Proassurance Corporation · NYSE:PRA
Proassurance — Investor Presentation (December 2014)
84 slides from Proassurance's investor presentation, Dec 4, 2014
Slide 1: Forward Looking Statements
Forward Looking Statements 1 This presentation contains Forward Looking Statements and other information designed to convey our projections and expectations regarding future results. There are a number of factors which could cause our actual results to vary materially from those projected in this pr
Slide 2: ProAssurance Corporate Profile
ProAssurance Corporate Profile Healthcare - centric specialty insurance writer Healthcare Professional Liability (HCPL) Only public company writing predominately HCPL Life sciences and medical device liability Workers' compensation Legal professional liability ProAssurance Mission Statement We Exist
Slide 3: Financial Results YTD
Financial Results YTD Our commentary on YTD 2014 results and updates on recent transactions and strategy
Slide 4: Strong Results YTD in 2014
Strong Results YTD in 2014 4 Record level of capital being returned to shareholders $ 427 million in share repurchase and dividends declared (at 12/3/14) More than $1 billion in share repurchase and dividends declared since 2007 Gross Written Premiums up 40% year - over - year Driven by the acquisit
Slide 5: Key YTD Takeaways
Key YTD Takeaways 5 Acquisition of Eastern Alliance Insurance Group driving top line growth Strong favorable reserve development New products and capabilities coming to market ProAssurance Risk Solutions ProAssurance Complex Medicine New D&O product for healthcare insureds Continued growth in market
Slide 6: YTD 2014 Income Statement Highlights
YTD 2014 Income Statement Highlights in millions, except per share data September 30 , Y - OVER - Y Change 2014 2013 Gross Premiums Written $ 632 $ 452 +40% Net Premiums Earned $ 525 $ 399 +32% Total Revenues $ 634 $ 547 +16% Net Losses & Loss Adjustment Expenses $ 288 $ 190 +51% Underwriting & Oper
Slide 7: Balance Sheet Highlights
$1.42 $1.70 $1.86 $2.16 $2.27 $2.39 $2.32 2008 2009 2010 2011 2012 2013 Q3 2014 YTD 2014 Balance Sheet Highlights Split adjusted, in billions Shareholders’ Equity $ 2.3 $ 2.4 - 3% Total Investments 4.1 3.9 +3% Total Assets 5.3 5.2 +5% Policy Liabilities 2.6 2.4 +9% 9/30/14 12/31/13 CHANGE Shareholde
Slide 8: Capital Discussion
Capital Discussion We focus on the creation of meaningful shareholder value through a disciplined approach to capital management
Slide 9: Strong Commitment to Capital Management
Strong Commitment to Capital Management Capital return at historic levels – $427 million YTD Dividends:$221 mln declared in 2014 Quarterly dividend increased to $0.31/share on December 3, 2014 Yield: Approximately 2.6% Buyback: $206 mln spent YTD 4.6 mln shares repurchased $198 mln currently authori
Slide 10: Effective Use of Capital
Effective Use of Capital 10 $1.5 billion deployed since 2010 Preparing our business to succeed in the new world of healthcare Directly benefiting our shareholders through dividends and share repurchase Dividends Declared Share Repurchase Acquisition Total 2010 $ 0 $ 106,346 $ 233,000 $ 335,346 2011
Slide 11: Strong Capital Position and Minimal Debt
Strong Capital Position and Minimal Debt Committed to enhancing shareholder value through effective capital management R etaining capital needed for the market turn and M&A 11% 10% 6% 2% 3% 3% 2% 13% 16% 22% 25% 19% 14% 20% $- $0.5 $1.0 $1.5 $2.0 $2.5 YTD 2014 2013 2012 2011 2010 2009 2008 2007 2006
Slide 12: The Payoff: Consistent Book Value Growth
$2.62 $3.85 $4.77 $6.24 $11.60 $15.75 $10.09 $8.34 $10.50 $16.08 $19.56 $24.32 $24.96 $27.46 $26.39 $30.30 $39.91 $42.19 $48.48 $45. 09 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 YTD '14 $1.84 $3.14 $4.28 $5.79 $6.96 $8.01 $9.39 $10.46 $12.30 $16.81 $19.35 $21.35 $26.30 $30
Slide 13: Focused on Shareholder Value
Focused on Shareholder Value Maintaining profitability and bottom line focus Continuing to grow book value per share Producing sustainable shareholder value 0.0 0.5 1.0 1.5 2.0 2.5 $- $10.00 $20.00 $30.00 $40.00 $50.00 Sep-91 Aug-93 Jul-95 Jun-97 May-99 Apr-01 Mar-03 Feb-05 Jan-07 Dec-08 Nov-10 Oct-
Slide 14: Consolidated Operational Highlights
Consolidated Operational Highlights Our commentary on YTD 2014 results and updates on recent transactions and strategy
Slide 15: 2014 Acquisition and Syndicate Milestones
2014 Corporate Update 15 Acquired Eastern Insurance effective 1/1/14 Integration into ProAssurance well underway Significant contributions to Q1 results Lloyd’s Syndicate 1729 began operations on 1/1/14 Business on the books as planned All senior staffing arrangement complete Medmarc and IND well in
Slide 16: Strong Operational Results YTD in 2014
Strong Operational Results YTD in 2014 Combined Ratio: 85.1% (Avg Since 2009: 67.1%) Operating Ratio: 67.4% (Avg Since 2009: 42.1%) 69.1% 68.0% 52.5% 57.3% 70.6% 85.1% 38.8% 39.8% 27.6% 32.6% 46.1% 67.4% 2009 2010 2011 2012 2013 YTD 2014 Combined Ratio and Operating Ratio History Combined Ratio Oper
Slide 17: Operational Results vs Top P&C Writers
Operational Results vs Top 100 P&C Writers Consistently achieving superior results 69.1% 68.0% 52.5% 57.3% 70.6% 85.1% 99.5% 99.4% 106.8% 102.0% 97.1% 2009 PRA Rank: 2 2010 PRA Rank: 4 2011 PRA Rank: 1 2012 PRA Rank: 1 2013 PRA Rank: 1 YTD 2014 PRA Top 100 P&C AVERAGE 17 PRA Data: As reported Indust
Slide 18: Operational Results vs Top P&C Writers
Operational Results vs Top 100 P&C Writers Consistently achieving superior results 38.8% 39.8% 27.6% 32.6% 46.1% 67.4% 88.2% 89.8% 97.4% 93.4% 89.1% 2009 PRA Rank: 1 2010 PRA Rank: 3 2011 PRA Rank: 1 2012 PRA Rank: 1 2013 PRA Rank: 1 YTD 2014 PRA Top 100 P&C AVERAGE 18 PRA Data: As reported Industry
Slide 19: Consistent Approach to Reserves
Consistent Approach to Reserves Recognizing loss trends as they appear No change in reserving philosophy or process Reserve Development History by Quarter by Year $16 $20 $19 $25 $40 $47 $53 $47 $20 $31 $37 $38 $50 $60 $39 $42 $25 $30 $43 $33 $52 $50 $49 $43 44 104 109 138 184 115 82 2003 2004 2005
Slide 20: Premium Distribution at September 30, 2014
Premium Distribution at September 30, 2014 2013 ProForma Premium: $726 mln YTD 2014 Premium: $630 mln Tail Premium Allocated by Line Physician & Dental 60.7% Ancillary Healthcare 5.1% Life Sciences & Med Tech 4.7% Hospitals & Facilities 3.6% Attorneys 3.8% Workers' Comp 21.8% Other 0.3% Physician &
Slide 21: Eastern Insurance Transaction Update
Eastern Insurance Transaction Update Significant contributor to top line growth and bottom line profitability Expected cross selling opportunities are emerging Continues building the platform to serve the needs of larger integrated health systems and healthcare delivery organizations Workers’ compen
Slide 22: Lloyd's Syndicate Update
Lloyd’s Syndicate Update First policies underwritten January 1, 2014 $27 mln in gross premium written reported to date (reporting on a one - quarter lag) ProAssurance is providing 58% of underwriting capital Remaining capital from other corporates and private names ProAssurance has committed $77 mln
Slide 23: Opportunities and Strategies
Opportunities and Strategies ProAssurance is Evolving to Anticipate the Risks Facing an Increasingly Complex healthcare Delivery System
Slide 24: Healthcare Realities
Healthcare Realities American healthcare is wrestling with the question of cost vs. care — we can deliver more care than we can afford Restructuring is producing profound changes in healthcare Healthcare delivery is being pushed down to lower cost providers The Affordable Care Act (ACA) is creating
Slide 25: Insurance Marketplace Realities
Insurance Marketplace Realities 25 Insurance companies are awash in capital Pressure is mounting to “do something” with it M&A — the hunter vs. the hunted Chase market share with low prices but disastrous long - term consequences Appease investors with unwise capital - return strategies
Slide 26: The ProAssurance Response
The ProAssurance Response 26 Our long - term focus on financial strength is central to our overall strategy and success ProAssurance has always evolved ahead of the curve We have proven our ability to thrive across insurance cycles We have an unmatched combination of financial strength and deep expe
Slide 27: Positioned to Succeed
Positioned to Succeed 27 ProAssurance has the right combination of geographic scope, broad experience, and financial strength for success in the new world of healthcare liability Medical Protective National Recent Hospital Experience $780 Doctors Co National Limited Hospital Experience $736 MLMIC NY
Slide 28: Continuing Emphasis on Strategic M&A
Continuing Emphasis on Strategic M&A 28 Well known, seasoned acquirer with a successful track record 1. Purchased Company 2. Demutualization Original Companies OHIC HOSPITALS ONLY 2 1 1 1 1 1 1 1 1 1 1 3 4 4 1 4 3. Renewal Rights 4. Assumed Business 2 2 † 2 3 1 3 3 1 SERTA 2 PROFESSIONAL PROTECTIVE
Slide 29: Strategic Successes
Strategic Successes Leveraging our reach, expertise and financial strength $22 mln in annualized premium in the Certitude tm program in partnership with Ascension Health Insuring Ascension - affiliated physicians through coordinated, jointly insured programs Adding Ascension - employed physicians an
Slide 30: Strategic Opportunities
Strategic Opportunities 30 Alternative risk and self - insurance opportunities Captive insurance programs allow large, sophisticated healthcare and workers’ compensation customers to control their own insurance programs Eastern Re brings proven experience and expertise in establishing and operating
Slide 31: Strategic Opportunities: ProAssurance Risk Solutions
Strategic Opportunities 31 ProAssurance Risk Solutions sm Newly formed unit brings proven expertise to address complex risk financing challenges in both healthcare and workers’ compensation Run - off liabilities in M&A transactions Assumption of existing reserve liabilities for large organizations s
Slide 32: Strategic Opportunities Through Lloyd's Syndicate 1729
Strategic Opportunities Through Lloyd’s Syndicate 1729 is an investment opportunity with significant insurance benefits Potentially provides access to international medical professional liability opportunities Leverage Medmarc’s expertise to underwrite international medical technology and life scien
Slide 33: Strategic Opportunities Through Medmarc
Strategic Opportunities Through Medmarc Medmarc is a market - leader in medical products and life sciences liability Increasing presence in device and drug development by larger healthcare organizations Increasing globalization of testing and development efforts are a natural fit with Lloyd’s Syndic
Slide 34: Strategic Opportunities Through Mid-Continent
Strategic Opportunities Through Mid - Continent ProAssurance Mid - Continent Underwriters addresses the needs of ancillary healthcare providers This market is increasing rapidly as the push to reduce healthcare costs drives care through lower cost providers who are an important part of the healthcar
Slide 35: Key Investor Points
Key Investor Points 35 ProAssurance has always evolved ahead of the curve in our industry — we continue that trend We have proven our ability to thrive across insurance cycles and produce significant returns for long - term shareholders Our long - term focus on financial strength and sustained value
Slide 36: Segment Highlights
Segment Highlights We report results in three operational segments Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 37: Specialty P&C Financial Highlights - YTD
September 30, Y - OVER - Y Change 2014 2013 Gross Premiums Written $ 430 $ 452 - 5% Net Premiums Earned $ 375 $ 399 - 6% Total Revenues $ 379 $ 402 - 6% Net Losses & Loss Adjustment Expenses $ 191 $ 190 +1% Underwriting & Operating Expenses $ 101 $ 96 +5% Operating Result $ 87 $ 117 - 26% Specialty
Slide 38: Specialty P&C Gross Written Premium - YTD
Specialty P&C Gross Written Premium - YTD 38 $26 $27 $22 $18 $25 $27 $29 $23 $17 $28 Other healthcare providers Healthcare facilities Legal professionals Tail & other, professional liability Products liability 2013 2014 $311 $290 $23 $18 $334 $307 2013 2014 Physician 12-mo Physician 24-mo $ in milli
Slide 39: Strong Retention Despite Competition
Strong Retention Despite Competition Retention remains in line with recent quarters Continued underwriting vigilance is being used today to ensure future success Market share is important, but NOT as important as profitability 84% 85% 87% 90% 90% 89% 90% 88% 90% 2006 2007 2008 2009 2010 2011 2012 20
Slide 40: No Overall Change in HCPL Loss Trends
No Overall Change in HCPL Loss Trends Current accident year loss ratio adjustments have been minor — in either direction Minimal changes on renewed business 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 YTD 9/30/14 Annual 23% 28% 28% 19% 11% 3% -2% -6% -4% -2% -2% 0% -1% 0% Cumula
Slide 41: The Bottom Line Benefits of Strong Defense
The Bottom Line Benefits of Strong Defense Our ability and willingness to defend claims allows us to achieve better results 21% 32% 48% 42% 44% 18% 45% 28% 79% 68% 52% 58% 56% 82% 55% 72% 2006 2007 2008 2009 2010 2011 2012 2013 PRA Industry 63% 42% 37% 58% Source: Statutory Basis, A.M. Best Aggregat
Slide 42: ProAssurance Outperforms in HCPL
ProAssurance Outperforms in HCPL ProAssurance consistently outperforms in a volatile line of business 40% 60% 80% 100% 120% 140% 160% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Calendar Year Combined Ratio 1991 - 2013 ProAssurance MPL Source: 1991 - 2012 A.M. Best Aggregates and Ave
Slide 43: Segment Highlights
Segment Highlights We repo rt results in three operational segments Specialty Property Casualty Insurance Workers’ Compensation In surance Lloyd’s Syndicate 1729
Slide 44: Workers' Compensation Highlights - YTD
September30, Y - OVER - Y Change 2014 2013 Gross Premiums Written $ 181 ‒ - 7% Net Premiums Earned $ 144 ‒ - 6% Total Revenues $ 144 ‒ - 6% Net Losses & Loss Adjustment Expenses $ 92 Underwriting & Operating Expenses $ 45 ‒ +4% Segregated Cell Dividend Expense $ 2 ‒ Operating Results $ 5 ‒ - 27% Wor
Slide 45: Consistent Profitability in Workers' Comp
Consistent Profitability in Workers' Comp 45 Historical Combined Ratio (1) excluding fair value adjustment and intangible asset amortization, transaction - related and other one - time charges (1) 79.1% 65.6% 80.2% 87.7% 96.0% 89.7% 91.8% 93.0% 95.4% 91.6% 2006 2007 2008 2009 2010 2011 2012 2013 YTD
Slide 46: How Eastern Differentiates
How Eastern Differentiates 46 Disciplined individual account underwriting with focus on rate adequacy in rural territories Understands market dynamics and regulatory concerns Use of local knowledge that has always differentiated ProAssurance
Slide 47: Eastern Business Profile
Eastern Business Profile 47 • Direct Written Premium of $175.4 Million for the Nine Months Ended 9.30.14 and $ 158.5 Million for the Nine Months Ended 9.30.13 • Licensed – 30 states Offices Licensed and actively seeking business Licensed, accepting “border” business Eastern Re (Cayman)
Slide 48: Workers' Compensation Risk Diversification
Workers' Compensation Risk Diversification Wide diversification by class code and market segment Approximately 7,000 active policies in Traditional Programs Over 600 class c odes a ctively written 48 Retirement / Life Care Community 2.3% Physician / Dentists 9.3% Nursing Homes Skilled , 2.5% Hospita
Slide 49: Workers' Compensation Risk Diversification
Workers' Compensation Risk Diversification Wide diversification by class code and market segment Approximately 2,150 active policies in Alternative Markets Over 4 00 class c odes a ctively written 49 Physician / Dentists 6.9% Nursing Homes Skilled 3.4% Ambulance Service (Non - Volunteer) , 2.1% Soci
Slide 50: Broad Product Spectrum
Broad Product Spectrum 50 Guaranteed Cost 56.0% Alternative Markets 26.5% Policyholder Dividend 9.9% Deductible Plans 3.8% Retrospective Rating 3.8% Guaranteed Cost Policies Loss - Sensitive Dividend Plans Deductible Plans Retrospective Rating Plans Alternative Market Programs ParallelPay – “ Pay as
Slide 51: How Eastern Differentiates
How Eastern Differentiates Extensive medical cost containment strategies Average five - year medical cost inflation of 0.6% Proactive claims management Use of Compromise & Release where permitted by law Strategic use of return - to - wellness initiatives Use of a proactive, unique claims approach th
Slide 52: Workers' Comp Claim Closing Pattern: Traditional
Workers’ Comp Claim Closing Pattern: Traditional 52 Few claims remain open from older accident years Eastern is recognized as a short - tail writer of workers’ compensation insurance 63 201 364 535 590 570 685 591 716 775 885 951 1,068 1,161 1,160 951 1 3 2 2 3 4 8 10 16 61 120 376 0 200 400 600 800
Slide 53: Workers' Comp Claim Closing Pattern: Alternative
Workers’ Comp Claim Closing Pattern: Alternative 53 Few claims remain open from older accident years Eastern is recognized as a short - tail writer of workers’ compensation insurance 35 66 103 175 267 407 423 310 324 334 383 397 488 464 438 1 2 2 3 10 15 38 141 0 100 200 300 400 500 600 1999 2000 20
Slide 54: How Eastern Differentiates
How Eastern Differentiates Captive insurance solutions provided through Eastern Re Segregated cell company based in Cayman Opens additional business opportunities for healthcare professional liability business Strategic partnerships with select independent agencies that share philosophies on control
Slide 55: Segment Highlights
Segment Highlights We repo rt results in three operational segments Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 56: Lloyd's Syndicate 1729 - YTD
As reported 9/30/14 June 30, Y - OVER - Y Change 2014 2013 Gross Premiums Written $ 27 ‒ - 7% Net Premiums Earned $ 6 ‒ - 6% Total Revenues $ 7 ‒ - 6% Net Losses & Loss Adjustment Expenses $ 4 Underwriting & Operating Expenses $ 6 ‒ +4% Operating Results $ - 4 ‒ - 27% Lloyd’s Syndicate 1729 – YTD in
Slide 57: Lloyd's Syndicate 1729: Business Detail
Lloyd’s Syndicate 1729: Business Detail Broad spread of risk Casualty includes $14.8 million ceded by PRA/PICA (Podiatry) Property is primarily US 57 Casualty $18.7 69.9% Catastrophe Reinsurance $4.8 17.8% Property Reinsurance $1.3 4.7% Property Insurance $2.0 7.5% YTD 6/30/14 As Reported at 9/30/14
Slide 58: Segment Highlights: Corporate
Segment Highlights Corporate U.S. investing activities Non - premium revenues Corporate expenses U. S. taxes
Slide 59: Corporate Segment Highlights - YTD
September 30, Y - OVER - Y Change 2014 2013 Investment income $ 92.5 $ 99.2 - 7% Equity in earnings (loss) of unconsolidated subsidiaries 2.8 - 3.5 >100% Net realized investment gains (losses) 7.7 47.7 - 84% Other income 1.9 1.4 +36% Operating expenses 6.9 9.7 - 30% Interest expense 10.7 1.1 >100% I
Slide 60: Corporate Segment Financial Highlights - YTD
Corporate Segment Financial Highlights – YTD No meaningful change in overall investment result $6.3 million increase in Equity in Unconsolidated Subsidiaries $6.7 million reduction in investment income, primarily due to lower average balances on fixed income investments Net realized investment gains
Slide 61: Additional Financial Detail
Additional Financial Detail
Slide 62: Capital Growth: 2008 - Q3 2014
Capital Growth: 2008 - Q3 2014 2008 2009 2010 2011 2012 2013 Q3 2014 Dividends (15,269) (192,466) (64,777) (52,873) Earnings 177,725 222,026 231,598 287,096 275,470 297,523 131,451 Employee Stock Transactions 11,673 7,205 6,147 6,855 7,780 9,261 8,116 Stock Issued 112,478 - - - - - - Treasury Stock
Slide 63: Inside ProAssurance's Balance Sheet
Inside ProAssurance’s Balance Sheet Cash & Investments: 80.7% Insurance Receivables 9.2% Goodwill & Intangible Assets: 5.9% Other Assets: 4.2% Retained Earnings: 39.3% Other Equity: 4.3% Reinsurance Payable & Other Liabilities: 8.8% Unearned Premiums: 7.3% Loss Reserves: 40.3% Assets: $5.3 bln Liabi
Slide 64: Inside ProAssurance's Income Statement - YTD
Inside ProAssurance’s Income Statement - YTD 64 Net Premiums Earned: 82.8% Net Realized Investment Gains: 1.2% Net Investment Income: 14.6% Other: 1.4% Net Income: 20.7% Provision for Income Taxes: 6.8% Underwriting, Policy Acquisitions, Operating and Interest Expenses: 27.2% Net Losses and Loss Adj
Slide 65: Book Value per Share History
Book Value per Share History 65 $21.35 $26.30 $30.17 $35.42 $36.85 $39.13 $40.24 $20.26 $24.04 $26.58 $31.93 $33.34 $35.64 $34.80 $20.80 $23.13 $25.29 $29.80 $30.98 $34.67 $33.63 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 9/30/2014 Book Value per Share Tangible Book Value per Share Tangib
Slide 66: Book Value per Share Components
Book Value per Share 66 Components September 30, 2014 December 31, 2013 Change Total Book Value $ 40.24 $ 39.13 $ 1.11 Less: Goodwill & Intangible Assets 5.44 3.49 1.95 Tangible Book Value $ 34.80 $ 35.64 $ (0.84) Less: Unrealized Gain / Loss 1.17 0.97 0.20 Tangible Book Value excl Unreal G/L $ 33.6
Slide 67: Components of Return on Equity
6.4% 5.5% 2.7% - 3.4% - 0.3% Pre-Tax Underwriting Profit $112 Pre-Tax Investment Income $96 Non-Operating Gains $48 Taxes $(60) Interest & Intangibles $(5) 2013 Return on Equity: 10.9% YTD (excludes gain on acquisition) Components of Return on Equity 67 Long - term ROE target: 12% - 14% 5.2% 5.4% 0.
Slide 68: Investment Portfolio Detail
Investment Portfolio Detail ProAssurance remains conservatively invested to ensure our ability to keep our long - term promise of insurance protection
Slide 69: 2014 Investment Developments
2014 Investment Developments Maintaining duration of approximately four years Q3 tax effective book yield: 4.2% YTD tax effective book yield: 4.3% Overall credit quality is stable at A+ 69 2015 Investment Strategy & Outlook Seeking incremental yield Avoiding duration risk Q3 2014 Investment Highligh
Slide 70: ProAssurance: Q3 2014 Investment Profile
ProAssurance: Q3 2014 Investment Profile Fixed Income 80% Short Term (incl cash) 2% Equities & Equity Substitutes 17% BOLI 1% $4.1 Billion Overall Portfolio State & Muni 34% Corporate 45% Asset Backed 14% Govt & Agency , 7% $3.3 Billion Fixed Income Portfolio Average duration: 3.6 years, down slight
Slide 71: Portfolio Detail: Asset Backed
Other 11% Auto 11% Non Agency MBS 2% Agency MBS/CMBS 64% Non Agency CMBS 12% ProAssurance Portfolio Detail: Asset Backed 9 /30/14 Subject to Rounding Asset Backed: $465 Million Weighted Average Rating: “ AAA” 71
Slide 72: Portfolio Detail: Corporate
Financials 29% Industrials 28% Utilities/ Energy 20% Other 2% Consumer Oriented 21% ProAssurance Portfolio Detail: Corporate Corporates: $ 1.5 Billion Weighted Average Rating: A - Top 20 Banks/Financials: $ 219 million in millions JPM Chase $25 Citi $10 GECC $17 Simon Property $10 Goldman Sachs $16
Slide 73: Portfolio Detail: Municipals
General Obligation 26% Special Revenue 60% Prerefunded 14% ProAssurance Portfolio Detail: Municipals Municipals: $ 1.1 Billion Investment policy has always required investment grade rating prior to applying the effect of insurance Top 10 Municipal Holdings in millions State of Texas $16 Por t Author
Slide 74: Portfolio: Equities & Other
Equities 39% Alternative Equity & Debt 9% Real Estate LP 4% Private Equity 13% Convertible Bonds 5% Investment Grade Bond Fund 8% FHLB Stock 1% Tax Credits 21% ProAssurance Portfolio: Equities & Other 9 /30/14 Equities & Other: $654 Million 5.6% TE Book Yield 13% TE IRR 74
Slide 75: Portfolio Detail: Various
ProAssurance Portfolio Detail: Various Govt MMF 86% Lloyd's 6% Prime MMF (Bermuda) 7% Other 1% Best Rating: A , 8% Best Rating: A+ 57% Best Rating: A++ 35% Rated A1/P1 or better Money Markets: Moody’s: Aaa S&P: AAA Weighted average rating Moody’s: AA3 S&P: AA - A. M. Best: A+ Treasuries 42% TIPS 38%
Slide 76: Additional Details
Additional Details Py PROASSURANCE. Tela
Slide 77: Now Reporting in Four Segments
Now Reporting in Four Segments 77 • Healthcare Professional Liability • Products Liability • Lawyers’ Professional Liability Specialty P&C • Traditional • Captive Market Facility Workers’ Compensation • Syndicate 1729 (58%) (including investments & taxes) Lloyd’s • PRA Corp – parent company • Intern
Slide 78: Q3 2014 Condensed Results by Segment
Q3 2014 Condensed Results by Segment 78 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination Q3 2014 Consol. Q3 2013 Gross premiums written $ 163,134 $ 60,307 $ 6,105 $ - $ (2,860) $ 226,686 $ 165,794 Net premiums written 142,733 54,287 3,889 - - 200,909 157,641 Net premiums e
Slide 79: Nine-Month 2014 Condensed Results by Segment
Nine - Month 2014 Condensed Results by Segment 79 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination 2014 Consol. 2013 Gross premiums written $ 429,730 $ 181,130 $ 26,813 $ - $ (5,662) $ 632,011 $ 451,819 Net premiums written 379,428 164,984 24,163 - - 568,575 417,813 Net pr
Slide 80: Capital Management Priorities
Capital Management Priorities 80 The manner in which capital is used has an effect on financial ratings Conceptual Model of Projected A. M. Best BCAR Scores if Premiums Increase Surplus is Reduced Excess Capital vs. Excess Capacity “A+” Rating Threshold
Slide 81: ProAssurance Outperforms in Insurance
ProAssurance Outperforms in Insurance Source: A.M . Best Aggregates and Averages for Each Lines of Business and Period Selected 104.5% 100.2% 102.1% 107.1% 89.7% 86.6% 88.5% 72.8% 57.6% 89.2% 74.8% 61.5% 1991-2013 10-Year 5-Year Average Combined Ratio Overall P&C MPL PRA - MPL Only PRA - All Lines 8
Slide 82: Differentiate Through Claims Defense
Differentiate Through Claims Defense 82 We leverage our financial strength to give our insureds the opportunity for an uncompromising defense of each claim Differentiates our product Provides long - term financial and marketing advantages Retains business and deters future lawsuits Increasingly impo
Slide 83: The Ohio Example: 2006 – 2012 Data
The Ohio Example: 2006 – 2012 Data Comprehensive, reliable data provided by the Ohio Department of Insurance Broad range of competitors and business approaches www.insurance.ohio.gov/Legal/Reports/Documents/Ohio2012MedicalProfessionalLiabilityClosedClaimReport.pdf 92% 75% 8% 25% ProAssurance All Oth
Slide 84: ProAssurance by the Numbers
ProAssurance by the Numbers 84 YTD 2014 Policyholders: 80,500 Physicians & Dentists 58.0% Ancillary Healthcare 11.8% Hospitals & Facilities 0.7% Attorneys 15.7% Life Sciences Medical Tech 1.5% Workers' Compensation 11.5% Other 1.0% September 30, 2014