | 82 | % | 77 | % | 87 | % | 80 | % | |||
Other healthcare providers | 83 | % | 85 | % | 85 | % | 86 | % | |||
Legal professionals* | 82 | % | 87 | % | 83 | % | 78 | % | |||
Medical technology liability* | 86 | % | 90 | % | 85 | % | 87 | % | |||
* See Gross Premiums Written section for further explanation of retention decline in 2017. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||
2017 | 2017 | ||||
Physicians* | 2 | % | 2 | % | |
Healthcare facilities* | 16 | % | 9 | % | |
Other healthcare providers | 3 | % | 2 | % | |
Legal professionals | 2 | % | 3 | % | |
Medical technology liability | 1 | % | 1 | % | |
* See Gross Premiums Written section for further explanation of renewal pricing increase in 2017. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||
Excess of loss reinsurance arrangements (1) | $ | 8,805 | $ | 8,557 | $ | 248 | 2.9 | % | $ | 25,845 | $ | 23,881 | $ | 1,964 | 8.2 | % | |||||||
Premium ceded to Syndicate 1729 (2) | 2,416 | 4,656 | (2,240 | ) | (48.1 | %) | 8,906 | 13,767 | (4,861 | ) | (35.3 | %) | |||||||||||
Other shared risk arrangements (3) | 13,258 | 9,393 | 3,865 | 41.1 | % | 27,923 | 23,956 | 3,967 | 16.6 | % | |||||||||||||
Other ceded premiums written | 1,039 | 938 | 101 | 10.8 | % | 2,726 | 1,612 | 1,114 | 69.1 | % | |||||||||||||
Adjustment to premiums owed under reinsurance agreements, prior accident years, net (4) | (2,520 | ) | (2,695 | ) | 175 | (6.5 | %) | (4,480 | ) | (7,525 | ) | 3,045 | 40.5 | % | |||||||||
Total ceded premiums written | $ | 22,998 | $ | 20,849 | $ | 2,149 | 10.3 | % | $ | 60,920 | $ | 55,691 | $ | 5,229 | 9.4 | % |
(1) | We generally reinsure risks under our excess of loss reinsurance arrangements pursuant to which the reinsurers agree to assume all or a portion of all risks that we insure above our individual risk retention levels, up to the maximum individual limits offered. In the majority of our excess of loss reinsurance arrangements, the premium due to the reinsurer is determined by the loss experience of the business reinsured, subject to certain minimum and maximum amounts. The increase in ceded premiums written under our excess of loss reinsurance arrangements for the 2017 three- and nine-month periods primarily reflected adjustments to the premiums we expect to owe our reinsurers based upon adjustments to our estimates of losses that are attributable to our reinsurance partners. For the 2017 three- and nine-month periods, we increased our estimate of premiums we expect to owe our reinsurers whereas in the 2016 three- and nine-month periods we decreased this estimate. |
(2) | As previously discussed, we are a 58% participant in Syndicate 1729 and record our pro rata share of its operating results in our Lloyd's Syndicate segment on a quarter delay. We also record the cession to the Lloyd's Syndicate segment from our Specialty P&C segment on a quarter delay as the amounts are not material and this permits the cession to be reported by both the Lloyd's Syndicate segment and the Specialty P&C segment in the same reporting period. The decrease in ceded premiums to Syndicate 1729 for the 2017 three- and nine-month periods reflected the revised contract terms effective January 1, 2017 which reduced the premiums ceded by essentially half. See Lloyd's Syndicate segment results for further discussion on revisions to the quota share agreement as of the most recent renewal date. As our premiums are earned, we recognize the related ceding commission income which reduces underwriting expense by offsetting DPAC amortization. For the 2017 and 2016 three- and nine-month periods the related ceding commission income was approximately 27% of ceded premiums written. For our consolidated results, eliminations of the inter-segment portion (58% of the Specialty P&C cession) of the transactions are also recorded on a quarter delay. |
(3) | We have entered into various shared risk arrangements, including quota share, fronting, and captive arrangements, with certain large healthcare systems and other insurance entities. These arrangements include our Ascension Health and CAPAssurance programs. While we cede a large portion of the premium written under these arrangements, they provide us an opportunity to grow net premium through strategic partnerships. The increase in the 2017 three- and nine-month periods was primarily driven by a few large tail endorsements that were written, and substantially ceded, during the current quarter related to one of these shared risk arrangements, as previously discussed. The remaining increase in both periods was due to growth in our Ascension Health and CAPAssurance programs. |
(4) | Given the length of time that it takes to resolve our claims, many years may elapse before all losses recoverable under a reinsurance arrangement are known. As a part of the process of estimating our loss reserve we also make estimates regarding the amounts recoverable under our reinsurance arrangements. As previously discussed, the premiums ultimately ceded under certain of our excess of loss reinsurance arrangements are subject to the losses ceded under the arrangements. For the 2017 and 2016 three- and nine-month periods, we reduced our estimate of expected losses and associated recoveries for prior year ceded losses, as well as our estimate of ceded premiums owed to reinsurers. The change in the adjustment to ceded premiums owed to reinsurers for the 2017 nine-month period as compared to the same period of 2016 was due to the overall change in expected loss recoveries attributable to one large claim during the second quarter of 2017. We do not believe this isolated claim indicates a change in overall loss trends for us or the industry. Changes to estimates of premiums ceded related to prior accident years are fully earned in the period the changes in estimates occur. |
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||
Ceded premiums ratio, as reported | 13.8 | % | 13.4 | % | 0.4 | pts | 14.2 | % | 13.6 | % | 0.6 | pts | ||||
Less the effect of adjustments in premiums owed under reinsurance agreements, prior accident years (as previously discussed) | (1.5 | %) | (1.7 | %) | 0.2 | pts | (1.0 | %) | (1.8 | %) | 0.8 | pts | ||||
Ratio, current accident year | 15.3 | % | 15.1 | % | 0.2 | pts | 15.2 | % | 15.4 | % | (0.2 | ) | pts |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Gross premiums earned | $ | 140,427 | $ | 135,221 | $ | 5,206 | 3.8 | % | $ | 402,897 | $ | 391,230 | $ | 11,667 | 3.0 | % | |||||||||||||
Less: Ceded premiums earned | 22,096 | 19,022 | 3,074 | 16.2 | % | 62,503 | 56,150 | 6,353 | 11.3 | % | |||||||||||||||||||
Net premiums earned | $ | 118,331 | $ | 116,199 | $ | 2,132 | 1.8 | % | $ | 340,394 | $ | 335,080 | $ | 5,314 | 1.6 | % |
Net Loss Ratios (1) | |||||||||||||||||||
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||
Calendar year net loss ratio | 62.4 | % | 62.2 | % | 0.2 | pts | 64.7 | % | 61.4 | % | 3.3 | pts | |||||||
Less impact of prior accident years on the net loss ratio | (25.4 | %) | (25.9 | %) | 0.5 | pts | (24.0 | %) | (26.9 | %) | 2.9 | pts | |||||||
Current accident year net loss ratio | 87.8 | % | 88.1 | % | (0.3 | ) | pts | 88.7 | % | 88.3 | % | 0.4 | pts | ||||||
Less estimated ratio increase (decrease) attributable to: | |||||||||||||||||||
Ceded premium adjustments, prior accident years (2) | (1.9 | %) | (2.1 | %) | 0.2 | pts | (1.2 | %) | (2.0 | %) | 0.8 | pts | |||||||
Current accident year net loss ratio, excluding the effect of prior year ceded premium (3) | 89.7 | % | 90.2 | % | (0.5 | ) | pts | 89.9 | % | 90.3 | % | (0.4 | ) | pts |
(1) | Net losses, as specified, divided by net premiums earned. |
(2) | Reductions to premiums owed under reinsurance agreements for prior accident years increased Net premiums earned (the denominator of the current accident year ratio) for the 2017 and 2016 three- and nine-month periods. See the discussion in the Premiums section for our Specialty P&C segment under the heading "Ceded Premiums Written" for additional information. |
(3) | The decline in the current accident year net loss ratio for the 2017 three-month period primarily reflected changes in the mix of business. For the 2017 nine-month period, the decline reflected an increase in our estimate of losses ultimately recoverable from our reinsurance partners and changes in expected loss costs related to mass tort litigation. While we increased our reserves related to mass tort litigation in both the 2017 and 2016 nine-month periods, the increase was substantially less in the 2017 nine-month period and resulted in an 0.3 percentage point decrease to the current accident year net loss ratio in the 2017 nine-month period. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Specialty P&C segment: | |||||||||||||||||||||||||||||
DPAC amortization | $ | 12,405 | $ | 10,901 | $ | 1,504 | 13.8 | % | $ | 35,350 | $ | 32,854 | $ | 2,496 | 7.6 | % | |||||||||||||
Management fees | 2,004 | 1,832 | 172 | 9.4 | % | 5,156 | 4,928 | 228 | 4.6 | % | |||||||||||||||||||
Other underwriting and operating expenses | 12,628 | 13,830 | (1,202 | ) | (8.7 | %) | 38,746 | 39,737 | (991 | ) | (2.5 | %) | |||||||||||||||||
Total | $ | 27,037 | $ | 26,563 | $ | 474 | 1.8 | % | $ | 79,252 | $ | 77,519 | $ | 1,733 | 2.2 | % |
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||
Underwriting expense ratio | 22.8 | % | 22.9 | % | (0.1 | ) | pts | 23.3 | % | 23.1 | % | 0.2 | pts |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
(In thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||
SPC dividend (expense) income | $ | 65 | $ | (94 | ) | $ | 159 | $ | (5,026 | ) | $ | (94 | ) | $ | (4,932 | ) |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||
Net premiums written | $ | 54,647 | $ | 54,444 | $ | 203 | 0.4 | % | $ | 184,917 | $ | 175,986 | $ | 8,931 | 5.1 | % | |||||||
Net premiums earned | $ | 57,654 | $ | 54,498 | $ | 3,156 | 5.8 | % | $ | 169,791 | $ | 163,974 | $ | 5,817 | 3.5 | % | |||||||
Other income | 164 | 86 | 78 | 90.7 | % | 519 | 696 | (177 | ) | (25.4 | %) | ||||||||||||
Net losses and loss adjustment expenses | (35,081 | ) | (34,472 | ) | (609 | ) | 1.8 | % | (103,217 | ) | (104,160 | ) | 943 | (0.9 | %) | ||||||||
Underwriting, policy acquisition and operating expenses | (18,434 | ) | (18,331 | ) | (103 | ) | 0.6 | % | (52,220 | ) | (52,494 | ) | 274 | (0.5 | %) | ||||||||
Segregated portfolio cells dividend (expense) income (1) | (1,722 | ) | (1,449 | ) | (273 | ) | 18.8 | % | (5,593 | ) | (3,440 | ) | (2,153 | ) | 62.6 | % | |||||||
Segment operating results | $ | 2,581 | $ | 332 | $ | 2,249 | 677.4 | % | $ | 9,280 | $ | 4,576 | $ | 4,704 | 102.8 | % | |||||||
Net loss ratio | |||||||||||||||||||||||
Traditional business | 65.2% | 66.5% | (1.3 | ) | pts | 65.0% | 66.5% | (1.5 | ) | pts | |||||||||||||
Alternative market business | 49.7% | 54.3% | (4.6 | ) | pts | 49.8% | 55.0% | (5.2 | ) | pts | |||||||||||||
Segment results | 60.8% | 63.3% | (2.5 | ) | pts | 60.8% | 63.5% | (2.7 | ) | pts | |||||||||||||
Underwriting expense ratio | |||||||||||||||||||||||
Traditional business | 32.5% | 34.6% | (2.1 | ) | pts | 30.8% | 32.4% | (1.6 | ) | pts | |||||||||||||
Alternative market business | 30.6% | 31.0% | (0.4 | ) | pts | 30.7% | 31.0% | (0.3 | ) | pts | |||||||||||||
Segment results | 32.0% | 33.6% | (1.6 | ) | pts | 30.8% | 32.0% | (1.2 | ) | pts | |||||||||||||
(1) Represents the underwriting profit (loss) attributable to the alternative market business ceded to the SPCs at Eastern Re, net of our participation. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||
Gross premiums written | |||||||||||||||||||||||
Traditional business* | $ | 42,592 | $ | 43,225 | $ | (633 | ) | (1.5 | %) | $ | 139,614 | $ | 136,407 | $ | 3,207 | 2.4 | % | ||||||
Alternative market business | 17,091 | 16,685 | 406 | 2.4 | % | 63,623 | 58,013 | 5,610 | 9.7 | % | |||||||||||||
Segment results | 59,683 | 59,910 | (227 | ) | (0.4 | %) | 203,237 | 194,420 | 8,817 | 4.5 | % | ||||||||||||
Less: Ceded premiums written | |||||||||||||||||||||||
Traditional business | 2,193 | 2,851 | (658 | ) | (23.1 | %) | 5,956 | 7,174 | (1,218 | ) | (17.0 | %) | |||||||||||
Alternative market business* | 2,843 | 2,615 | 228 | 8.7 | % | 12,364 | 11,260 | 1,104 | 9.8 | % | |||||||||||||
Segment results | 5,036 | 5,466 | (430 | ) | (7.9 | %) | 18,320 | 18,434 | (114 | ) | (0.6 | %) | |||||||||||
Net premiums written | |||||||||||||||||||||||
Traditional business | 40,399 | 40,374 | 25 | 0.1 | % | 133,658 | 129,233 | 4,425 | 3.4 | % | |||||||||||||
Alternative market business | 14,248 | 14,070 | 178 | 1.3 | % | 51,259 | 46,753 | 4,506 | 9.6 | % | |||||||||||||
Segment results | $ | 54,647 | $ | 54,444 | $ | 203 | 0.4 | % | $ | 184,917 | $ | 175,986 | $ | 8,931 | 5.1 | % | |||||||
* Traditional gross premiums written and alternative market ceded premiums written are reported net of alternative market premiums assumed by our traditional business totaling $0.2 million and $0.5 million for the 2017 three- and nine-month periods, respectively, and $0.2 million and $0.7 million for the same respective periods of 2016. |
Three Months Ended September 30 | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
($ in millions) | Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | |||||||||||||
New business | $ | 7.1 | $ | 2.1 | $ | 9.2 | $ | 5.3 | $ | 1.5 | $ | 6.8 | |||||||
Audit premium (including EBUB) | $ | 0.4 | $ | 0.3 | $ | 0.7 | $ | 1.5 | $ | — | $ | 1.5 | |||||||
Retention rate (1) | 85 | % | 92 | % | 87 | % | 81 | % | 88 | % | 83 | % | |||||||
Change in renewal pricing (2) | (5 | %) | (4 | %) | (5 | %) | (4 | %) | (2 | %) | (3 | %) |
Nine Months Ended September 30 | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
($ in millions) | Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | |||||||||||||
New business | $ | 24.2 | $ | 8.5 | $ | 32.7 | $ | 15.1 | $ | 7.7 | $ | 22.8 | |||||||
Audit premium (including EBUB) | $ | 2.1 | $ | 0.7 | $ | 2.8 | $ | 4.2 | $ | 0.4 | $ | 4.6 | |||||||
Retention rate (1) | 86 | % | 94 | % | 88 | % | 83 | % | 88 | % | 84 | % | |||||||
Change in renewal pricing (2) | (4 | %) | (4 | %) | (4 | %) | (2 | %) | (1 | %) | (1 | %) | |||||||
(1) We calculate our workers' compensation retention rate as annualized expiring renewed premium divided by all annualized expiring premium subject to renewal. Our retention rate can be impacted by various factors, including price or other competitive issues, insureds being acquired, or a decision not to renew based on our underwriting evaluation. | |||||||||||||||||||
(2) The pricing of our business includes an assessment of the underlying policy exposure and the effects of current market conditions. We continue to base our pricing on expected losses, as indicated by our historical loss data. The renewal rate decreases reflected the competitive workers’ compensation environment and the impact of loss cost reductions due to declining frequency trends in certain states in which we do business. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||
Premiums ceded to external reinsurers | |||||||||||||||||||||||
Traditional business | $ | 2,573 | $ | 2,896 | $ | (323 | ) | (11.2 | %) | $ | 6,928 | $ | 7,498 | $ | (570 | ) | (7.6 | %) | |||||
Alternative market business | 1,783 | 1,725 | 58 | 3.4 | % | 6,401 | 5,606 | 795 | 14.2 | % | |||||||||||||
Segment results | 4,356 | 4,621 | (265 | ) | (5.7 | %) | 13,329 | 13,104 | 225 | 1.7 | % | ||||||||||||
Change in return premium estimate under external reinsurance | |||||||||||||||||||||||
Traditional business | (380 | ) | (45 | ) | (335 | ) | 744.4 | % | (972 | ) | (324 | ) | (648 | ) | (200.0 | %) | |||||||
Alternative market business | — | — | — | nm | — | — | — | nm | |||||||||||||||
Segment results | (380 | ) | (45 | ) | (335 | ) | 744.4 | % | (972 | ) | (324 | ) | (648 | ) | (200.0 | %) | |||||||
Premiums ceded to unaffiliated captive insurers | |||||||||||||||||||||||
Traditional business | — | — | — | nm | — | — | — | nm | |||||||||||||||
Alternative market business | 1,060 | 890 | 170 | 19.1 | % | 5,963 | 5,654 | 309 | 5.5 | % | |||||||||||||
Segment results | 1,060 | 890 | 170 | 19.1 | % | 5,963 | 5,654 | 309 | 5.5 | % | |||||||||||||
Total ceded premiums written | |||||||||||||||||||||||
Traditional business | 2,193 | 2,851 | (658 | ) | (23.1 | %) | 5,956 | 7,174 | (1,218 | ) | (17.0 | %) | |||||||||||
Alternative market business | 2,843 | 2,615 | 228 | 8.7 | % | 12,364 | 11,260 | 1,104 | 9.8 | % | |||||||||||||
Segment results | $ | 5,036 | $ | 5,466 | $ | (430 | ) | (7.9 | %) | $ | 18,320 | $ | 18,434 | $ | (114 | ) | (0.6 | %) |
Three Months Ended September 30 | |||||||||||
2017 | 2016 | Change | |||||||||
Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | |||
Ceded premiums ratio, as reported | 5.1% | 16.6% | 8.4% | 6.6% | 15.7% | 9.1% | (1.5) | 0.9 | (0.7) | ||
Less the effect of: | |||||||||||
Return premium estimated under external reinsurance | (0.9%) | —% | (0.6%) | (0.1%) | —% | (0.1%) | (0.8) | — | (0.5) | ||
Premiums ceded to unaffiliated captive insurers (100%) | —% | 5.5% | 1.7% | —% | 4.8% | 1.4% | — | 0.7 | 0.3 | ||
Ceded premiums ratio, less the effects of above | 6.0% | 11.1% | 7.3% | 6.7% | 10.9% | 7.8% | (0.7) | 0.2 | (0.5) |
Nine Months Ended September 30 | |||||||||||
2017 | 2016 | Change | |||||||||
Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | |||
Ceded premiums ratio, as reported | 4.3% | 19.4% | 9.0% | 5.3% | 19.4% | 9.5% | (1.0) | — | (0.5) | ||
Less the effect of: | |||||||||||
Return premium estimated under external reinsurance | (0.7%) | —% | (0.5%) | (0.2%) | —% | (0.2%) | (0.5) | — | (0.3) | ||
Premiums ceded to unaffiliated captive insurers (100%) | —% | 8.3% | 2.8% | —% | 8.7% | 2.7% | — | (0.4) | 0.1 | ||
Ceded premiums ratio, less the effects of above | 5.0% | 11.1% | 6.7% | 5.5% | 10.7% | 7.0% | (0.5) | 0.4 | (0.3) |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||
Gross premiums earned | |||||||||||||||||||||||
Traditional business* | $ | 43,492 | $ | 42,582 | $ | 910 | 2.1 | % | $ | 127,761 | $ | 127,426 | $ | 335 | 0.3 | % | |||||||
Alternative market business | 20,200 | 18,502 | 1,698 | 9.2 | % | 59,855 | 55,601 | 4,254 | 7.7 | % | |||||||||||||
Segment results | 63,692 | 61,084 | 2,608 | 4.3 | % | 187,616 | 183,027 | 4,589 | 2.5 | % | |||||||||||||
Less: Ceded premiums earned | |||||||||||||||||||||||
Traditional business | 2,193 | 2,850 | (657 | ) | (23.1 | %) | 5,956 | 7,174 | (1,218 | ) | (17.0 | %) | |||||||||||
Alternative market business* | 3,845 | 3,736 | 109 | 2.9 | % | 11,869 | 11,879 | (10 | ) | (0.1 | %) | ||||||||||||
Segment results | 6,038 | 6,586 | (548 | ) | (8.3 | %) | 17,825 | 19,053 | (1,228 | ) | (6.4 | %) | |||||||||||
Net premiums earned | |||||||||||||||||||||||
Traditional business | 41,299 | 39,732 | 1,567 | 3.9 | % | 121,805 | 120,252 | 1,553 | 1.3 | % | |||||||||||||
Alternative market business | 16,355 | 14,766 | 1,589 | 10.8 | % | 47,986 | 43,722 | 4,264 | 9.8 | % | |||||||||||||
Segment results | $ | 57,654 | $ | 54,498 | $ | 3,156 | 5.8 | % | $ | 169,791 | $ | 163,974 | $ | 5,817 | 3.5 | % | |||||||
* Traditional gross premiums earned and alternative market ceded premiums earned are reported net of alternative market premiums assumed by our traditional business totaling $0.2 million and $0.4 million for the 2017 three- and nine-month periods, respectively, and $0.2 million and $0.7 million for the same respective periods of 2016. |
Three Months Ended September 30 | ||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||
Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | ||||||||||||
Calendar year net loss ratio* | 65.2 | % | 49.7 | % | 60.8 | % | 66.5 | % | 54.3 | % | 63.3 | % | (1.3 | ) | (4.6 | ) | (2.5 | ) | ||
Less impact of prior accident years on the net loss ratio | (0.9 | %) | (11.7 | %) | (4.0 | %) | (1.0 | %) | (9.7 | %) | (3.3 | %) | 0.1 | (2.0 | ) | (0.7 | ) | |||
Current accident year net loss ratio | 66.1 | % | 61.4 | % | 64.8 | % | 67.5 | % | 64.0 | % | 66.6 | % | (1.4 | ) | (2.6 | ) | (1.8 | ) | ||
Less impact of audit premium on loss ratio | — | % | (0.9 | %) | (0.3 | %) | — | % | 0.2 | % | — | % | — | (1.1 | ) | (0.3 | ) | |||
Current accident year net loss ratio, excluding the effect of audit premium | 66.1 | % | 62.3 | % | 65.1 | % | 67.5 | % | 63.8 | % | 66.6 | % | (1.4 | ) | (1.5 | ) | (1.5 | ) |
Nine Months Ended September 30 | ||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||
Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | ||||||||||||
Calendar year net loss ratio* | 65.0 | % | 49.8 | % | 60.8 | % | 66.5 | % | 55.0 | % | 63.5 | % | (1.5 | ) | (5.2 | ) | (2.7 | ) | ||
Less impact of prior accident years on the net loss ratio | (1.0 | %) | (13.5 | %) | (4.5 | %) | (1.0 | %) | (6.4 | %) | (2.4 | %) | — | (7.1 | ) | (2.1 | ) | |||
Current accident year net loss ratio | 66.0 | % | 63.3 | % | 65.3 | % | 67.5 | % | 61.4 | % | 65.9 | % | (1.5 | ) | 1.9 | (0.6 | ) | |||
Less impact of audit premium on loss ratio | — | % | (1.0 | %) | (0.3 | %) | — | % | (0.6 | %) | (0.2 | %) | — | (0.4 | ) | (0.1 | ) | |||
Current accident year net loss ratio, excluding the effect of audit premium | 66.0 | % | 64.3 | % | 65.6 | % | 67.5 | % | 62.0 | % | 66.1 | % | (1.5 | ) | 2.3 | (0.5 | ) | |||
* The net loss ratios for the 2017 three- and nine-month periods in the above tables are calculated before the impact of $0.2 million and $0.4 million, respectively, and $0.2 million and $0.7 million for the same respective periods of 2016 of premiums earned that is assumed by and ceded from the traditional and alternative markets business. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||
Traditional business | $ | 13,508 | $ | 13,821 | $ | (313 | ) | (2.3 | %) | $ | 37,632 | $ | 39,136 | $ | (1,504 | ) | (3.8 | %) | |||||
Alternative market business | 4,926 | 4,510 | 416 | 9.2 | % | 14,588 | 13,358 | 1,230 | 9.2 | % | |||||||||||||
Underwriting, policy acquisition and operating expenses | $ | 18,434 | $ | 18,331 | $ | 103 | 0.6 | % | $ | 52,220 | $ | 52,494 | $ | (274 | ) | (0.5 | %) |
Three Months Ended September 30 | ||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||
Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | ||||||||||||
Underwriting expense ratio, as reported* | 32.5 | % | 30.6 | % | 32.0 | % | 34.6 | % | 31.0 | % | 33.6 | % | (2.1 | ) | (0.4 | ) | (1.6 | ) | ||
Less estimated ratio increase (decrease) attributable to: | ||||||||||||||||||||
Amortization of intangible assets | 1.8 | % | — | % | 1.3 | % | 3.3 | % | — | % | 2.4 | % | (1.5 | ) | — | (1.1 | ) | |||
Management fee | 1.1 | % | — | % | 0.8 | % | 1.1 | % | — | % | 0.8 | % | — | — | — | |||||
Impact of audit premium | (0.3 | %) | (0.5 | %) | (0.3 | %) | (1.2 | %) | 0.1 | % | (0.9 | %) | 0.9 | (0.6 | ) | 0.6 | ||||
Impact of return premium estimate | (0.3 | %) | — | % | (0.2 | %) | — | % | — | % | — | % | (0.3 | ) | — | (0.2 | ) | |||
Underwriting expense ratio, less listed effects | 30.2 | % | 31.1 | % | 30.4 | % | 31.4 | % | 30.9 | % | 31.3 | % | (1.2 | ) | 0.2 | (0.9 | ) |
Nine Months Ended September 30 | ||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||
Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | Traditional Business | Alternative Market Business | Segment Results | ||||||||||||
Underwriting expense ratio, as reported* | 30.8 | % | 30.7 | % | 30.8 | % | 32.4 | % | 31.0 | % | 32.0 | % | (1.6 | ) | (0.3 | ) | (1.2 | ) | ||
Less estimated ratio increase (decrease) attributable to: | ||||||||||||||||||||
Non-recurring/unusual expenses | — | % | — | % | — | % | 0.5 | % | — | % | 0.4 | % | (0.5 | ) | — | (0.4 | ) | |||
Amortization of intangible assets | 1.8 | % | — | % | 1.3 | % | 3.2 | % | — | % | 2.4 | % | (1.4 | ) | — | (1.1 | ) | |||
Management fee | 1.2 | % | — | % | 0.9 | % | 1.2 | % | — | % | 0.9 | % | — | — | — | |||||
Impact of audit premium | (0.5 | %) | (0.5 | %) | (0.5 | %) | (1.0 | %) | (0.3 | %) | (0.8 | %) | 0.5 | (0.2 | ) | 0.3 | ||||
Impact of return premium estimate | (0.2 | %) | — | % | (0.2 | %) | (0.1 | %) | — | % | (0.1 | %) | (0.1 | ) | — | (0.1 | ) | |||
Underwriting expense ratio, less listed effects | 28.5 | % | 31.2 | % | 29.3 | % | 28.6 | % | 31.3 | % | 29.2 | % | (0.1 | ) | (0.1 | ) | 0.1 | |||
* The underwriting expense ratios for the 2017 three- and nine-month periods in the above tables are calculated before the impact of $0.2 million and $0.4 million, respectively, and $0.2 million and $0.7 million for the same respective periods of 2016 of premiums earned that is assumed by and ceded from the traditional and alternative markets business, respectively. |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Net premiums earned | $ | 16,113 | $ | 14,539 | $ | 1,574 | 10.8 | % | $ | 47,544 | $ | 43,026 | $ | 4,518 | 10.5 | % | |||||||||||||
Other income | 34 | 3 | 31 | 1,033.3 | % | 83 | 10 | 73 | 730.0 | % | |||||||||||||||||||
Less: Net losses and loss adjustment expenses | 8,016 | 7,888 | 128 | 1.6 | % | 23,698 | 23,683 | 15 | 0.1 | % | |||||||||||||||||||
Less: Underwriting, policy acquisition and operating expenses | 4,926 | 4,510 | 416 | 9.2 | % | 14,587 | 13,358 | 1,229 | 9.2 | % | |||||||||||||||||||
SPC net operating results - profit/(loss) | 3,205 | 2,144 | 1,061 | 49.5 | % | 9,342 | 5,995 | 3,347 | 55.8 | % | |||||||||||||||||||
Less: Eastern participation - profit/(loss) | 1,483 | 695 | 788 | 113.4 | % | 3,749 | 2,555 | 1,194 | 46.7 | % | |||||||||||||||||||
SPC dividend expense (income) | $ | 1,722 | $ | 1,449 | $ | 273 | 18.8 | % | $ | 5,593 | $ | 3,440 | $ | 2,153 | 62.6 | % |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||
Gross premiums written | $ | 20,972 | $ | 18,956 | $ | 2,016 | 10.6 | % | $ | 56,995 | $ | 50,870 | $ | 6,125 | 12.0 | % | |||||||
Net premiums written | $ | 18,773 | $ | 16,342 | $ | 2,431 | 14.9 | % | $ | 44,555 | $ | 42,575 | $ | 1,980 | 4.7 | % | |||||||
Net premiums earned | $ | 16,318 | $ | 14,578 | $ | 1,740 | 11.9 | % | $ | 45,374 | $ | 40,533 | $ | 4,841 | 11.9 | % | |||||||
Net investment income | 412 | 351 | 61 | 17.4 | % | 1,194 | 1,004 | 190 | 18.9 | % | |||||||||||||
Net realized gains (losses) | 31 | 50 | (19 | ) | (38.0 | %) | 105 | 59 | 46 | 78.0 | % | ||||||||||||
Other income | (1,881 | ) | 734 | (2,615 | ) | (356.3 | %) | (1,641 | ) | 1,174 | (2,815 | ) | (239.8 | %) | |||||||||
Net losses and loss adjustment expenses | (20,444 | ) | (11,299 | ) | (9,145 | ) | 80.9 | % | (40,718 | ) | (25,989 | ) | (14,729 | ) | 56.7 | % | |||||||
Underwriting, policy acquisition and operating expenses | (6,723 | ) | (6,251 | ) | (472 | ) | 7.6 | % | (19,786 | ) | (16,660 | ) | (3,126 | ) | 18.8 | % | |||||||
Income tax benefit (expense) | (61 | ) | (1,352 | ) | 1,291 | (95.5 | %) | 495 | (2,248 | ) | 2,743 | (122.0 | %) | ||||||||||
Segment operating results | $ | (12,348 | ) | $ | (3,189 | ) | $ | (9,159 | ) | 287.2 | % | $ | (14,977 | ) | $ | (2,127 | ) | $ | (12,850 | ) | 604.1 | % | |
Net loss ratio | 125.3% | 77.5% | 47.8 | pts | 89.7% | 64.1% | 25.6 | pts | |||||||||||||||
Underwriting expense ratio | 41.2% | 42.9% | (1.7 | ) | pts | 43.6% | 41.1% | 2.5 | pts |
(In thousands) | Three and Nine Months Ended September 30, 2017 | ||
Gross premiums written | $ | 1,391 | |
Net premiums written | $ | 1,391 | |
Net premiums earned | $ | 1,391 | |
Gross losses | (36,492 | ) | |
Reinsurance recoveries | 27,626 | ||
Net losses and loss adjustment expenses | (8,866 | ) | |
Segment operating results, before tax | $ | (7,475 | ) |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Net investment income | $ | 23,317 | $ | 24,910 | $ | (1,593 | ) | (6.4 | %) | $ | 68,398 | $ | 74,280 | $ | (5,882 | ) | (7.9 | %) | |||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries | 4,164 | (3,349 | ) | 7,513 | 224.3 | % | 8,489 | (6,607 | ) | 15,096 | 228.5 | % | |||||||||||||||||
Net realized gains (losses) | 7,718 | 15,687 | (7,969 | ) | (50.8 | %) | 18,705 | 18,255 | 450 | 2.5 | % | ||||||||||||||||||
Other income | 1,023 | 15 | 1,008 | 6,720.0 | % | 1,974 | 758 | 1,216 | 160.4 | % | |||||||||||||||||||
Underwriting, policy acquisition and operating expenses | (4,989 | ) | (5,086 | ) | 97 | (1.9 | %) | (21,062 | ) | (20,748 | ) | (314 | ) | 1.5 | % | ||||||||||||||
Segregated portfolio cells dividend (expense) income (1) | (1,234 | ) | (1,653 | ) | 419 | (25.3 | %) | (3,457 | ) | (2,361 | ) | (1,096 | ) | 46.4 | % | ||||||||||||||
Interest expense | (4,124 | ) | (3,748 | ) | (376 | ) | 10.0 | % | (12,402 | ) | (11,285 | ) | (1,117 | ) | 9.9 | % | |||||||||||||
Income tax benefit (expense) | (5,963 | ) | (8,328 | ) | 2,365 | (28.4 | %) | (4,962 | ) | (14,209 | ) | 9,247 | (65.1 | %) | |||||||||||||||
Segment operating results | $ | 19,912 | $ | 18,448 | $ | 1,464 | 7.9 | % | $ | 55,683 | $ | 38,083 | $ | 17,600 | 46.2 | % | |||||||||||||
(1) Represents the investment results attributable to the SPCs at Eastern Re |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Fixed maturities | $ | 18,503 | $ | 20,660 | $ | (2,157 | ) | (10.4 | %) | $ | 56,655 | $ | 63,759 | $ | (7,104 | ) | (11.1 | %) | |||||||||||
Equities | 4,495 | 3,779 | 716 | 18.9 | % | 12,437 | 10,983 | 1,454 | 13.2 | % | |||||||||||||||||||
Short-term and Other investments | 1,131 | 1,456 | (325 | ) | (22.3 | %) | 2,867 | 2,524 | 343 | 13.6 | % | ||||||||||||||||||
BOLI | 620 | 639 | (19 | ) | (3.0 | %) | 1,517 | 1,537 | (20 | ) | (1.3 | %) | |||||||||||||||||
Investment fees and expenses | (1,432 | ) | (1,624 | ) | 192 | (11.8 | %) | (5,078 | ) | (4,523 | ) | (555 | ) | 12.3 | % | ||||||||||||||
Net investment income | $ | 23,317 | $ | 24,910 | $ | (1,593 | ) | (6.4 | %) | $ | 68,398 | $ | 74,280 | $ | (5,882 | ) | (7.9 | %) |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||
2017 | 2016 | 2017 | 2016 | ||||
Average income yield | 3.1% | 3.3% | 3.1% | 3.3% | |||
Average tax equivalent income yield | 3.5% | 3.7% | 3.5% | 3.8% |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Investment LPs/LLCs | $ | 8,227 | $ | 4,998 | $ | 3,229 | 64.6 | % | $ | 22,590 | $ | 10,341 | $ | 12,249 | 118.5 | % | |||||||||||||
Tax credit partnerships | (4,063 | ) | (8,347 | ) | 4,284 | (51.3 | %) | (14,101 | ) | (16,948 | ) | 2,847 | (16.8 | %) | |||||||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries | $ | 4,164 | $ | (3,349 | ) | $ | 7,513 | 224.3 | % | $ | 8,489 | $ | (6,607 | ) | $ | 15,096 | 228.5 | % |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Tax credits recognized during the period | $ | 6.0 | $ | 7.3 | $ | 17.8 | $ | 20.8 | |||||||
Tax benefit of tax credit partnership operating losses | $ | 1.4 | $ | 2.9 | $ | 4.9 | $ | 5.9 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
GAAP net investment result: | |||||||||||||||
Net investment income | $ | 23,317 | $ | 24,910 | $ | 68,398 | $ | 74,280 | |||||||
Equity in earnings (loss) of unconsolidated subsidiaries | 4,164 | (3,349 | ) | 8,489 | (6,607 | ) | |||||||||
GAAP net investment result | $ | 27,481 | $ | 21,561 | $ | 76,887 | $ | 67,673 | |||||||
Pro forma tax-equivalent investment result | $ | 39,644 | $ | 36,215 | $ | 113,824 | $ | 110,784 | |||||||
Reconciliation of pro forma and GAAP tax-equivalent investment result: | |||||||||||||||
GAAP net investment result | $ | 27,481 | $ | 21,561 | $ | 76,887 | $ | 67,673 | |||||||
Taxable equivalent adjustments, calculated using the 35% federal statutory tax rate: | |||||||||||||||
State and municipal bonds | 2,219 | 2,855 | 7,080 | 8,959 | |||||||||||
BOLI | 334 | 344 | 817 | 828 | |||||||||||
Dividends received | 441 | 338 | 1,642 | 1,396 | |||||||||||
Tax credit partnerships | 9,169 | 11,117 | 27,398 | 31,928 | |||||||||||
Pro forma tax-equivalent investment result | $ | 39,644 | $ | 36,215 | $ | 113,824 | $ | 110,784 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
OTTI losses, total: | |||||||||||||||
State and municipal bonds | $ | — | $ | (100 | ) | $ | — | $ | (100 | ) | |||||
Corporate debt | — | — | (419 | ) | (7,604 | ) | |||||||||
Other investments | — | — | — | (3,130 | ) | ||||||||||
Portion of OTTI losses recognized in other comprehensive income before taxes: | |||||||||||||||
Corporate debt | — | — | 248 | 1,068 | |||||||||||
Net impairment losses recognized in earnings | — | (100 | ) | (171 | ) | (9,766 | ) | ||||||||
Gross realized gains, available-for-sale securities | 1,721 | 3,853 | 4,294 | 8,920 | |||||||||||
Gross realized (losses), available-for-sale securities | (260 | ) | (369 | ) | (1,726 | ) | (5,620 | ) | |||||||
Net realized gains (losses), trading securities | 3,602 | 1,277 | 10,957 | 5,243 | |||||||||||
Net realized gains (losses), other investments | 478 | 335 | 2,197 | 833 | |||||||||||
Change in unrealized holding gains (losses), trading securities | 2,152 | 9,809 | 2,526 | 17,646 | |||||||||||
Change in unrealized holding gains (losses), convertible securities, carried at fair value as a part of Other investments | 23 | 880 | 621 | 976 | |||||||||||
Other | 2 | 2 | 7 | 23 | |||||||||||
Net realized investment gains (losses) | $ | 7,718 | $ | 15,687 | $ | 18,705 | $ | 18,255 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Operating expenses | $ | 9,333 | $ | 9,086 | $ | 247 | 2.7 | % | $ | 32,546 | $ | 31,713 | $ | 833 | 2.6 | % | |||||||||||||
Management fee offset | (4,344 | ) | (4,000 | ) | (344 | ) | 8.6 | % | (11,484 | ) | (10,965 | ) | (519 | ) | 4.7 | % | |||||||||||||
Segment Total | $ | 4,989 | $ | 5,086 | $ | (97 | ) | (1.9 | %) | $ | 21,062 | $ | 20,748 | $ | 314 | 1.5 | % |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
($ in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Senior notes due 2023 | $ | 3,357 | $ | 3,357 | $ | — | — | % | $ | 10,071 | $ | 10,071 | $ | — | — | % | |||||||||||||
Revolving credit agreement (including fees and amortization) | 757 | 381 | 376 | 98.7 | % | 2,302 | 1,185 | 1,117 | 94.3 | % | |||||||||||||||||||
Other | 10 | 10 | — | — | % | 29 | 29 | — | — | % | |||||||||||||||||||
$ | 4,124 | $ | 3,748 | $ | 376 | 10.0 | % | $ | 12,402 | $ | 11,285 | $ | 1,117 | 9.9 | % |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Corporate segment income tax expense (benefit) | $ | 5,963 | $ | 8,328 | $ | 4,962 | $ | 14,209 | |||||||
Lloyd's Syndicate segment income tax expense (benefit) | 61 | 1,352 | (495 | ) | 2,248 | ||||||||||
Consolidated income tax expense (benefit) | $ | 6,024 | $ | 9,680 | $ | 4,467 | $ | 16,457 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | |||
Tax-exempt income* | (5.6 | %) | (3.8 | %) | (6.8 | %) | (5.7 | %) | |||
Tax credits | (17.0 | %) | (13.1 | %) | (18.9 | %) | (16.9 | %) | |||
U.K. operating results | 15.3 | % | 0.5 | % | 6.1 | % | 0.1 | % | |||
Excess tax benefit on share-based compensation | — | % | — | % | (2.8 | %) | — | % | |||
Other | (10.5 | %) | 3.6 | % | (7.9 | %) | 2.1 | % | |||
Effective tax rate | 17.2 | % | 22.2 | % | 4.7 | % | 14.6 | % | |||
* Includes tax-exempt interest, dividends received deduction and change in cash surrender value of BOLI. |
Interest Rate Shift in Basis Points | |||||||||||||||||||
September 30, 2017 | |||||||||||||||||||
($ in millions) | (200) | (100) | Current | 100 | 200 | ||||||||||||||
Fair Value: | |||||||||||||||||||
U.S. Treasury obligations | $ | 157 | $ | 153 | $ | 148 | $ | 144 | $ | 140 | |||||||||
U.S. Government-sponsored enterprise obligations | 20 | 19 | 19 | 18 | 17 | ||||||||||||||
State and municipal bonds | 748 | 720 | 693 | 667 | 642 | ||||||||||||||
Corporate debt | 1,362 | 1,316 | 1,273 | 1,230 | 1,189 | ||||||||||||||
Asset-backed securities | 349 | 344 | 335 | 323 | 310 | ||||||||||||||
All fixed maturity securities | $ | 2,636 | $ | 2,552 | $ | 2,468 | $ | 2,382 | $ | 2,298 | |||||||||
Duration: | |||||||||||||||||||
U.S. Treasury obligations | 3.03 | 2.95 | 2.86 | 2.78 | 2.71 | ||||||||||||||
U.S. Government-sponsored enterprise obligations | 1.70 | 1.67 | 3.36 | 4.54 | 4.81 | ||||||||||||||
State and municipal bonds | 3.77 | 3.74 | 3.75 | 3.79 | 3.82 | ||||||||||||||
Corporate debt | 3.36 | 3.33 | 3.36 | 3.36 | 3.32 | ||||||||||||||
Asset-backed securities | 1.77 | 2.12 | 3.10 | 3.85 | 4.17 | ||||||||||||||
All fixed maturity securities | 3.23 | 3.24 | 3.41 | 3.52 | 3.55 | ||||||||||||||
($ in millions) | December 31, 2016 | ||||||||||||||||||
Fair Value: | |||||||||||||||||||
U.S. Treasury obligations | $ | 155 | $ | 151 | $ | 147 | $ | 142 | $ | 138 | |||||||||
U.S. Government-sponsored enterprise obligations | 31 | 31 | 30 | 29 | 29 | ||||||||||||||
State and municipal bonds | 865 | 832 | 800 | 770 | 740 | ||||||||||||||
Corporate debt | 1,365 | 1,321 | 1,279 | 1,238 | 1,198 | ||||||||||||||
Asset-backed securities | 373 | 368 | 357 | 344 | 331 | ||||||||||||||
All fixed maturity securities | $ | 2,789 | $ | 2,703 | $ | 2,613 | $ | 2,523 | $ | 2,436 | |||||||||
Duration: | |||||||||||||||||||
U.S. Treasury obligations | 3.00 | 2.93 | 2.85 | 2.78 | 2.72 | ||||||||||||||
U.S. Government-sponsored enterprise obligations | 1.55 | 1.70 | 2.39 | 2.67 | 2.70 | ||||||||||||||
State and municipal bonds | 3.85 | 3.82 | 3.83 | 3.87 | 3.91 | ||||||||||||||
Corporate debt | 3.21 | 3.20 | 3.22 | 3.22 | 3.18 | ||||||||||||||
Asset-backed securities | 1.75 | 2.48 | 3.38 | 3.86 | 4.10 | ||||||||||||||
All fixed maturity securities | 3.18 | 3.26 | 3.40 | 3.47 | 3.49 |
(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* (In thousands) | ||||||
July 1 - 31, 2017 | — | N/A | — | $109,643 | ||||||
August 1 - 31, 2017 | — | N/A | — | $109,643 | ||||||
September 1 - 30, 2017 | — | N/A | — | $109,643 | ||||||
Total | — | $— | — |
* | Under its current plan begun in November 2010, the ProAssurance Board of Directors has authorized $600 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. |
Exhibit Number | Description | |
Certification of Principal Executive Officer of ProAssurance as required under SEC rule 13a-14(a). | ||
Certification of Principal Financial and Accounting Officer of ProAssurance as required under SEC rule 13a-14(a). | ||
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). | ||
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). | ||
XBRL Instance Document | ||
XBRL Taxonomy Extension Schema Document | ||
XBRL Taxonomy Extension Calculation Linkbase Document | ||
XBRL Taxonomy Extension Definition Linkbase Document | ||
XBRL Taxonomy Extension Labels Linkbase Document | ||
XBRL Taxonomy Extension Presentation Linkbase Document |
PROASSURANCE CORPORATION |
/s/ Edward L. Rand, Jr. |
Edward L. Rand, Jr. |
Chief Financial Officer |
(Duly authorized officer and principal financial officer) |
/s/ W. Stancil Starnes |
W. Stancil Starnes |
Chief Executive Officer |
/s/ Edward L. Rand, Jr. |
Edward L. Rand, Jr. |
Chief Financial Officer |
/s/ W. Stancil Starnes |
W. Stancil Starnes |
Chief Executive Officer |
/s/ Edward L. Rand, Jr. |
Edward L. Rand, Jr. |
Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 31, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | PROASSURANCE CORP | |
Entity Central Index Key | 0001127703 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 53,415,236 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, at fair value; amortized cost | $ 2,429,092 | $ 2,586,821 |
Equity securities, trading, cost | 376,074 | 353,744 |
Other investments, portion carried at fair value | $ 51,789 | $ 31,501 |
Common shares, par value (USD per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common shares, shares issued (in shares) | 62,822,376 | 62,660,234 |
Deferred tax expense (benefit) on accumulated other comprehensive income (loss) | $ 13,985 | $ 9,894 |
Treasury shares, number of shares (in shares) | 9,408,925 | 9,408,977 |
Basis of Presentation |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of ProAssurance Corporation and its consolidated subsidiaries (ProAssurance, PRA or the Company). The financial statements have been prepared in accordance with 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 nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes contained in ProAssurance’s December 31, 2016 report on Form 10-K. In connection with its preparation of the Condensed Consolidated Financial Statements, ProAssurance evaluated events that occurred subsequent to September 30, 2017 for recognition or disclosure in its financial statements and notes to financial statements. ProAssurance operates in four reportable segments as follows: Specialty P&C, Workers' Compensation, Lloyd's Syndicate and Corporate. For more information on the nature of products and services provided and for financial information by segment, refer to Note 11 of the Notes to Condensed Consolidated Financial Statements. Reclassifications In the second quarter of 2017, ProAssurance began presenting separately the components of Underwriting, policy acquisition and operating expense as Operating expense and DPAC amortization on the Condensed Consolidated Statements of Income and Comprehensive Income in order to provide additional details for investors. The Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2016 have been reclassified to conform to the current period presentation. Total Underwriting, policy acquisition and operating expense as well as Net income for all periods presented was not affected by the change in presentation. Other Liabilities Other liabilities consisted of the following:
SPC dividends payable are the cumulative undistributed earnings contractually payable to the external preferred shareholders of SPCs operated by ProAssurance's Cayman Islands subsidiary, Eastern Re. Unpaid dividends represent common stock dividends declared by ProAssurance's Board of Directors that had not yet been paid. Unpaid dividends at December 31, 2016 reflect a special dividend declared in late 2016 that was paid in January 2017. Accounting Changes Adopted Improvements to Employee Share-Based Payment Accounting Effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, the FASB issued guidance that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of cash flows, and the classification of awards as either equity or liabilities. Under the new guidance, the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes is to be recognized as income tax expense in the current period and included with other income tax cash flows as an operating activity. The threshold for equity classification has also been revised to permit withholdings up to the maximum statutory tax rates in the applicable jurisdictions. The update also provides an accounting policy election to account for forfeitures as they occur. ProAssurance adopted the guidance as of January 1, 2017. The primary effects of the adoption on the current period are the following: (1) using a prospective application, ProAssurance recorded unrecognized excess tax benefits of $2.6 million as current tax expense for the nine months ended September 30, 2017 (unrecognized excess tax benefits were nominal for the 2017 three-month period), (2) using a modified retrospective application, ProAssurance elected to recognize forfeitures as they occur and recorded a $0.4 million increase to Additional paid-in capital, and a respective $0.3 million reduction to Retained earnings and a $0.1 million increase to deferred taxes to reflect the incremental share-based compensation expense, net of related tax impacts, that would have been recognized in prior years under the modified guidance and (3) excess tax benefits from share-based compensation of $2.2 million was reclassified from financing activities to operating activities in the Condensed Consolidated Statements of Cash Flows. Interests Held Through Related Parties that are Under Common Control Effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, the FASB issued additional guidance regarding consolidation of legal entities such as LPs/LLCs and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The new guidance modifies the criteria used by a reporting entity when determining if it is a primary beneficiary of a VIE when there are entities under common control and the reporting entity has indirect interests in the VIE through related party relationships. ProAssurance adopted the guidance as of January 1, 2017. Adoption of the guidance had no material effect on ProAssurance’s results of operations or financial position. Simplifying the Transition to the Equity Method of Accounting Effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, the FASB issued guidance that eliminates the requirement for retroactive restatement when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. The new guidance provides that the cost of acquiring an additional interest in an investee is to be added to the current basis of an investor’s previously held interest and the equity method of accounting adopted as of the date the investment becomes qualified for equity method accounting with no retroactive adjustment of the investment. If an available-for-sale equity security qualifies for the equity method of accounting, the unrealized holding gain or loss in AOCI is to be recognized through earnings at the date the investment becomes qualified for use of the equity method. ProAssurance adopted the guidance as of January 1, 2017. Adoption of the guidance had no material effect on ProAssurance’s results of operations or financial position. Clarifying the Definition of a Business Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance which provides clarification of the definition of a business, affecting areas such as acquisitions, disposals, goodwill and consolidation. The new guidance intends to assist entities with determining whether a transaction should be accounted for as an acquisition or disposal of assets or a business. The guidance will be applied prospectively to any transaction occurring within the period of adoption. ProAssurance early adopted the guidance during the third quarter of 2017 and adoption of the guidance had no material effect on ProAssurance’s results of operations or financial position. Accounting Changes Not Yet Adopted Restricted Cash Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance related to the classification of restricted cash presented in the statement of cash flows with the objective of reducing diversity in practice. Under the new guidance, entities are required to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts as presented on the statement of cash flows. ProAssurance plans to adopt the guidance beginning January 1, 2018. Adoption is not expected to have a material effect on ProAssurance’s results of operations, financial position or cash flows. Intra-Entity Transfers of Assets Other than Inventory Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance which reduces the complexity in accounting standards related to the income tax consequences of intra-entity transfers of assets other than inventory. Under the new guidance, entities are required to recognize income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs instead of delaying recognition until the asset has been sold to an outside party. ProAssurance is in the process of evaluating the effect the new guidance would have on its results of operations and financial position and plans to adopt the guidance beginning January 1, 2018. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Classification of Certain Cash Receipts and Cash Payments Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance related to the classification of certain cash receipts and cash payments presented in the statement of cash flows with the objective of reducing diversity in practice. ProAssurance plans to adopt the guidance beginning January 1, 2018. Adoption is not expected to have a material effect on ProAssurance’s results of operations, financial position or cash flows. Revenue from Contracts with Customers Effective for fiscal years beginning after December 15, 2017 the FASB issued guidance related to revenue from contracts with customers. The core principle of the new guidance is that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ProAssurance plans to adopt the guidance beginning January 1, 2018 under the modified retrospective method. As the majority of ProAssurance's revenues come from insurance contracts which fall under the scope of other FASB standards, only an insignificant amount of the Company's revenue is subject to the updated guidance. Therefore, adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Recognition and Measurement of Financial Assets and Financial Liabilities Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance that requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The new guidance also specifies that an entity use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and present financial assets and liabilities by measurement category and form of financial asset. Other provisions of the new guidance include: revised disclosure requirements related to the presentation in comprehensive income of changes in the fair value of liabilities; elimination, for public companies, of disclosure requirements relative to the method(s) and significant assumptions underlying fair values disclosed for financial instruments measured at amortized cost; and simplified impairment assessments for equity investments without readily determinable fair values. ProAssurance plans to adopt the guidance beginning January 1, 2018, with the cumulative effect of the adoption made to retained earnings. The majority of ProAssurance's equity investments are either measured at fair value or accounted for under the equity method of accounting. As of September 30, 2017, approximately 1% of the Company's total investments would be impacted by the guidance and therefore, adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Modification Accounting for Employee Share-Based Payment Awards Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance which reduces the complexity in accounting standards when there is a change in the terms or conditions of a share-based payment award. The new guidance clarifies that an entity should apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. ProAssurance plans to adopt the guidance beginning January 1, 2018. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Premium Amortization on Purchased Callable Debt Securities Effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, the FASB issued guidance that will require the premium for certain callable debt securities to be amortized over a shorter period than is currently required. Currently amortization is permitted over the contractual life of the instrument and the guidance shortens the amortization to the earliest call date. The purpose of the guidance is to more closely align the amortization period of premiums to expectations incorporated in market pricing on the underlying securities. ProAssurance plans to adopt the guidance beginning January 1, 2019. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Leases Effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, the FASB issued guidance that requires a lessee to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. ProAssurance plans to adopt the guidance beginning January 1, 2019. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position as ProAssurance does not have any leases it believes to be material. Simplifying the Test for Goodwill Impairment Effective for the fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, the FASB issued guidance that simplifies the requirements to test goodwill for impairment for business entities that have goodwill reported in their financial statements. The guidance eliminates the second step of the impairment test which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount. In addition, the guidance also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. ProAssurance plans to adopt the guidance beginning January 1, 2020. Adoption is not expected to have a material effect on ProAssurance’s results of operations or financial position. Improvements to Financial Instruments - Credit Losses Effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, the FASB issued guidance that replaces the incurred loss impairment methodology, which delays recognition of credit losses until a probable loss has been incurred, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Under the new guidance, credit losses are required to be recorded through an allowance for credit losses account and the income statement reflects the measurement for newly recognized financial assets, as well as increases or decreases of expected credit losses that have taken place during the period. ProAssurance is in the process of evaluating the effect the new guidance would have on its results of operations and financial position and plans to adopt the guidance beginning January 1, 2020. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. |
Fair Value Measurement |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement | 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:
Fair values of assets measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 are shown in the following tables. Where applicable, the tables also indicate the fair value hierarchy of the valuation techniques utilized to determine those fair values. 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 require judgment and consideration of factors specific to the assets being valued.
The fair values for securities included in the Level 2 category, with the few exceptions described below, were developed by one of several third party, nationally recognized pricing services, including services that price only certain types of securities. Each service uses complex methodologies to determine values for securities and subject the values they develop to quality control reviews. Management selected a primary source for each type of security in the portfolio and reviewed the values provided for reasonableness by comparing data to alternate pricing services and to available market and trade data. Values that appeared inconsistent were further reviewed for appropriateness. Any value that did not appear reasonable was discussed with the service that provided the value and adjusted, if necessary. There were no material changes to the values supplied by the pricing services during the three and nine months ended September 30, 2017 and 2016. 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 were 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. Government-sponsored enterprise obligations were 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 were included in the valuation process when necessary to reflect recent regulatory, government or corporate actions or significant economic, industry or geographic events affecting the security’s fair value. State and municipal bonds were valued using a series of matrices that considered credit ratings, the structure of the security, the sector in which the security falls, yields, and contractual cash flows. Valuations were further adjusted, when necessary, to reflect the expected effect on fair value of recent significant economic or geographic events or ratings changes. Corporate debt, multiple observable inputs consisted primarily of corporate bonds, but also included a small number of bank loans. The methodology used to value Level 2 corporate bonds was the same as the methodology previously described for U.S. Government-sponsored enterprise obligations. Bank loans were valued based on an average of broker quotes for the loans in question, if available. If quotes were not available, the loans were valued based on quoted prices for comparable loans or, if the loan was newly issued, by comparison to similar seasoned issues. Broker quotes were compared to actual trade prices to permit assessment of the reliability of the quotes; unreliable quotes were not considered in quoted averages. Residential and commercial mortgage-backed securities were valued using a pricing matrix which considers the issuer type, coupon rate and longest cash flows outstanding. The matrix used was based on the most recently available market information. Agency and non-agency collateralized mortgage obligations were 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. Other asset-backed securities were 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. Equity securities were securities not traded on an exchange on the valuation date. The securities were valued using the most recently available quotes for the securities. Short-term investments are securities maturing within one year, carried at cost which approximated the fair value of the security due to the short term to maturity. Other investments consisted primarily of convertible bonds valued using a pricing model that incorporated selected dealer quotes as well as current market data regarding equity prices and risk free rates. If dealer quotes were unavailable for the security being valued, quotes for securities with similar terms and credit status were used in the pricing model. Dealer quotes selected for use were those considered most accurate based on parameters such as underwriter status and historical reliability. 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 Valuation Methodologies Corporate debt, limited observable inputs consisted of corporate bonds valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were subjectively determined by management if not available. At September 30, 2017, 73% of the securities were rated and the average rating was BBB+. At December 31, 2016, 84% of the securities were rated and the average rating was BBB+. Other asset-backed securities consisted of securitizations of receivables valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Other investments consisted of convertible securities for which limited observable inputs were available at September 30, 2017 and at December 31, 2016. The securities were valued internally based on expected cash flows, including the expected final recovery, discounted at a yield that considered the lack of liquidity and the financial status of the issuer. Quantitative Information Regarding Level 3 Valuations
The significant unobservable inputs used in the fair value measurement of the above listed securities were the valuations of comparable securities with similar issuers, credit quality and maturity. Changes in the availability of comparable securities could result in changes in the fair value measurements. Fair Value Measurements - Level 3 Assets The following tables (the Level 3 Tables) present summary information regarding changes in the fair value of assets measured at fair value using Level 3 inputs.
Transfers There were no transfers between the Level 1 and Level 2 categories during the three months ended September 30, 2017. During the nine months ended September 30, 2017, equity securities of approximately $35.4 million were transferred from Level 2 to Level 1. During the three and nine months ended September 30, 2016, equity securities of approximately $10.2 million were transferred from Level 2 to Level 1. Transfers shown in the preceding Level 3 tables were as of the end of the quarter in which the transfer occurred. All transfers were to or from Level 2. All transfers during the three and nine months ended September 30, 2017 and 2016 related to securities held for which the level of market activity for identical or nearly identical securities varies from period to period. The securities were valued using multiple observable inputs when those inputs were available; otherwise the securities were valued using limited observable inputs. Fair Values Not Categorized Investments in unconsolidated subsidiaries at both September 30, 2017 and December 31, 2016 included interests in investment fund LPs/LLCs and Other investments at September 30, 2017 included interests in certain investment funds that measure fund assets at fair value on a recurring basis and that provide a NAV for the interest. The carrying value of these interests is based on the NAV provided and was considered to approximate the fair value of the interests. In accordance with GAAP, the fair value of these investments was not classified within the fair value hierarchy. Additional information regarding these investments is as follows:
ProAssurance may not sell, transfer or assign its interest in any of the above LPs/LLCs without special consent from the LPs/LLCs. Financial Instruments - Methodologies Other Than Fair Value The following table provides the estimated fair value of our financial instruments that, in accordance with GAAP for the type of investment, are measured using a methodology other than fair value. All fair values provided fall within the Level 3 fair value category.
The fair value of the BOLI was equal to the cash surrender value associated with the policies on the valuation date. Other investments listed in the table above include interests in certain investment fund LPs/LLCs accounted for using the cost method, investments in FHLB common stock carried at cost, and an annuity investment carried at amortized cost. The estimated fair value of the LP/LLC interests was based on the equity value of the interest provided by the LP/LLC managers for the most recent quarter, which approximates the fair value of the interest. The estimated fair value of the FHLB common stock was based on the amount ProAssurance would receive if its membership were canceled, as the membership cannot be sold. The fair value of the annuity represents the present value of the expected future cash flows discounted using a rate available in active markets for similarly structured instruments. Other assets and Other liabilities primarily consisted of related investment assets and liabilities associated with funded deferred compensation agreements. Fair values of the funded deferred compensation assets and liabilities were based on the NAVs provided by the underlying funds. Other assets also included a secured note receivable and unsecured note receivable under two separate line of credit agreements. Fair value of these notes receivable was based on the present value of expected cash flows from the notes receivable, discounted at market rates on the valuation date for receivables with similar credit standings and similar payment structures. The fair value of the debt was estimated based on the present value of expected future cash outflows, discounted at rates available on the valuation date for similar debt issued by entities with a similar credit standing to ProAssurance. |
Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Available-for-sale securities at September 30, 2017 and December 31, 2016 included the following:
The recorded cost basis and estimated fair value of available-for-sale fixed maturities at September 30, 2017, 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.
Excluding obligations of the U.S. Government, U.S. Government-sponsored enterprises and a U.S. Government obligations money market fund, no investment in any entity or its affiliates exceeded 10% of Shareholders’ equity at September 30, 2017. Cash and securities with a carrying value of $46.6 million at September 30, 2017 were on deposit with various state insurance departments to meet regulatory requirements. ProAssurance also held securities with a carrying value of $189.5 million at September 30, 2017 that are pledged as collateral security for advances under the Revolving Credit Agreement (see Note 7 of the Notes to Condensed Consolidated Financial Statements for additional detail on the Revolving Credit Agreement). As a member of Lloyd's and a capital provider to Syndicate 1729, ProAssurance is required to maintain capital at Lloyd's, referred to as FAL. ProAssurance investments at September 30, 2017 included fixed maturities with a fair value of $98.7 million and short-term investments with a fair value of approximately $0.5 million on deposit with Lloyd's in order to satisfy these FAL requirements. BOLI ProAssurance holds BOLI policies that are carried at the current cash surrender value of the policies (original cost $33 million). All insured individuals were members of ProAssurance management at the time the policies were acquired. 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 beneficiary of these policies. Investment in Unconsolidated Subsidiaries ProAssurance holds investments in unconsolidated subsidiaries, accounted for under the equity method. The investments include the following:
Qualified affordable housing tax credit partnership interests held by ProAssurance generate investment returns by providing tax benefits to fund investors in the form of tax credits and project operating losses. The carrying value of these investments reflects ProAssurance's total commitments (both funded and unfunded) to the partnerships, less any amortization. ProAssurance's ownership percentage relative to two of the tax credit partnership interests is almost 100%; these interests had a carrying value of $34.5 million at September 30, 2017 and $40.2 million at December 31, 2016. ProAssurance's ownership percentage relative to the remaining tax credit partnership interests is less than 20%; these interests had a carrying value of $57.1 million at September 30, 2017 and $62.1 million at December 31, 2016. ProAssurance does not have the ability to exert control over the partnerships; all are accounted for using the equity method. Other tax credit partnerships are comprised entirely of historic tax credits. The historic tax credits generate investment returns by providing benefits to fund investors in the form of tax credits, tax-deductible project operating losses and positive cash flows. The carrying value of these investments reflects ProAssurance's total funded commitments less any amortization. ProAssurance's ownership percentage relative to the tax credit partnerships is almost 100%. ProAssurance does not have the ability to exert control over the partnerships; all are accounted for using the equity method. As discussed in additional detail in Note 2 of the Notes to Condensed Consolidated Financial Statements, ProAssurance holds interests in certain LPs/LLCs that are investment funds which measure fund assets at fair value on a recurring basis and the fund managers provide a NAV for the interest. The carrying value of these interests is based on the NAV provided, and is considered to approximate the fair value of the interests; such interests totaled $202.5 million at September 30, 2017 and $204.7 million at December 31, 2016. ProAssurance also holds interests in other LPs/LLCs which are not considered to be investment funds; such interests totaled $29.4 million at September 30, 2017 and $22.4 million at December 31, 2016. ProAssurance's ownership percentage relative to three of the LPs/LLCs is greater than 25%, which is expected to be reduced as the funds mature and other investors participate in the funds; these investments had a carrying value of $25.4 million at September 30, 2017 and $18.5 million at December 31, 2016. ProAssurance's ownership percentage relative to the remaining LPs/LLCs is less than 25%; these interests had a carrying value of $206.5 million at September 30, 2017 and $208.6 million at December 31, 2016. ProAssurance does not have the ability to exert control over any of these funds. Other Investments Other investments at September 30, 2017 and December 31, 2016 were comprised as follows:
Investments in convertible securities are carried at fair value as permitted by the accounting guidance for hybrid financial instruments, with changes in fair value recognized in income as a component of Net realized investment gains (losses) during the period of change. Investment funds measure fund assets at fair value on a recurring basis and the fund managers provide a NAV for the interest. The carrying value of these interests is based on the NAV provided, and is considered to approximate the fair value of the interests, with changes in fair value recognized in income as a component of Net realized investment gains (losses) during the period of change. 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. Investments Held in a Loss Position The following tables provide summarized information with respect to investments held in an unrealized loss position at September 30, 2017 and December 31, 2016, including the length of time the investment had been held in a continuous unrealized loss position.
As of September 30, 2017, excluding U.S. Government or U.S. Government-sponsored enterprise obligations, there were 501 debt securities (20.4% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 335 issuers. The greatest and second greatest unrealized loss positions among those securities were approximately $0.6 million and $0.4 million, respectively. The securities were evaluated for OTTI as of September 30, 2017. As of December 31, 2016, excluding U.S. Government or U.S. Government-sponsored enterprise obligations, there were 703 debt securities (27.2% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 456 issuers. The greatest and second greatest unrealized loss positions among those securities were each approximately $0.5 million. The securities were evaluated for OTTI as of December 31, 2016. 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 OTTI. 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, 2016 Form 10-K. Fixed maturity securities held in an unrealized loss position at September 30, 2017, 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, excluding those issued by GNMA, FNMA and FHLMC, held in an unrealized loss position were estimated as part of the September 30, 2017 OTTI evaluation 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, and equaled or exceeded the current amortized cost basis of the security. Net Investment Income Net investment income by investment category was as follows:
Equity in Earnings (Loss) of Unconsolidated Subsidiaries Equity in earnings (loss) of unconsolidated subsidiaries included losses from qualified affordable housing project tax credit investments and historic tax credit investments. The losses recorded reflect ProAssurance's allocable portion of partnership operating losses. Losses from qualified affordable housing project tax credit investments were $3.4 million and $10.7 million for the three and nine months ended September 30, 2017, respectively, and $6.7 million and $14.9 million for the same respective periods of 2016. Tax credits recognized related to these investments totaled $4.6 million and $13.8 million for the three and nine months ended September 30, 2017, respectively, and $4.6 million and $13.9 million for the same respective periods of 2016. Losses from historic tax credit investments were $0.6 million and $3.4 million for the three and nine months ended September 30, 2017, respectively, and $1.6 million and $2.0 million for the same respective periods of 2016. Tax credits recognized related to these investments totaled $1.4 million and $4.0 million for the three and nine months ended September 30, 2017, respectively, and $2.7 million and $6.9 million for the same respective periods of 2016. Tax credits recognized reduced income tax expense in the respective periods. Net Realized Investment Gains (Losses) Realized investment gains and losses are recognized on the first-in, first-out basis. The following table provides detailed information regarding Net realized investment gains (losses):
ProAssurance did not recognize OTTI during the third quarter of 2017. During the 2017 nine-month period, ProAssurance recognized OTTI in earnings of $0.2 million and $0.2 million in non-credit OTTI in OCI, both of which related to corporate bonds. ProAssurance recognized OTTI in earnings of $0.1 million and $9.8 million during the 2016 three- and nine-month periods, respectively. ProAssurance recognized OTTI in earnings during the 2016 nine-month period of $6.5 million related to corporate bonds, including credit-related OTTI of $5.5 million related to debt instruments from ten issuers in the energy sector. The fair value of the bonds and the credit quality of the issuers had declined and ProAssurance recognized credit-related OTTI to reduce the amortized cost basis of the bonds to the present value of future cash flows expected to be received from the bonds. ProAssurance also recognized non-credit OTTI in OCI during the 2016 nine-month period of $0.9 million related to certain of these same bonds, as the fair value of the bonds was less than the present value of the expected future cash flows from the securities. ProAssurance also recognized a $3.1 million OTTI in earnings during the 2016 nine-month period related to an investment fund that is accounted for using the cost method (classified as Other investments). The fund is focused on the energy sector and securities held by the fund declined in value during the first quarter of 2016. An OTTI was recognized to reduce ProAssurance's carrying value of the investment to the NAV reported by the fund. 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 OTTI was recorded in OCI.
Other information regarding sales and purchases of available-for-sale securities is as follows:
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Income Taxes |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes ProAssurance estimates its annual effective tax rate at the end of each quarterly reporting period and uses this estimated rate 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 income taxes primarily because a portion of ProAssurance’s investment income is tax-exempt, and because ProAssurance utilizes tax credit benefits transferred from tax credit partnership investments. ProAssurance had a liability for Federal and U.K. income taxes of $3.3 million at September 30, 2017 and $5.1 million at December 31, 2016, both carried as a part of Other liabilities. The liability for unrecognized tax benefits was $8.5 million at September 30, 2017 and $8.4 million at December 31, 2016. |
Reserve for Losses and Loss Adjustment Expenses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve for Losses and Loss Adjustment Expenses | 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 the reserve, particularly the reserve appropriate for liability exposures, 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 requires ProAssurance to make and revise judgments and assessments regarding multiple uncertainties over an extended period of time. As a result, the reserve estimate may vary considerably from the eventual outcome. The assumptions used in establishing ProAssurance’s reserve 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 believes that the methods it uses to establish reserves are reasonable and appropriate. Each year, ProAssurance uses internal actuaries to review the reserve for losses of each insurance subsidiary. ProAssurance also engages consulting actuaries to review ProAssurance claims data and provide observations regarding cost trends, rate adequacy and ultimate loss costs. ProAssurance considers the views of the actuaries as well as other factors, such as known, anticipated or estimated changes in frequency and severity of claims, loss retention levels and premium rates, in establishing the amount of its reserve for losses. The statutory filings of each insurance company with the insurance regulators must be accompanied by a consulting actuary's certification as to their respective reserves. ProAssurance partitions its reserve by accident year, which is the year in which the claim becomes its liability. As claims are incurred (reported) and claim payments are made, they are aggregated by accident year for analysis purposes. ProAssurance also partitions its reserve by reserve type: case reserves and IBNR reserves. Case reserves are established by the claims department based upon the particular circumstances of each reported claim and represent ProAssurance’s estimate of the future loss costs (often referred to as expected losses) that will be paid on reported claims. Case reserves are decremented as claim payments are made and are periodically adjusted upward or downward as estimates regarding the amount of future losses are revised; a reported loss for an individual claim equates to the case reserve at any point in time plus the claim payments that have been made to date. IBNR reserves represent an estimate, in the aggregate, of future development on losses that have been reported to ProAssurance plus an estimate of losses that have been incurred but not reported. Development of Prior Accident Years In addition to setting the initial reserve for the current accident year, each period ProAssurance reassesses the amount of reserve required for prior accident years. The foundation of ProAssurance’s reserve re-estimation process is an actuarial analysis that is performed by both the internal and consulting actuaries. This detailed analysis projects ultimate losses on a line of business, geographic, coverage layer and accident year basis. The procedure uses the most representative data for each partition, capturing its unique patterns of development and trends. In all, there are 219 different partitions of ProAssurance's business for purposes of this analysis. ProAssurance believes that the use of consulting actuaries provides an independent view of the loss data as well as a broader perspective on industry loss trends. Activity in the Reserve for losses and loss adjustment expenses is summarized as follows:
The favorable loss development of $90.1 million recognized in the nine months ended September 30, 2017 primarily reflected a lower than anticipated claims severity trend (i.e., the average size of a claim) for accident years 2010 through 2014. The favorable loss development of $94.5 million recognized in the nine months ended September 30, 2016 primarily reflected a lower than anticipated claims severity trend for accident years 2009 through 2013. The favorable loss development of $143.8 million recognized in the twelve months ended December 31, 2016 primarily reflected a lower than anticipated claims severity trend for accident years 2008 through 2014. For additional information regarding ProAssurance's reserve, see Note 1 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2016 Form 10-K. |
Commitments and Contingencies |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 the heading "Losses and Loss Adjustment Expenses" in the Accounting Policies section in Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's 2016 Form 10-K. As a member of Lloyd's ProAssurance is required to provide capital to support Syndicate 1729 through 2022 of up to $200 million, referred to as FAL. At September 30, 2017, ProAssurance is satisfying the FAL requirement with investment securities on deposit with Lloyd's with a carrying value of $99.2 million (see Note 3 of the Notes to Condensed Consolidated Financial Statements). ProAssurance has issued an unconditional revolving credit agreement to the Premium Trust Fund of Syndicate 1729 for the purpose of providing working capital. Permitted borrowings are £20.0 million under an amended Syndicate Credit Agreement executed in April 2016. Under the amended Syndicate Credit Agreement advances bear interest at 3.8% annually, and may be repaid at any time but are repayable upon demand after December 31, 2019. As of September 30, 2017, the unused commitment under the Syndicate Credit Agreement approximated £11.0 million (approximately $14.7 million as of September 30, 2017). In conjunction with a strategic business partnership ProAssurance entered into during the third quarter of 2016, ProAssurance issued a line of credit of up to $9.0 million for the purpose of funding the entity's operations. The line of credit is non-interest bearing and may be settled upon the entity's achievement of certain milestones which is expected to occur within the next six months. As of September 30, 2017, the unused commitment under the line of credit approximated $1.6 million. |
Debt |
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Debt | Debt ProAssurance’s outstanding debt consisted of the following:
Covenant Compliance There are no financial covenants associated with the Senior Notes due 2023. The Revolving Credit Agreement contains customary representations, covenants and events constituting default, and remedies for default. The Revolving Credit Agreement also defines financial covenants regarding permitted leverage ratios. ProAssurance is currently in compliance with all covenants of the Revolving Credit Agreement. Additional Information For additional information regarding ProAssurance's debt, see Note 10 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2016 Form 10-K. |
Shareholders' Equity |
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Shareholders' Equity | Shareholders’ Equity At September 30, 2017 and December 31, 2016, ProAssurance had 100 million shares of authorized common stock and 50 million shares of authorized preferred stock. 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. ProAssurance declared cash dividends of $0.31 per share during each of the first three quarters of 2017, totaling $49.6 million. ProAssurance declared cash dividends of $0.31 per share during each of the first three quarters of 2016, totaling $49.4 million. At September 30, 2017, Board authorizations for the repurchase of common shares or the retirement of outstanding debt of $109.6 million remained available for use. ProAssurance did not repurchase any common shares during the nine months ended September 30, 2017 and repurchased approximately 44,500 shares at a cost of $2.1 million during the nine months ended September 30, 2016. Share-based compensation expense and related tax benefits were as follows:
ProAssurance awarded approximately 84,600 restricted share units and 48,000 base performance share units to employees in February 2017. The fair value of each unit awarded was estimated at $58.35, equal to the market value of a ProAssurance common share on the date of grant less the estimated present value of dividends during the vesting period. All awards are charged to expense as an increase to additional paid-in capital 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 50% to 200% of base awards depending upon the degree to which stated performance objectives are achieved. ProAssurance issued approximately 29,300 and 99,500 common shares to employees in February 2017 related to restricted share units and performance share units, respectively, granted in 2014. Performance share units for the 2014 award were issued at levels ranging from 117% to 125%. ProAssurance issued approximately 9,000 common shares to employees in February 2017 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 (Loss) and Accumulated Other Comprehensive Income (Loss) For the three and nine months ended September 30, 2017 and 2016, OCI was primarily comprised of unrealized gains and losses, including non-credit impairment losses, arising during the period related to available-for-sale securities, less reclassification adjustments, as shown in the table that follows, net of tax. For the nine months ended September 30, 2016, OCI included a gain of $0.6 million, net of tax, related to changes from the reestimation of two defined benefit plans assumed in the Eastern acquisition, one of which was terminated late in 2016. The remaining plan is frozen as to the earnings of additional benefits, but the unrecognized plan benefit liability is reestimated annually. At September 30, 2017 and December 31, 2016, AOCI was primarily comprised of unrealized gains and losses from available-for-sale securities, including non-credit impairments recognized in OCI of $0.5 million and $0.3 million, respectively, net of tax. During 2016, as discussed above, one of the defined benefit plans assumed in the Eastern acquisition was terminated and the related unrecognized losses were reclassified from AOCI to earnings. At September 30, 2017 and December 31, 2016, unrecognized changes in the remaining defined benefit plan liability were nominal in amount. All tax effects were computed using a 35% rate, with the exception of unrealized gains and losses on available-for-sale securities held at our U.K. and Cayman Island entities which were immaterial in amount. Amounts reclassified from AOCI to Net income and the amounts of deferred tax expense (benefit) included in OCI were as follows:
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Variable Interest Entities |
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Sep. 30, 2017 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | Variable Interest Entities ProAssurance holds passive interests in a number of entities that are considered to be VIEs under GAAP guidance. ProAssurance's VIE interests principally consist of interests in LPs/LLCs formed for the purpose of achieving diversified equity and debt returns. ProAssurance's VIE interests carried as a part of Other investments totaled $27.4 million at September 30, 2017 and $26.9 million at December 31, 2016. ProAssurance's VIE interests carried as a part of Investment in unconsolidated subsidiaries totaled $269.6 million at September 30, 2017 and $282.3 million at December 31, 2016. ProAssurance does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the primary beneficiary. Therefore, ProAssurance has not consolidated these VIEs. ProAssurance’s involvement with each entity is limited to its direct ownership interest in the entity. Except as disclosed in Note 6 of the Notes to Condensed Consolidated Financial Statements, ProAssurance has no arrangements with any of the entities to provide other financial support to or on behalf of the entity. At September 30, 2017, ProAssurance’s maximum loss exposure relative to these investments was limited to the carrying value of ProAssurance’s investment in the VIE. |
Earnings Per Share |
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Earnings Per Share | 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 restricted share units, performance share units and purchase match units have vested. The following table provides the weighted average number of common shares outstanding used in the calculation of the Company's basic and diluted earnings per share:
All dilutive common share equivalents are reflected in the earnings per share calculation while antidilutive common share equivalents are not reflected in the earnings per share calculation. The diluted weighted average number of common shares outstanding for the three and nine months ended September 30, 2017 excludes approximately 28,000 and 9,000 common share equivalents, respectively, issuable under the Company's stock compensation plans, as their effect would be antidilutive. There were no common share equivalents that were antidilutive for the three and nine months ended September 30, 2016. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information ProAssurance operates in four segments that are organized around the nature of the products and services provided: Specialty P&C, Workers' Compensation, Lloyd's Syndicate, and Corporate. A description of each segment follows. Specialty P&C is primarily focused on professional liability insurance and medical technology liability insurance. Professional liability insurance is primarily offered to healthcare providers and institutions and to attorneys and their firms. Medical technology liability insurance is offered to medical technology and life sciences companies that manufacture or distribute products including entities conducting human clinical trials. The Specialty P&C segment cedes certain premium to the Lloyd's Syndicate segment under a quota share agreement with Syndicate 1729. As discussed below, Syndicate 1729 operating results are reported on a quarter delay. For consistency purposes, results from this ceding arrangement, other than cash receipts or disbursements, have been reported within the Specialty P&C segment on the same one-quarter delay. Workers' Compensation provides workers' compensation products primarily to employers with 1,000 or fewer employees. The segment also offers alternative market solutions whereby policies written are 100% ceded either to captive insurers unaffiliated with ProAssurance or to SPCs operated by a wholly owned subsidiary of ProAssurance. Each SPC is owned, fully or in part, by an agency, group or association. Operating results (underwriting profit or loss, plus investment results reported in the Corporate segment) of the SPCs are due to the owners of that cell. Lloyd's Syndicate includes operating results from ProAssurance's 58% participation in Lloyd's of London Syndicate 1729. Syndicate 1729 underwrites risks over a wide range of property and casualty insurance and reinsurance lines in both the U.S. and international markets. The results of this segment are reported on a quarter delay, except when information is available that is material to the current period. Furthermore, investment results associated with investment assets solely allocated to Syndicate 1729 operations and certain U.S. paid administrative expenses are reported concurrently as that information is available on an earlier time frame. Corporate includes ProAssurance's investment operations, interest expense and U.S. income taxes, all of which are managed at the corporate level with the exception of investment assets solely allocated to Syndicate 1729 as discussed above. The segment also includes non-premium revenues generated outside of our insurance entities and corporate expenses. The accounting policies of the segments are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in ProAssurance’s December 31, 2016 report on Form 10-K and Note 1 of the Notes to Condensed Consolidated Financial Statements. ProAssurance evaluates performance of its Specialty P&C and Workers' Compensation segments based on before tax underwriting profit or loss, which excludes investment performance. Performance of the Lloyd's Syndicate segment is evaluated based on underwriting profit or loss, plus investment results of investment assets solely allocated to Syndicate 1729 operations, net of U.K. income tax expense. Performance of the Corporate segment is evaluated based on the contribution made to consolidated after tax results. ProAssurance accounts for inter-segment transactions as if the transactions were to third parties at current market prices. Assets are not allocated to segments because investments and other assets are not managed at the segment level. Financial results by segment were as follows:
The following table provides detailed information regarding ProAssurance's gross premiums earned by product as well as a reconciliation to net premiums earned. All gross premiums earned are from external customers except as noted. ProAssurance's insured risks are primarily within the U.S.
*Includes premium assumed from the Specialty P&C segment of $2.9 million and $9.5 million for the three and nine months ended September 30, 2017, respectively, and $3.4 million and $10.4 million for the same respective periods of 2016. |
Subsequent Events |
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Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In October 2017, ProAssurance repaid $18 million of the balance outstanding on the Revolving Credit Agreement (see Note 7 of the Notes to Condensed Consolidated Financial Statements for further discussion of the terms of the Revolving Credit Agreement). |
Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Reclassifications | Reclassifications In the second quarter of 2017, ProAssurance began presenting separately the components of Underwriting, policy acquisition and operating expense as Operating expense and DPAC amortization on the Condensed Consolidated Statements of Income and Comprehensive Income in order to provide additional details for investors. The Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2016 have been reclassified to conform to the current period presentation. Total Underwriting, policy acquisition and operating expense as well as Net income for all periods presented was not affected by the change in presentation. |
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Accounting Changes Adopted and Not Yet Adopted | Accounting Changes Adopted Improvements to Employee Share-Based Payment Accounting Effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, the FASB issued guidance that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of cash flows, and the classification of awards as either equity or liabilities. Under the new guidance, the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes is to be recognized as income tax expense in the current period and included with other income tax cash flows as an operating activity. The threshold for equity classification has also been revised to permit withholdings up to the maximum statutory tax rates in the applicable jurisdictions. The update also provides an accounting policy election to account for forfeitures as they occur. ProAssurance adopted the guidance as of January 1, 2017. The primary effects of the adoption on the current period are the following: (1) using a prospective application, ProAssurance recorded unrecognized excess tax benefits of $2.6 million as current tax expense for the nine months ended September 30, 2017 (unrecognized excess tax benefits were nominal for the 2017 three-month period), (2) using a modified retrospective application, ProAssurance elected to recognize forfeitures as they occur and recorded a $0.4 million increase to Additional paid-in capital, and a respective $0.3 million reduction to Retained earnings and a $0.1 million increase to deferred taxes to reflect the incremental share-based compensation expense, net of related tax impacts, that would have been recognized in prior years under the modified guidance and (3) excess tax benefits from share-based compensation of $2.2 million was reclassified from financing activities to operating activities in the Condensed Consolidated Statements of Cash Flows. Interests Held Through Related Parties that are Under Common Control Effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, the FASB issued additional guidance regarding consolidation of legal entities such as LPs/LLCs and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The new guidance modifies the criteria used by a reporting entity when determining if it is a primary beneficiary of a VIE when there are entities under common control and the reporting entity has indirect interests in the VIE through related party relationships. ProAssurance adopted the guidance as of January 1, 2017. Adoption of the guidance had no material effect on ProAssurance’s results of operations or financial position. Simplifying the Transition to the Equity Method of Accounting Effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, the FASB issued guidance that eliminates the requirement for retroactive restatement when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. The new guidance provides that the cost of acquiring an additional interest in an investee is to be added to the current basis of an investor’s previously held interest and the equity method of accounting adopted as of the date the investment becomes qualified for equity method accounting with no retroactive adjustment of the investment. If an available-for-sale equity security qualifies for the equity method of accounting, the unrealized holding gain or loss in AOCI is to be recognized through earnings at the date the investment becomes qualified for use of the equity method. ProAssurance adopted the guidance as of January 1, 2017. Adoption of the guidance had no material effect on ProAssurance’s results of operations or financial position. Clarifying the Definition of a Business Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance which provides clarification of the definition of a business, affecting areas such as acquisitions, disposals, goodwill and consolidation. The new guidance intends to assist entities with determining whether a transaction should be accounted for as an acquisition or disposal of assets or a business. The guidance will be applied prospectively to any transaction occurring within the period of adoption. ProAssurance early adopted the guidance during the third quarter of 2017 and adoption of the guidance had no material effect on ProAssurance’s results of operations or financial position. Accounting Changes Not Yet Adopted Restricted Cash Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance related to the classification of restricted cash presented in the statement of cash flows with the objective of reducing diversity in practice. Under the new guidance, entities are required to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts as presented on the statement of cash flows. ProAssurance plans to adopt the guidance beginning January 1, 2018. Adoption is not expected to have a material effect on ProAssurance’s results of operations, financial position or cash flows. Intra-Entity Transfers of Assets Other than Inventory Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance which reduces the complexity in accounting standards related to the income tax consequences of intra-entity transfers of assets other than inventory. Under the new guidance, entities are required to recognize income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs instead of delaying recognition until the asset has been sold to an outside party. ProAssurance is in the process of evaluating the effect the new guidance would have on its results of operations and financial position and plans to adopt the guidance beginning January 1, 2018. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Classification of Certain Cash Receipts and Cash Payments Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance related to the classification of certain cash receipts and cash payments presented in the statement of cash flows with the objective of reducing diversity in practice. ProAssurance plans to adopt the guidance beginning January 1, 2018. Adoption is not expected to have a material effect on ProAssurance’s results of operations, financial position or cash flows. Revenue from Contracts with Customers Effective for fiscal years beginning after December 15, 2017 the FASB issued guidance related to revenue from contracts with customers. The core principle of the new guidance is that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ProAssurance plans to adopt the guidance beginning January 1, 2018 under the modified retrospective method. As the majority of ProAssurance's revenues come from insurance contracts which fall under the scope of other FASB standards, only an insignificant amount of the Company's revenue is subject to the updated guidance. Therefore, adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Recognition and Measurement of Financial Assets and Financial Liabilities Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance that requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The new guidance also specifies that an entity use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and present financial assets and liabilities by measurement category and form of financial asset. Other provisions of the new guidance include: revised disclosure requirements related to the presentation in comprehensive income of changes in the fair value of liabilities; elimination, for public companies, of disclosure requirements relative to the method(s) and significant assumptions underlying fair values disclosed for financial instruments measured at amortized cost; and simplified impairment assessments for equity investments without readily determinable fair values. ProAssurance plans to adopt the guidance beginning January 1, 2018, with the cumulative effect of the adoption made to retained earnings. The majority of ProAssurance's equity investments are either measured at fair value or accounted for under the equity method of accounting. As of September 30, 2017, approximately 1% of the Company's total investments would be impacted by the guidance and therefore, adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Modification Accounting for Employee Share-Based Payment Awards Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, the FASB issued guidance which reduces the complexity in accounting standards when there is a change in the terms or conditions of a share-based payment award. The new guidance clarifies that an entity should apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. ProAssurance plans to adopt the guidance beginning January 1, 2018. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Premium Amortization on Purchased Callable Debt Securities Effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, the FASB issued guidance that will require the premium for certain callable debt securities to be amortized over a shorter period than is currently required. Currently amortization is permitted over the contractual life of the instrument and the guidance shortens the amortization to the earliest call date. The purpose of the guidance is to more closely align the amortization period of premiums to expectations incorporated in market pricing on the underlying securities. ProAssurance plans to adopt the guidance beginning January 1, 2019. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. Leases Effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, the FASB issued guidance that requires a lessee to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. ProAssurance plans to adopt the guidance beginning January 1, 2019. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position as ProAssurance does not have any leases it believes to be material. Simplifying the Test for Goodwill Impairment Effective for the fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, the FASB issued guidance that simplifies the requirements to test goodwill for impairment for business entities that have goodwill reported in their financial statements. The guidance eliminates the second step of the impairment test which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount. In addition, the guidance also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. ProAssurance plans to adopt the guidance beginning January 1, 2020. Adoption is not expected to have a material effect on ProAssurance’s results of operations or financial position. Improvements to Financial Instruments - Credit Losses Effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, the FASB issued guidance that replaces the incurred loss impairment methodology, which delays recognition of credit losses until a probable loss has been incurred, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Under the new guidance, credit losses are required to be recorded through an allowance for credit losses account and the income statement reflects the measurement for newly recognized financial assets, as well as increases or decreases of expected credit losses that have taken place during the period. ProAssurance is in the process of evaluating the effect the new guidance would have on its results of operations and financial position and plans to adopt the guidance beginning January 1, 2020. Adoption of the guidance is not expected to have a material effect on ProAssurance’s results of operations or financial position. |
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Fair Value Policy | The fair values for securities included in the Level 2 category, with the few exceptions described below, were developed by one of several third party, nationally recognized pricing services, including services that price only certain types of securities. Each service uses complex methodologies to determine values for securities and subject the values they develop to quality control reviews. Management selected a primary source for each type of security in the portfolio and reviewed the values provided for reasonableness by comparing data to alternate pricing services and to available market and trade data. Values that appeared inconsistent were further reviewed for appropriateness. Any value that did not appear reasonable was discussed with the service that provided the value and adjusted, if necessary. There were no material changes to the values supplied by the pricing services during the three and nine months ended September 30, 2017 and 2016. 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 were 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. Government-sponsored enterprise obligations were 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 were included in the valuation process when necessary to reflect recent regulatory, government or corporate actions or significant economic, industry or geographic events affecting the security’s fair value. State and municipal bonds were valued using a series of matrices that considered credit ratings, the structure of the security, the sector in which the security falls, yields, and contractual cash flows. Valuations were further adjusted, when necessary, to reflect the expected effect on fair value of recent significant economic or geographic events or ratings changes. Corporate debt, multiple observable inputs consisted primarily of corporate bonds, but also included a small number of bank loans. The methodology used to value Level 2 corporate bonds was the same as the methodology previously described for U.S. Government-sponsored enterprise obligations. Bank loans were valued based on an average of broker quotes for the loans in question, if available. If quotes were not available, the loans were valued based on quoted prices for comparable loans or, if the loan was newly issued, by comparison to similar seasoned issues. Broker quotes were compared to actual trade prices to permit assessment of the reliability of the quotes; unreliable quotes were not considered in quoted averages. Residential and commercial mortgage-backed securities were valued using a pricing matrix which considers the issuer type, coupon rate and longest cash flows outstanding. The matrix used was based on the most recently available market information. Agency and non-agency collateralized mortgage obligations were 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. Other asset-backed securities were 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. Equity securities were securities not traded on an exchange on the valuation date. The securities were valued using the most recently available quotes for the securities. Short-term investments are securities maturing within one year, carried at cost which approximated the fair value of the security due to the short term to maturity. Other investments consisted primarily of convertible bonds valued using a pricing model that incorporated selected dealer quotes as well as current market data regarding equity prices and risk free rates. If dealer quotes were unavailable for the security being valued, quotes for securities with similar terms and credit status were used in the pricing model. Dealer quotes selected for use were those considered most accurate based on parameters such as underwriter status and historical reliability. 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 Valuation Methodologies Corporate debt, limited observable inputs consisted of corporate bonds valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were subjectively determined by management if not available. At September 30, 2017, 73% of the securities were rated and the average rating was BBB+. At December 31, 2016, 84% of the securities were rated and the average rating was BBB+. Other asset-backed securities consisted of securitizations of receivables valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Other investments consisted of convertible securities for which limited observable inputs were available at September 30, 2017 and at December 31, 2016. The securities were valued internally based on expected cash flows, including the expected final recovery, discounted at a yield that considered the lack of liquidity and the financial status of the issuer. |
Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | Other liabilities consisted of the following:
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Fair Value Measurement (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value | Fair values of assets measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 are shown in the following tables. Where applicable, the tables also indicate the fair value hierarchy of the valuation techniques utilized to determine those fair values. 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 require judgment and consideration of factors specific to the assets being valued.
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Summary of quantitative information about Level 3 fair value measurements | Quantitative Information Regarding Level 3 Valuations
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Summary of changes in the fair value of assets measured at fair value | The following tables (the Level 3 Tables) present summary information regarding changes in the fair value of assets measured at fair value using Level 3 inputs.
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Investments in Limited liability companies and limited partnerships | Investments in unconsolidated subsidiaries at both September 30, 2017 and December 31, 2016 included interests in investment fund LPs/LLCs and Other investments at September 30, 2017 included interests in certain investment funds that measure fund assets at fair value on a recurring basis and that provide a NAV for the interest. The carrying value of these interests is based on the NAV provided and was considered to approximate the fair value of the interests. In accordance with GAAP, the fair value of these investments was not classified within the fair value hierarchy. Additional information regarding these investments is as follows:
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Financial instruments not measured at fair value | The following table provides the estimated fair value of our financial instruments that, in accordance with GAAP for the type of investment, are measured using a methodology other than fair value. All fair values provided fall within the Level 3 fair value category.
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost and estimated fair value of available-for-sale fixed maturities and equity securities | Available-for-sale securities at September 30, 2017 and December 31, 2016 included the following:
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Schedule of available for sale securities by contractual maturity | The recorded cost basis and estimated fair value of available-for-sale fixed maturities at September 30, 2017, 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.
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Unconsolidated subsidiaries | ProAssurance holds investments in unconsolidated subsidiaries, accounted for under the equity method. The investments include the following:
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Other investments | Other investments at September 30, 2017 and December 31, 2016 were comprised as follows:
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Investments held in an unrealized loss position | The following tables provide summarized information with respect to investments held in an unrealized loss position at September 30, 2017 and December 31, 2016, including the length of time the investment had been held in a continuous unrealized loss position.
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Net Investment Income | Net investment income by investment category was as follows:
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Net realized investment gains (losses) | The following table provides detailed information regarding Net realized investment gains (losses):
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Other than temporary impairment, credit losses recognized in earnings | 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 OTTI was recorded in OCI.
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Information regarding sales and purchases of available-for-sale securities | Other information regarding sales and purchases of available-for-sale securities is as follows:
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Reserve for Losses and Loss Adjustment Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of reserve for losses and loss adjustment expenses | Activity in the Reserve for losses and loss adjustment expenses is summarized as follows:
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | ProAssurance’s outstanding debt consisted of the following:
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Shareholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based compensation expense and related tax benefits | Share-based compensation expense and related tax benefits were as follows:
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Reclassification adjustments related to available-for-sale securities | Amounts reclassified from AOCI to Net income and the amounts of deferred tax expense (benefit) included in OCI were as follows:
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Earnings Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table provides the weighted average number of common shares outstanding used in the calculation of the Company's basic and diluted earnings per share:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Financial results by segment were as follows:
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Schedule of Gross Premiums by Product | The following table provides detailed information regarding ProAssurance's gross premiums earned by product as well as a reconciliation to net premiums earned. All gross premiums earned are from external customers except as noted. ProAssurance's insured risks are primarily within the U.S.
*Includes premium assumed from the Specialty P&C segment of $2.9 million and $9.5 million for the three and nine months ended September 30, 2017, respectively, and $3.4 million and $10.4 million for the same respective periods of 2016. |
Basis of Presentation (Other Liabilities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
SPC dividends payable | $ 46,353 | $ 34,289 | |
Unpaid dividends | 16,558 | 265,659 | $ 16,462 |
All other | 113,417 | 122,337 | |
Total other liabilities | $ 176,328 | $ 422,285 |
Fair Value Measurement (Assets and Liabilities Measured at Fair Value) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Assets: | ||
Equity securities | $ 411,796 | $ 387,274 |
Other investments, portion carried at fair value | 51,789 | 31,501 |
LP/LLC and investment fund interests carried at NAV which approximates fair value. These interests, reported as a part of Investment in unconsolidated subsidiaries and Other investments, respectively, are not categorized within the fair value hierarchy. | 222,541 | 204,719 |
Level 3 [Member] | Corporate debt with limited observable inputs [Member] | ||
Assets: | ||
Total assets categorized within the fair value hierarchy | 14,963 | 14,810 |
Level 3 [Member] | Other asset-backed securities [Member] | ||
Assets: | ||
Total assets categorized within the fair value hierarchy | 3,540 | 3,007 |
Fair Value, Measurements, Recurring [Member] | ||
Assets: | ||
Other investments, portion carried at fair value | 31,789 | 31,501 |
Total assets categorized within the fair value hierarchy | 3,206,314 | 3,474,265 |
LP/LLC and investment fund interests carried at NAV which approximates fair value. These interests, reported as a part of Investment in unconsolidated subsidiaries and Other investments, respectively, are not categorized within the fair value hierarchy. | 222,541 | 204,719 |
Total assets at fair value, including NAV value not within fair value hierarchy | 3,428,855 | 3,678,984 |
Fair Value, Measurements, Recurring [Member] | U.S. Treasury obligations [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 148,372 | 146,539 |
Fair Value, Measurements, Recurring [Member] | U.S. Government-sponsored enterprise obligations [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 18,772 | 30,235 |
Fair Value, Measurements, Recurring [Member] | State and municipal bonds [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 693,398 | 800,463 |
Fair Value, Measurements, Recurring [Member] | Corporate debt, multiple observable inputs [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 1,257,819 | 1,264,181 |
Fair Value, Measurements, Recurring [Member] | Corporate debt with limited observable inputs [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 14,963 | 14,810 |
Fair Value, Measurements, Recurring [Member] | Residential mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 201,691 | 217,906 |
Fair Value, Measurements, Recurring [Member] | Agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 11,835 | 12,783 |
Fair Value, Measurements, Recurring [Member] | Other commercial mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 16,190 | 19,611 |
Fair Value, Measurements, Recurring [Member] | Other asset-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 105,310 | 106,878 |
Fair Value, Measurements, Recurring [Member] | Financial [Member] | ||
Assets: | ||
Equity securities | 75,274 | 81,749 |
Fair Value, Measurements, Recurring [Member] | Utilities/Energy [Member] | ||
Assets: | ||
Equity securities | 53,553 | 52,869 |
Fair Value, Measurements, Recurring [Member] | Consumer oriented [Member] | ||
Assets: | ||
Equity securities | 53,569 | 61,284 |
Fair Value, Measurements, Recurring [Member] | Industrial [Member] | ||
Assets: | ||
Equity securities | 51,002 | 54,265 |
Fair Value, Measurements, Recurring [Member] | Bond funds [Member] | ||
Assets: | ||
Equity securities | 119,155 | 90,002 |
Fair Value, Measurements, Recurring [Member] | All other [Member] | ||
Assets: | ||
Equity securities | 59,243 | 47,105 |
Fair Value, Measurements, Recurring [Member] | Short-term investments [Member] | ||
Assets: | ||
Short-term investments | 294,379 | 442,084 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | ||
Assets: | ||
Other investments, portion carried at fair value | 747 | 1,956 |
Total assets categorized within the fair value hierarchy | 703,745 | 799,066 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | U.S. Treasury obligations [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | U.S. Government-sponsored enterprise obligations [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | State and municipal bonds [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Corporate debt, multiple observable inputs [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 2,406 | 2,339 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Corporate debt with limited observable inputs [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Residential mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Other commercial mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Other asset-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Financial [Member] | ||
Assets: | ||
Equity securities | 75,274 | 81,749 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Utilities/Energy [Member] | ||
Assets: | ||
Equity securities | 53,553 | 52,869 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Consumer oriented [Member] | ||
Assets: | ||
Equity securities | 53,569 | 61,284 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Industrial [Member] | ||
Assets: | ||
Equity securities | 51,002 | 54,265 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Bond funds [Member] | ||
Assets: | ||
Equity securities | 119,155 | 79,843 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | All other [Member] | ||
Assets: | ||
Equity securities | 59,243 | 27,181 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Short-term investments [Member] | ||
Assets: | ||
Short-term investments | 288,796 | 437,580 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | ||
Assets: | ||
Other investments, portion carried at fair value | 30,614 | 29,542 |
Total assets categorized within the fair value hierarchy | 2,483,638 | 2,657,379 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | U.S. Treasury obligations [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 148,372 | 146,539 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | U.S. Government-sponsored enterprise obligations [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 18,772 | 30,235 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | State and municipal bonds [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 693,398 | 800,463 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Corporate debt, multiple observable inputs [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 1,255,413 | 1,261,842 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Corporate debt with limited observable inputs [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Residential mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 201,691 | 217,906 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 11,835 | 12,783 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Other commercial mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 16,190 | 19,611 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Other asset-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 101,770 | 103,871 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Financial [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Utilities/Energy [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Consumer oriented [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Industrial [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Bond funds [Member] | ||
Assets: | ||
Equity securities | 0 | 10,159 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | All other [Member] | ||
Assets: | ||
Equity securities | 0 | 19,924 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Short-term investments [Member] | ||
Assets: | ||
Short-term investments | 5,583 | 4,504 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | ||
Assets: | ||
Other investments, portion carried at fair value | 428 | 3 |
Total assets categorized within the fair value hierarchy | 18,931 | 17,820 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | U.S. Treasury obligations [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | U.S. Government-sponsored enterprise obligations [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | State and municipal bonds [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Corporate debt, multiple observable inputs [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Corporate debt with limited observable inputs [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 14,963 | 14,810 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Residential mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Other commercial mortgage-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Other asset-backed securities [Member] | ||
Assets: | ||
Fixed maturities, available for sale | 3,540 | 3,007 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Financial [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Utilities/Energy [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Consumer oriented [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Industrial [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Bond funds [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | All other [Member] | ||
Assets: | ||
Equity securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Short-term investments [Member] | ||
Assets: | ||
Short-term investments | $ 0 | $ 0 |
Fair Value Measurement (Narrative) (Details) $ in Millions |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2017
USD ($)
Agreement
|
Dec. 31, 2016 |
Sep. 30, 2016
USD ($)
|
|
Credit Derivatives [Line Items] | |||
Transfer of equity securities from Level 2 to Level 1 | $ 10.2 | ||
Number of line of credit agreement | Agreement | 2 | ||
Corporate debt with limited observable inputs [Member] | NRSRO [Member] | NRSRO, Rating BBBplus [Member] | |||
Credit Derivatives [Line Items] | |||
Credit rating | 73.00% | 84.00% | |
Equity securities [Member] | |||
Credit Derivatives [Line Items] | |||
Transfer of equity securities from Level 2 to Level 1 | $ 35.4 |
Fair Value Measurement (Quantitative Information Regarding Level 3 Valuations) (Details) - Level 3 [Member] - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Corporate debt with limited observable inputs [Member] | ||
Assets: | ||
Fair Value at | $ 14,963 | $ 14,810 |
Corporate debt with limited observable inputs [Member] | Market comparable securities valuation technique [Member] | Minimum [Member] | ||
Assets: | ||
Comparability Adjustment | 0.00% | |
Corporate debt with limited observable inputs [Member] | Market comparable securities valuation technique [Member] | Maximum [Member] | ||
Assets: | ||
Comparability Adjustment | 5.00% | |
Corporate debt with limited observable inputs [Member] | Market comparable securities valuation technique [Member] | Weighted Average [Member] | ||
Assets: | ||
Comparability Adjustment | 2.50% | |
Corporate debt with limited observable inputs [Member] | Discount cash flows valuation technique [Member] | Minimum [Member] | ||
Assets: | ||
Comparability Adjustment | 0.00% | |
Corporate debt with limited observable inputs [Member] | Discount cash flows valuation technique [Member] | Maximum [Member] | ||
Assets: | ||
Comparability Adjustment | 5.00% | |
Corporate debt with limited observable inputs [Member] | Discount cash flows valuation technique [Member] | Weighted Average [Member] | ||
Assets: | ||
Comparability Adjustment | 2.50% | |
Other asset-backed securities [Member] | ||
Assets: | ||
Fair Value at | $ 3,540 | 3,007 |
Other asset-backed securities [Member] | Market comparable securities valuation technique [Member] | Minimum [Member] | ||
Assets: | ||
Comparability Adjustment | 0.00% | |
Other asset-backed securities [Member] | Market comparable securities valuation technique [Member] | Maximum [Member] | ||
Assets: | ||
Comparability Adjustment | 5.00% | |
Other asset-backed securities [Member] | Market comparable securities valuation technique [Member] | Weighted Average [Member] | ||
Assets: | ||
Comparability Adjustment | 2.50% | |
Other asset-backed securities [Member] | Discount cash flows valuation technique [Member] | Minimum [Member] | ||
Assets: | ||
Comparability Adjustment | 0.00% | |
Other asset-backed securities [Member] | Discount cash flows valuation technique [Member] | Maximum [Member] | ||
Assets: | ||
Comparability Adjustment | 5.00% | |
Other asset-backed securities [Member] | Discount cash flows valuation technique [Member] | Weighted Average [Member] | ||
Assets: | ||
Comparability Adjustment | 2.50% | |
Other investments [Member] | ||
Assets: | ||
Fair Value at | $ 428 | $ 3 |
Other investments [Member] | Discount cash flows valuation technique [Member] | Minimum [Member] | ||
Assets: | ||
Comparability Adjustment | 0.00% | |
Other investments [Member] | Discount cash flows valuation technique [Member] | Maximum [Member] | ||
Assets: | ||
Comparability Adjustment | 10.00% | |
Other investments [Member] | Discount cash flows valuation technique [Member] | Weighted Average [Member] | ||
Assets: | ||
Comparability Adjustment | 5.00% |
Fair Value Measurement (Level 3 Assets) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||||
Beginning Balance | $ 20,859 | $ 20,121 | $ 17,820 | $ 15,257 |
Included in earnings, as a part of: | ||||
Included in other comprehensive income | (63) | 330 | (203) | 464 |
Purchases | 581 | 193 | 12,470 | 11,248 |
Sales | (858) | (709) | (5,330) | (4,108) |
Transfers in | 1,412 | 2,819 | 2,320 | 2,819 |
Transfers out | (2,948) | (5,110) | (7,910) | (7,921) |
Ending Balance | 18,931 | 17,613 | 18,931 | 17,613 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | 0 | 0 | 0 |
Net investment income [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | (52) | (31) | (125) | (71) |
Net realized investment gains (losses) [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | (111) | (75) | ||
State and municipal bonds [Member] | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||||
Beginning Balance | 0 | 0 | ||
Included in earnings, as a part of: | ||||
Included in other comprehensive income | 0 | 0 | ||
Purchases | 0 | 0 | ||
Sales | 0 | 0 | ||
Transfers in | 900 | 900 | ||
Transfers out | 0 | 0 | ||
Ending Balance | 900 | 900 | ||
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | 0 | ||
State and municipal bonds [Member] | Net investment income [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | 0 | 0 | ||
State and municipal bonds [Member] | Net realized investment gains (losses) [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | 0 | |||
Corporate debt [Member] | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||||
Beginning Balance | 17,849 | 17,810 | 14,810 | 14,500 |
Included in earnings, as a part of: | ||||
Included in other comprehensive income | (18) | 324 | (296) | 453 |
Purchases | 1 | 0 | 11,890 | 5,995 |
Sales | (858) | (709) | (4,418) | (3,406) |
Transfers in | 989 | 0 | 999 | 0 |
Transfers out | (2,948) | (5,110) | (7,910) | (5,116) |
Ending Balance | 14,963 | 12,287 | 14,963 | 12,287 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | 0 | 0 | 0 |
Corporate debt [Member] | Net investment income [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | (52) | (28) | (125) | (64) |
Corporate debt [Member] | Net realized investment gains (losses) [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | 13 | (75) | ||
Asset-backed securities [Member] | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||||
Beginning Balance | 3,005 | 755 | 3,007 | 757 |
Included in earnings, as a part of: | ||||
Included in other comprehensive income | (45) | (2) | (47) | 3 |
Purchases | 580 | 0 | 580 | 3,500 |
Sales | 0 | 0 | 0 | (702) |
Transfers in | 0 | 1,000 | 0 | 1,000 |
Transfers out | 0 | 0 | 0 | (2,805) |
Ending Balance | 3,540 | 1,753 | 3,540 | 1,753 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | 0 | 0 | 0 |
Asset-backed securities [Member] | Net investment income [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | 0 | 0 | 0 | 0 |
Asset-backed securities [Member] | Net realized investment gains (losses) [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | 0 | 0 | ||
All other investments [Member] | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||||
Beginning Balance | 5 | 1,556 | 3 | 0 |
Included in earnings, as a part of: | ||||
Included in other comprehensive income | 0 | 8 | 140 | 8 |
Purchases | 0 | 193 | 0 | 1,753 |
Sales | 0 | 0 | (912) | 0 |
Transfers in | 423 | 919 | 1,321 | 919 |
Transfers out | 0 | 0 | 0 | 0 |
Ending Balance | 428 | 2,673 | 428 | 2,673 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | 0 | 0 | 0 |
All other investments [Member] | Net investment income [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | $ 0 | $ (3) | 0 | (7) |
All other investments [Member] | Net realized investment gains (losses) [Member] | ||||
Included in earnings, as a part of: | ||||
Total gains (losses) realized and unrealized, included in earnings | $ (124) | $ 0 |
Fair Value Measurement (Investments in LLCs and Limited Partnerships) (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments in LPs/LLCs fair value | $ 222,541,000 | $ 204,719,000 |
Private debt fund [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments LPs/LLCs unfunded commitments | 12,006,000 | |
Investments in LPs/LLCs fair value | 42,650,000 | 55,637,000 |
Long equity fund [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments LPs/LLCs unfunded commitments | 0 | |
Investments in LPs/LLCs fair value | 7,396,000 | 6,268,000 |
Long/Short equity funds [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments LPs/LLCs unfunded commitments | 0 | |
Investments in LPs/LLCs fair value | 30,904,000 | 28,926,000 |
Non-public equity funds [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments LPs/LLCs unfunded commitments | 86,985,000 | |
Investments in LPs/LLCs fair value | 92,887,000 | 89,691,000 |
Multi-strategy fund of funds [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments LPs/LLCs unfunded commitments | 0 | |
Investments in LPs/LLCs fair value | 8,966,000 | 8,448,000 |
Structured credit fund [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments LPs/LLCs unfunded commitments | 0 | |
Investments in LPs/LLCs fair value | 6,394,000 | 4,273,000 |
Long/Short commodities fund [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments LPs/LLCs unfunded commitments | 0 | |
Investments in LPs/LLCs fair value | 12,648,000 | 11,476,000 |
Strategy focused fund [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments LPs/LLCs unfunded commitments | 4,304,000 | |
Investments in LPs/LLCs fair value | 696,000 | 0 |
Mortgage fund [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Investments LPs/LLCs unfunded commitments | 0 | |
Investments in LPs/LLCs fair value | $ 20,000,000 | $ 0 |
Fair Value Measurement (Investments in LLCs and Limited Partnerships Footnote) (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Long equity fund [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Investment redemption notice period | 15 days |
Payment period for redemption of LP valued at NAV | 10 days |
Long/Short Equity Funds [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Payment period for redemption of LP valued at NAV | 30 days |
Redemption percentage of LP at NAV for which initial payment is limited | 90.00% |
Non-public equity funds [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Liquidating investments remaining period | 9 years |
Structured credit fund [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Investment redemption notice period | 90 days |
Long/Short commodities fund [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Investment redemption notice period | 30 days |
Mortgage fund [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Investment redemption notice period | 65 days |
Payment period for redemption of LP valued at NAV | 45 days |
Minimum [Member] | Secured debt fund [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Liquidating investments remaining period | 3 years |
Minimum [Member] | Long/Short Equity Funds [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Investment redemption notice period | 30 days |
Maximum [Member] | Secured debt fund [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Liquidating investments remaining period | 8 years |
Maximum [Member] | Long/Short Equity Funds [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Investment redemption notice period | 90 days |
Maximum [Member] | Long/Short commodities fund [Member] | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Payment period for redemption of LP valued at NAV | 30 days |
Fair Value Measurement (Methodologies Other Than Fair Value) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Financial assets: | ||
BOLI | $ 61,652 | $ 60,134 |
Other investments | 103,764 | 81,892 |
Other assets | 109,638 | 96,004 |
Financial liabilities: | ||
Debt | 400,460 | 448,202 |
Other liabilities | 176,328 | 422,285 |
Not Measured At Fair Value [Member] | Carrying Value [Member] | ||
Financial assets: | ||
BOLI | 61,652 | 60,134 |
Other investments | 51,975 | 50,391 |
Other assets | 34,412 | 29,111 |
Financial liabilities: | ||
Other liabilities | 19,858 | 17,033 |
Not Measured At Fair Value [Member] | Carrying Value [Member] | Senior notes due 2023 [Member] | ||
Financial liabilities: | ||
Debt | 250,000 | 250,000 |
Not Measured At Fair Value [Member] | Carrying Value [Member] | Revolving Credit Facility [Member] | ||
Financial liabilities: | ||
Debt | 152,000 | 200,000 |
Not Measured At Fair Value [Member] | Level 3 [Member] | Fair Value [Member] | ||
Financial assets: | ||
BOLI | 61,652 | 60,134 |
Other investments | 60,713 | 58,757 |
Other assets | 34,311 | 28,960 |
Financial liabilities: | ||
Other liabilities | 19,858 | 17,011 |
Not Measured At Fair Value [Member] | Level 3 [Member] | Fair Value [Member] | Senior notes due 2023 [Member] | ||
Financial liabilities: | ||
Debt | 273,923 | 270,898 |
Not Measured At Fair Value [Member] | Level 3 [Member] | Fair Value [Member] | Revolving Credit Facility [Member] | ||
Financial liabilities: | ||
Debt | $ 152,000 | $ 200,000 |
Investments (Available-For-Sale Securities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | $ 2,429,092 | $ 2,586,821 |
Gross Unrealized Gains | 47,479 | 45,712 |
Gross Unrealized Losses | 8,221 | 19,127 |
Estimated Fair Value | 2,468,350 | 2,613,406 |
U.S. Treasury obligations [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 148,194 | 146,186 |
Gross Unrealized Gains | 954 | 1,264 |
Gross Unrealized Losses | 776 | 911 |
Estimated Fair Value | 148,372 | 146,539 |
U.S. Government-sponsored enterprise obligations [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 18,756 | 30,038 |
Gross Unrealized Gains | 119 | 388 |
Gross Unrealized Losses | 103 | 191 |
Estimated Fair Value | 18,772 | 30,235 |
State and municipal bonds [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 675,012 | 790,154 |
Gross Unrealized Gains | 20,086 | 17,261 |
Gross Unrealized Losses | 1,700 | 6,952 |
Estimated Fair Value | 693,398 | 800,463 |
Corporate debt [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 1,254,878 | 1,264,812 |
Gross Unrealized Gains | 22,427 | 22,659 |
Gross Unrealized Losses | 4,523 | 8,480 |
Estimated Fair Value | 1,272,782 | 1,278,991 |
Residential mortgage-backed securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 199,110 | 216,285 |
Gross Unrealized Gains | 3,401 | 3,667 |
Gross Unrealized Losses | 820 | 2,046 |
Estimated Fair Value | 201,691 | 217,906 |
Agency commercial mortgage-backed securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 11,841 | 12,837 |
Gross Unrealized Gains | 63 | 89 |
Gross Unrealized Losses | 69 | 143 |
Estimated Fair Value | 11,835 | 12,783 |
Other commercial mortgage-backed securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 16,135 | 19,571 |
Gross Unrealized Gains | 126 | 177 |
Gross Unrealized Losses | 71 | 137 |
Estimated Fair Value | 16,190 | 19,611 |
Other asset-backed securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 105,166 | 106,938 |
Gross Unrealized Gains | 303 | 207 |
Gross Unrealized Losses | 159 | 267 |
Estimated Fair Value | $ 105,310 | $ 106,878 |
Investments (Available For Sale Securities by Contractual Maturity) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | $ 2,429,092 | $ 2,586,821 |
Estimated Fair Value | 2,468,350 | 2,613,406 |
U.S. Treasury obligations [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 148,194 | 146,186 |
Due in one year or less | 30,655 | |
Due after one year through five years | 93,222 | |
Due after five years through ten years | 21,495 | |
Due after ten years | 3,000 | |
Estimated Fair Value | 148,372 | 146,539 |
U.S. Government-sponsored enterprise obligations [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 18,756 | 30,038 |
Due in one year or less | 249 | |
Due after one year through five years | 8,362 | |
Due after five years through ten years | 10,020 | |
Due after ten years | 141 | |
Estimated Fair Value | 18,772 | 30,235 |
State and municipal bonds [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 675,012 | 790,154 |
Due in one year or less | 57,500 | |
Due after one year through five years | 233,506 | |
Due after five years through ten years | 295,098 | |
Due after ten years | 107,294 | |
Estimated Fair Value | 693,398 | 800,463 |
Corporate debt [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 1,254,878 | 1,264,812 |
Due in one year or less | 124,057 | |
Due after one year through five years | 737,639 | |
Due after five years through ten years | 390,103 | |
Due after ten years | 20,983 | |
Estimated Fair Value | 1,272,782 | 1,278,991 |
Residential mortgage-backed securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 199,110 | 216,285 |
Estimated Fair Value | 201,691 | 217,906 |
Agency commercial mortgage-backed securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 11,841 | 12,837 |
Estimated Fair Value | 11,835 | 12,783 |
Other commercial mortgage-backed securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 16,135 | 19,571 |
Estimated Fair Value | 16,190 | 19,611 |
Other asset-backed securities [Member] | ||
Fixed maturities, available for sale | ||
Amortized Cost | 105,166 | 106,938 |
Estimated Fair Value | $ 105,310 | $ 106,878 |
Investments (Narrative) (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
Business
investment_interest
Issuer
Security
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
Business
investment_interest
Issuer
Security
|
Sep. 30, 2016
USD ($)
Issuer
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
Issuer
Security
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Securities on deposit with state insurance departments | $ 46,600 | $ 46,600 | ||||||
Business owned life insurance cost | 33,000 | 33,000 | ||||||
Investment in unconsolidated subsidiaries | 331,897 | 331,897 | $ 340,906 | |||||
Investments in LPs/LLCs fair value | $ 222,541 | $ 222,541 | 204,719 | |||||
Number of LPs / LLCs with investment ownership percent over 25% | Business | 3 | 3 | ||||||
Equity in earnings, losses from affordable housing projects | $ (3,400) | $ (6,700) | $ (10,700) | $ (14,900) | ||||
Affordable housing tax credits | 4,600 | 4,600 | 13,800 | 13,900 | ||||
Losses from historic tax credit investments | (600) | 1,600 | (3,400) | (2,000) | ||||
Tax credits recognized related to historic tax credit investments | 1,400 | 2,700 | 4,000 | 6,900 | ||||
Net impairment losses recognized in earnings | 0 | 100 | 171 | 9,766 | ||||
Portion of noncredit OTTI losses recognized in OCI | 0 | 0 | 248 | 1,068 | ||||
Credit-related other-than-temporary impairment recognized in earnings | 1,313 | 1,520 | 1,313 | 1,520 | $ 1,313 | 1,158 | $ 3,319 | $ 5,751 |
Equity Method Investments [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Investments in LPs/LLCs fair value | $ 202,500 | $ 202,500 | 204,700 | |||||
Tax Credit Partnerships Almost 100% Ownership [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Number of tax credit partnerships almost 100% ownership percentage | investment_interest | 2 | 2 | ||||||
Investment in unconsolidated subsidiaries | $ 34,500 | $ 34,500 | 40,200 | |||||
Tax Credit Partnerships Less Than 20% Ownership [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Investment in unconsolidated subsidiaries | 57,100 | 57,100 | 62,100 | |||||
Other Limited Partnerships and Limited Liability Company, Not Considered Investment Funds [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Investment in unconsolidated subsidiaries | 29,400 | 29,400 | 22,400 | |||||
Other Limited Partnerships and Limited Liability Company, Greater Than 25% Ownership [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Investment in unconsolidated subsidiaries | 25,400 | 25,400 | 18,500 | |||||
Other Limited Partnerships and Limited Liability Company Less than 25% Ownership [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Investment in unconsolidated subsidiaries | $ 206,500 | $ 206,500 | $ 208,600 | |||||
Maximum [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Period for federal home loan bank stock liquidation process | 5 years | |||||||
Maximum [Member] | Tax Credit Partnerships Almost 100% Ownership [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Equity method investment ownership percentage | 100.00% | 100.00% | ||||||
Maximum [Member] | Tax Credit Partnerships Less Than 20% Ownership [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Equity method investment ownership percentage | 20.00% | 20.00% | ||||||
Fixed maturities [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Required FAL Deposit | $ 98,700 | $ 98,700 | ||||||
Short-term investments [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Required FAL Deposit | $ 500 | $ 500 | ||||||
Non Government-Backed [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Number of debt securities in unrealized loss position | Security | 501 | 501 | 703 | |||||
Debt securities in unrealized loss position as percentage of total debt securities held | 20.40% | 20.40% | 27.20% | |||||
Number of issuers in unrealized loss position | Issuer | 335 | 335 | 456 | |||||
Single greatest unrealized loss position | $ 600 | $ 600 | ||||||
Second greatest unrealized loss position | 400 | 400 | $ 500 | |||||
Corporate debt [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Portion of noncredit OTTI losses recognized in OCI | 0 | 0 | 248 | 1,068 | ||||
Credit-related other-than-temporary impairment recognized in earnings | $ 5,500 | $ 5,500 | ||||||
Debt securities, number of issuers | Issuer | 10 | |||||||
Corporate bonds [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Net impairment losses recognized in earnings | $ 6,500 | |||||||
Portion of noncredit OTTI losses recognized in OCI | 900 | |||||||
Other investments [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Net impairment losses recognized in earnings | $ 3,100 | |||||||
Revolving Credit Facility [Member] | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Securities pledged as collateral | $ 189,500 | $ 189,500 |
Investments (Unconsolidated Subsidiaries) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Unconsolidated Subsidiaries | ||
Investment in unconsolidated subsidiaries | $ 331,897 | $ 340,906 |
Qualified affordable housing tax credit partnerships [Member] | ||
Unconsolidated Subsidiaries | ||
Investment in unconsolidated subsidiaries | 91,598 | 102,313 |
Other tax credit partnerships [Member] | ||
Unconsolidated Subsidiaries | ||
Investment in unconsolidated subsidiaries | 8,355 | 11,459 |
All Other LPs/LLCs [Member] | ||
Unconsolidated Subsidiaries | ||
Investment in unconsolidated subsidiaries | $ 231,944 | $ 227,134 |
Investments (Other Investments) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Investments | ||
Other investments | $ 103,764 | $ 81,892 |
Investments in LPs/LLCs, at cost [Member] | ||
Other Investments | ||
Other investments | 48,505 | 46,852 |
Convertible securities, at fair value [Member] | ||
Other Investments | ||
Other investments | 31,789 | 31,501 |
Investment funds, at fair value [Member] | ||
Other Investments | ||
Other investments | 20,000 | 0 |
Other, principally FHLB capital stock at cost [Member] | ||
Other Investments | ||
Other investments | $ 3,470 | $ 3,539 |
Investments (Investments Held in a Loss Position) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Securities [Member] | ||
Fair Value | ||
Fair Value | $ 688,268 | $ 948,519 |
Less than 12 months, Fair Value | 491,768 | 888,568 |
More than 12 months, Fair Value | 196,500 | 59,951 |
Unrealized Loss | ||
Unrealized Loss | 8,221 | 19,127 |
Less than 12 months, Unrealized Loss | 2,810 | 15,694 |
More than 12 months, Unrealized Loss | 5,411 | 3,433 |
U.S. Treasury obligations [Member] | ||
Fair Value | ||
Fair Value | 93,684 | 79,833 |
Less than 12 months, Fair Value | 77,679 | 79,833 |
More than 12 months, Fair Value | 16,005 | 0 |
Unrealized Loss | ||
Unrealized Loss | 776 | 911 |
Less than 12 months, Unrealized Loss | 410 | 911 |
More than 12 months, Unrealized Loss | 366 | 0 |
US Government-sponsored Enterprises Debt Securities [Member] | ||
Fair Value | ||
Fair Value | 9,958 | 11,746 |
Less than 12 months, Fair Value | 4,048 | 11,746 |
More than 12 months, Fair Value | 5,910 | 0 |
Unrealized Loss | ||
Unrealized Loss | 103 | 191 |
Less than 12 months, Unrealized Loss | 20 | 191 |
More than 12 months, Unrealized Loss | 83 | 0 |
State and municipal bonds [Member] | ||
Fair Value | ||
Fair Value | 104,279 | 224,884 |
Less than 12 months, Fair Value | 69,891 | 219,276 |
More than 12 months, Fair Value | 34,388 | 5,608 |
Unrealized Loss | ||
Unrealized Loss | 1,700 | 6,952 |
Less than 12 months, Unrealized Loss | 406 | 6,444 |
More than 12 months, Unrealized Loss | 1,294 | 508 |
Corporate debt [Member] | ||
Fair Value | ||
Fair Value | 354,309 | 469,632 |
Less than 12 months, Fair Value | 238,877 | 424,721 |
More than 12 months, Fair Value | 115,432 | 44,911 |
Unrealized Loss | ||
Unrealized Loss | 4,523 | 8,480 |
Less than 12 months, Unrealized Loss | 1,286 | 5,662 |
More than 12 months, Unrealized Loss | 3,237 | 2,818 |
Residential mortgage-backed securities [Member] | ||
Fair Value | ||
Fair Value | 65,541 | 103,680 |
Less than 12 months, Fair Value | 52,366 | 100,542 |
More than 12 months, Fair Value | 13,175 | 3,138 |
Unrealized Loss | ||
Unrealized Loss | 820 | 2,046 |
Less than 12 months, Unrealized Loss | 499 | 1,982 |
More than 12 months, Unrealized Loss | 321 | 64 |
Agency commercial mortgage-backed securities [Member] | ||
Fair Value | ||
Fair Value | 4,515 | 4,579 |
Less than 12 months, Fair Value | 4,138 | 4,192 |
More than 12 months, Fair Value | 377 | 387 |
Unrealized Loss | ||
Unrealized Loss | 69 | 143 |
Less than 12 months, Unrealized Loss | 41 | 114 |
More than 12 months, Unrealized Loss | 28 | 29 |
Other commercial mortgage-backed securities [Member] | ||
Fair Value | ||
Fair Value | 8,753 | 9,822 |
Less than 12 months, Fair Value | 5,217 | 9,179 |
More than 12 months, Fair Value | 3,536 | 643 |
Unrealized Loss | ||
Unrealized Loss | 71 | 137 |
Less than 12 months, Unrealized Loss | 38 | 134 |
More than 12 months, Unrealized Loss | 33 | 3 |
Other asset-backed securities [Member] | ||
Fair Value | ||
Fair Value | 47,229 | 44,343 |
Less than 12 months, Fair Value | 39,552 | 39,079 |
More than 12 months, Fair Value | 7,677 | 5,264 |
Unrealized Loss | ||
Unrealized Loss | 159 | 267 |
Less than 12 months, Unrealized Loss | 110 | 256 |
More than 12 months, Unrealized Loss | $ 49 | $ 11 |
Investments (Net Investment Income) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Net Investment Income | ||||
Investment fees and expenses | $ (1,457) | $ (1,647) | $ (5,173) | $ (4,594) |
Net investment income | 23,729 | 25,261 | 69,592 | 75,284 |
Fixed maturities [Member] | ||||
Net Investment Income | ||||
Investment Income | 18,924 | 21,024 | 57,885 | 64,808 |
Equities [Member] | ||||
Net Investment Income | ||||
Investment Income | 4,495 | 3,779 | 12,437 | 10,983 |
Short-term investments and Other invested assets [Member] | ||||
Net Investment Income | ||||
Investment Income | 1,147 | 1,466 | 2,926 | 2,550 |
BOLI [Member] | ||||
Net Investment Income | ||||
Investment Income | $ 620 | $ 639 | $ 1,517 | $ 1,537 |
Investments (Net Realized Investment Gains (Losses)) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Gain (Loss) on Investments [Line Items] | ||||
OTTI losses | $ 0 | $ (100) | $ (419) | $ (10,834) |
Portion of OTTI losses recognized in other comprehensive income before taxes | 0 | 0 | 248 | 1,068 |
Net impairment losses recognized in earnings | 0 | (100) | (171) | (9,766) |
Gross realized gains, available-for-sale securities | 1,724 | 3,898 | 4,323 | 8,969 |
Gross realized (losses), available-for-sale securities | (262) | (370) | (1,730) | (5,628) |
Net realized gains (losses), Short-term investments | (1) | 0 | (1) | 18 |
Net realized gains (losses), trading securities | 3,603 | 1,276 | 10,958 | 5,244 |
Net realized gains (losses), Other investments | 478 | 335 | 2,197 | 833 |
Change in unrealized holding gains (losses), trading securities | 2,182 | 9,816 | 2,606 | 17,663 |
Change in unrealized holding gains (losses), Other investments, carried at fair value | 23 | 880 | 621 | 976 |
Other | 2 | 2 | 7 | 5 |
Total net realized investment gains (losses) | 7,749 | 15,737 | 18,810 | 18,314 |
US States and Political Subdivisions Debt Securities [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
OTTI losses | 0 | (100) | 0 | (100) |
Corporate debt [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
OTTI losses | 0 | 0 | (419) | (7,604) |
Portion of OTTI losses recognized in other comprehensive income before taxes | 0 | 0 | 248 | 1,068 |
Other investments [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
OTTI losses | $ 0 | $ 0 | $ 0 | (3,130) |
Net impairment losses recognized in earnings | $ (3,100) |
Investments (Credit Losses Recorded in Earnings) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Other than Temporary Impairment, Credit Losses Recognized in Earnings: | ||||
Accumulated credit losses related to impaired debt securities, Beginning Balance | $ 1,313 | $ 3,319 | $ 1,158 | $ 5,751 |
Additional credit losses recognized during the period, related to securities for which: | ||||
No OTTI has been previously recognized | 0 | 0 | 171 | 2,398 |
OTTI has been previously recognized | 0 | 0 | 0 | 2,154 |
Reductions due to: | ||||
Securities sold during the period (realized) | 0 | (1,799) | (16) | (8,783) |
Accumulated credit losses related to impaired debt securities, Ending Balance | $ 1,313 | $ 1,520 | $ 1,313 | $ 1,520 |
Investments (Sales and Purchases of Available-for-Sale Securities) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Information regarding sales and purchases of available-for-sale securities | ||||
Proceeds from sales (exclusive of maturities and paydowns) | $ 74,100 | $ 114,900 | $ 309,600 | $ 306,800 |
Purchases | $ 90,600 | $ 167,200 | $ 449,717 | $ 540,370 |
Income Taxes (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Income Tax Contingency [Line Items] | ||
Unrecognized tax benefits | $ 8.5 | $ 8.4 |
Other Liabilities [Member] | ||
Income Tax Contingency [Line Items] | ||
Income taxes liabilities | $ 3.3 | $ 5.1 |
Reserve for Losses and Loss Adjustment Expenses (Details) $ in Thousands |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2017
USD ($)
partition
|
Sep. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | |||
Minimum period for claims resolution (years) | 5 years | ||
Number of business partitions | partition | 219 | ||
Summary of reserve for losses and loss adjustment expenses | |||
Balance, beginning of year | $ 1,993,428 | $ 2,005,326 | $ 2,005,326 |
Less reinsurance recoverables on unpaid losses and loss adjustment expenses | 273,475 | 249,350 | 249,350 |
Net balance, beginning of year | 1,719,953 | 1,755,976 | 1,755,976 |
Net losses: | |||
Current year | 454,121 | 430,422 | 587,007 |
Favorable development of reserves established in prior years, net | (90,063) | (94,486) | (143,778) |
Total | 364,058 | 335,936 | 443,229 |
Paid related to: | |||
Current year | (63,667) | (55,349) | (96,190) |
Prior years | (293,522) | (293,321) | (383,062) |
Total paid | (357,189) | (348,670) | (479,252) |
Net balance, end of period | 1,726,822 | 1,743,242 | 1,719,953 |
Plus reinsurance recoverables on unpaid losses and loss adjustment expenses | 313,876 | 254,777 | 273,475 |
Balance, end of period | $ 2,040,698 | $ 1,998,019 | $ 1,993,428 |
Commitments and Contingencies (Details) |
Sep. 30, 2017
USD ($)
|
Sep. 30, 2017
GBP (£)
|
Apr. 30, 2016
GBP (£)
|
---|---|---|---|
Lloyds Syndicate [Member] | |||
Other Commitments [Line Items] | |||
Required FAL Deposit | $ 99,200,000 | ||
Current lending capacity under revolving credit agreement | £ | £ 20,000,000 | ||
Interest rate on revolving credit agreement | 3.80% | ||
Unused commitments to extend credit | 14,700,000 | £ 11,000,000 | |
Commitment to Provide Capital [Member] | Lloyds Syndicate [Member] | |||
Other Commitments [Line Items] | |||
Commitments Total | 200,000,000 | ||
Strategic Business Partnership [Member] | |||
Other Commitments [Line Items] | |||
Line of credit amount | 9,000,000 | ||
Line of credit unused commitment | $ 1,600,000 |
Debt (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Outstanding long-term debt | ||
Debt, gross | $ 402,000,000 | $ 450,000,000 |
Less debt issuance costs | 1,540,000 | 1,798,000 |
Debt less debt issuance costs | 400,460,000 | 448,202,000 |
Senior Notes [Member] | Senior notes due 2023 [Member] | ||
Outstanding long-term debt | ||
Debt, gross | $ 250,000,000 | $ 250,000,000 |
Debt stated interest rate | 5.30% | 5.30% |
Line of Credit [Member] | Revolving Credit Facility [Member] | ||
Outstanding long-term debt | ||
Debt, gross | $ 152,000,000 | $ 200,000,000 |
Interest rate on senior notes | 1.73% | 1.35% |
Line of credit maximum borrowing capacity | $ 250,000,000 | $ 250,000,000 |
Shareholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2014 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Authorized common stock (in shares) | 100,000,000 | 100,000,000 | 100,000,000 | ||||||||
Authorized preferred stock (in shares) | 50,000,000 | 50,000,000 | 50,000,000 | ||||||||
Quarterly dividend declared, per share (USD per share) | $ 0.310 | $ 0.31 | $ 0.31 | $ 0.31 | $ 0.31 | $ 0.31 | $ 0.93 | $ 0.93 | |||
Dividend declared | $ 49,600 | $ 49,400 | |||||||||
Total authorizations which remain available for use | $ 109,600 | $ 109,600 | |||||||||
Common shares acquired (in shares) | 0 | 44,500 | |||||||||
Cost of common shares reacquired | $ 0 | $ 2,106 | |||||||||
Bonus compensation shares issued (in shares) | 9,000 | ||||||||||
Gain (loss) related to unrecognized changes in defined benefit plan liabilities | $ 600 | ||||||||||
Non-credit loss, net of tax | $ 500 | $ 500 | $ 300 | ||||||||
Statutory income tax rate | 35.00% | 35.00% | 35.00% | 35.00% | |||||||
Restricted Share Units (RSUs) [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Awards in period (in shares) | 84,600 | ||||||||||
Fair value of each unit awarded (USD per share) | $ 58.35 | ||||||||||
Award vesting period | 3 years | ||||||||||
Shares issued in period for share-based compensation (in shares) | 29,300 | ||||||||||
Performance Share Units [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Awards in period (in shares) | 48,000 | ||||||||||
Shares issued in period for share-based compensation (in shares) | 99,500 | ||||||||||
Performance Share Units [Member] | Minimum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award payout rate | 50.00% | ||||||||||
Performance Share Units [Member] | Maximum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award payout rate | 200.00% | ||||||||||
Performance Shares Granted in 2014 [Member] | Minimum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award payout rate | 117.00% | ||||||||||
Performance Shares Granted in 2014 [Member] | Maximum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award payout rate | 125.00% |
Shareholders' Equity (Share-based Compensation Expense and Related Tax Benefits) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Equity [Abstract] | ||||
Share-based compensation expense | $ 1,018 | $ 1,645 | $ 7,110 | $ 7,458 |
Related tax benefits | $ 356 | $ 576 | $ 2,489 | $ 2,610 |
Shareholders' Equity (AOCI Reclassification) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Reclassifications from AOCI to Net income: | ||||
Reclassification amount, before tax effect | $ 1,462 | $ 3,429 | $ 2,422 | $ (3,296) |
Tax effect (at 35%) | (512) | (1,200) | (848) | 1,154 |
Net reclassification adjustments | 950 | 2,229 | 1,574 | (2,142) |
Deferred tax expense (benefit) included in OCI | $ (373) | $ (2,687) | $ 4,091 | $ 17,114 |
Tax rate used to compute the tax effect of amounts reclassified out of OCI | 35.00% | 35.00% | 35.00% | 35.00% |
Realized investment gains (losses) [Member] | ||||
Reclassifications from AOCI to Net income: | ||||
Reclassification amount, before tax effect | $ 1,462 | $ 3,852 | $ 2,425 | $ 145 |
Non-credit impairment losses reclassified to earnings, due to sale of securities or reclassification as a credit loss [Member] | ||||
Reclassifications from AOCI to Net income: | ||||
Reclassification amount, before tax effect | $ 0 | $ (423) | $ (3) | $ (3,441) |
Variable Interest Entities (Details) - Variable Interest Entity, Not Primary Beneficiary [Member] - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other investments [Member] | ||
Variable Interest Entity [Line Items] | ||
VIE interests carrying value | $ 27.4 | $ 26.9 |
Investment in unconsolidated subsidiaries [Member] | ||
Variable Interest Entity [Line Items] | ||
VIE interests carrying value | $ 269.6 | $ 282.3 |
Earnings Per Share (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Weighted average number of common shares outstanding, basic (in shares) | 53,413,000 | 53,222,000 | 53,377,000 | 53,199,000 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average number of common shares outstanding, diluted (in shares) | 53,614,000 | 53,456,000 | 53,586,000 | 53,419,000 |
Effect of dilutive shares on earnings per share (usd per share) | $ 0.00 | $ (0.01) | $ 0.00 | $ (0.01) |
Antidilutive shares excluded from computation of earnings per share (in shares) | 28,000 | 0 | 9,000 | 0 |
Restricted Share Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dilutive securities (in shares) | 87,000 | 75,000 | 81,000 | 71,000 |
Performance Share Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dilutive securities (in shares) | 88,000 | 132,000 | 105,000 | 124,000 |
Purchase Match Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dilutive securities (in shares) | 26,000 | 27,000 | 23,000 | 25,000 |
Segment Information (Narrative) (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
segment
|
Sep. 30, 2016
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||
Number of operating segments | segment | 4 | ||||
Segregated portfolio cells dividend expense (income) | $ 2,891 | $ 3,196 | $ 14,076 | $ 5,895 | |
Income tax benefit (expense) | (6,024) | (9,680) | (4,467) | (16,457) | |
Premiums ceded under quota share agreement | $ 2,900 | 3,400 | $ 9,500 | 10,400 | |
Workers Compensation [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Worker's compensation SPC percentage ceded | 100.00% | 100.00% | |||
Lloyds Syndicate [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Proportion of Capital Provided to support Lloyd's Syndicate 1729 | 58.00% | 58.00% | |||
Operating Segments [Member] | Workers Compensation [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Segregated portfolio cells dividend expense (income) | $ 1,722 | 1,449 | $ 5,593 | 3,440 | |
Operating Segments [Member] | Lloyds Syndicate [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Income tax benefit (expense) | (61) | (1,352) | 495 | (2,248) | |
Operating Segments [Member] | Specialty Property and Casualty [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Segregated portfolio cells dividend expense (income) | (65) | 94 | 5,026 | 94 | |
Operating Segments [Member] | Specialty Property and Casualty [Member] | Previously Unrecognized Segregated Portfolilo Cells (SPC) Dividend Expense [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Segregated portfolio cells dividend expense (income) | $ 5,200 | ||||
Operating Segments [Member] | Corporate [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Segregated portfolio cells dividend expense (income) | 1,234 | 1,653 | 3,457 | 2,361 | |
Income tax benefit (expense) | $ (5,963) | $ (8,328) | $ (4,962) | $ (14,209) | |
Operating Segments [Member] | Corporate [Member] | Previously Unrecognized Segregated Portfolilo Cells (SPC) Dividend Expense [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Income tax benefit (expense) | $ 1,800 |
Segment Information (Financial Data by Segment) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Net premiums earned | $ 192,303 | $ 185,275 | $ 555,559 | $ 539,587 |
Net investment income | 23,729 | 25,261 | 69,592 | 75,284 |
Equity in earnings (loss) of unconsolidated subsidiaries | 4,164 | (3,349) | 8,489 | (6,607) |
Net realized gains (losses) | 7,749 | 15,737 | 18,810 | 18,314 |
Other income | 510 | 1,428 | 4,581 | 5,963 |
Net losses and loss adjustment expenses | (129,356) | (118,082) | (364,058) | (335,936) |
Underwriting, policy acquisition and operating expenses | (57,111) | (55,812) | (172,106) | (166,735) |
Segregated portfolio cells dividend (expense) income | (2,891) | (3,196) | (14,076) | (5,895) |
Interest expense | (4,124) | (3,748) | (12,402) | (11,285) |
Income tax benefit (expense) | (6,024) | (9,680) | (4,467) | (16,457) |
Net income | 28,949 | 33,834 | 89,922 | 96,233 |
Depreciation and amortization, net of accretion | 7,075 | 8,538 | 21,024 | 25,509 |
Specialty P&C [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net premiums earned | 118,331 | 116,199 | 340,394 | 335,080 |
Workers Compensation [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net premiums earned | 57,654 | 54,498 | 169,791 | 163,974 |
Lloyds Syndicate [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net premiums earned | 16,318 | 14,578 | 45,374 | 40,533 |
Operating Segments [Member] | Specialty P&C [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net premiums earned | 118,331 | 116,199 | 340,394 | 335,080 |
Other income | 1,276 | 1,012 | 3,943 | 4,021 |
Net losses and loss adjustment expenses | (73,831) | (72,311) | (220,123) | (205,787) |
Underwriting, policy acquisition and operating expenses | (27,037) | (26,563) | (79,252) | (77,519) |
Segregated portfolio cells dividend (expense) income | 65 | (94) | (5,026) | (94) |
Net income | 18,804 | 18,243 | 39,936 | 55,701 |
Depreciation and amortization, net of accretion | 1,933 | 1,979 | 5,350 | 5,475 |
Operating Segments [Member] | Workers Compensation [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net premiums earned | 57,654 | 54,498 | 169,791 | 163,974 |
Other income | 164 | 86 | 519 | 696 |
Net losses and loss adjustment expenses | (35,081) | (34,472) | (103,217) | (104,160) |
Underwriting, policy acquisition and operating expenses | (18,434) | (18,331) | (52,220) | (52,494) |
Segregated portfolio cells dividend (expense) income | (1,722) | (1,449) | (5,593) | (3,440) |
Net income | 2,581 | 332 | 9,280 | 4,576 |
Depreciation and amortization, net of accretion | 848 | 1,396 | 2,516 | 4,193 |
Operating Segments [Member] | Lloyds Syndicate [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net premiums earned | 16,318 | 14,578 | 45,374 | 40,533 |
Net investment income | 412 | 351 | 1,194 | 1,004 |
Net realized gains (losses) | 31 | 50 | 105 | 59 |
Other income | (1,881) | 734 | (1,641) | 1,174 |
Net losses and loss adjustment expenses | (20,444) | (11,299) | (40,718) | (25,989) |
Underwriting, policy acquisition and operating expenses | (6,723) | (6,251) | (19,786) | (16,660) |
Income tax benefit (expense) | (61) | (1,352) | 495 | (2,248) |
Net income | (12,348) | (3,189) | (14,977) | (2,127) |
Depreciation and amortization, net of accretion | (6) | 23 | (14) | 132 |
Operating Segments [Member] | Corporate [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | 23,317 | 24,910 | 68,398 | 74,280 |
Equity in earnings (loss) of unconsolidated subsidiaries | 4,164 | (3,349) | 8,489 | (6,607) |
Net realized gains (losses) | 7,718 | 15,687 | 18,705 | 18,255 |
Other income | 1,023 | 15 | 1,974 | 758 |
Underwriting, policy acquisition and operating expenses | (4,989) | (5,086) | (21,062) | (20,748) |
Segregated portfolio cells dividend (expense) income | (1,234) | (1,653) | (3,457) | (2,361) |
Interest expense | (4,124) | (3,748) | (12,402) | (11,285) |
Income tax benefit (expense) | (5,963) | (8,328) | (4,962) | (14,209) |
Net income | 19,912 | 18,448 | 55,683 | 38,083 |
Depreciation and amortization, net of accretion | 4,300 | 5,140 | 13,172 | 15,709 |
Intersegment Eliminations [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Other income | (72) | (419) | (214) | (686) |
Net losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Underwriting, policy acquisition and operating expenses | 72 | 419 | 214 | 686 |
Net income | 0 | 0 | $ 0 | $ 0 |
Depreciation and amortization, net of accretion | $ 0 | $ 0 |
Segment Information (Gross Premiums Earned by Product and Reconciliation to Net Premiums) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Net premiums earned | $ 192,303 | $ 185,275 | $ 555,559 | $ 539,587 |
Specialty P&C [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Ceded premiums earned | (22,096) | (19,022) | (62,503) | (56,150) |
Net premiums earned | 118,331 | 116,199 | 340,394 | 335,080 |
Specialty P&C [Member] | Healthcare professional liability [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 125,377 | 119,833 | 358,209 | 345,520 |
Specialty P&C [Member] | Legal professional liability [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 6,483 | 6,492 | 19,217 | 19,599 |
Specialty P&C [Member] | Medical technology and life sciences product liability [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 8,459 | 8,756 | 25,160 | 25,549 |
Specialty P&C [Member] | Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 108 | 140 | 311 | 562 |
Workers Compensation [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Ceded premiums earned | (6,038) | (6,586) | (17,825) | (19,053) |
Net premiums earned | 57,654 | 54,498 | 169,791 | 163,974 |
Workers Compensation [Member] | Traditional business [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 43,492 | 42,582 | 127,761 | 127,426 |
Workers Compensation [Member] | Alternative market business [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 20,200 | 18,502 | 59,855 | 55,601 |
Lloyds Syndicate [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Ceded premiums earned | (2,472) | (1,809) | (7,561) | (3,086) |
Net premiums earned | 16,318 | 14,578 | 45,374 | 40,533 |
Lloyds Syndicate [Member] | Property, Liability and Casualty Insurance Product Line [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | $ 18,790 | $ 16,387 | $ 52,935 | $ 43,619 |
Subsequent Events (Details) $ in Millions |
1 Months Ended |
---|---|
Oct. 31, 2017
USD ($)
| |
Subsequent Event [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | |
Subsequent Event [Line Items] | |
Amount of debt repaid | $ 18 |
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