Proassurance Corporation · NYSE:PRA
Proassurance — Investor Presentation (November 2016)
83 slides from Proassurance's investor presentation, Nov 14, 2016
Slide 1: Q4 2016 Investor Presentation
Q4 2016 Investor Presentation Effective November 13, 2016
Slide 2: 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 3: Key Discussion Points for Third Quarter 2016
Key Discussion Points for Third Quarter 2016 2 Continued profitability in a challenging market that is pressuring the top line Sustaining profitability is the primary goal Underwriting Success: 93.8% Combined Ratio Favorable Development: $29.0 million Coordinated sales and market reached $9.6 millio
Slide 4: Corporate Profile
Corporate Profile Fe.
Slide 5: ProAssurance Corporate Profile
ProAssurance Corporate Profile 4 Healthcare - centric specialty insurance writer Healthcare Professional Liability (HCPL) Only public company writing predominantly HCPL Life sciences and medical device liability Workers' compensation Legal professional liability Alternative r isk transfer (ART) Mark
Slide 6: ProAssurance Brand Profile
ProAssurance Brand Profile 5 Specialty P&C Workers’ Comp Healthcare Professional Liability Medical Technology & Life Sciences Products Liability Legal Professional Liability Alternative Risk Transfer
Slide 7: Mission, Vision and Values
Mission, Vision and Values Mission We exist to protect others Vision We will be the best in the world at understanding and providing solutions for the risks our customers encounter as healers, innovators, employers, and professionals. Through an integrated family of specialty companies, products, an
Slide 8: Strategic Review
Strategic Review Fe.
Slide 9: Key High-Level Strategies
Key High - Level Strategies 8 Emerging Issues in Healthcare • Consolidation of providers into larger groups or within facilities/systems • Evolution of new delivery systems to address cost pressures • Multi - state expansion to achieve scale Challenges for HCPL Insurers • Broker - driven purchasing
Slide 10: The Realities
The Realities 9 Healthcare Cost control remains the real driver of change in the delivery of care Care being pushed down to lower cost providers Current spending levels are unsustainable The Affordable Care Act is a sideshow that does not address rising costs No perfect model for healthcare delivery
Slide 11: ProAssurance's Path to Success
ProAssurance’s Path to Success 10 1976 - 1991 Building the Financial Foundation 1976 - 1991 • Building financial strength • Establishing a brand reputation for superior service • Demutualized in 2001 1991 - 2012 • Scope & size addressed by expansion through careful M&A and de novo expansion in tradi
Slide 12: ProAssurance is Positioned to Succeed in HCPL
ProAssurance is Positioned to Succeed in HCPL 11 ProAssurance has the right combination of geographic scope, broad experience, and financial strength for success in the new world of healthcare liability SNL 2015 Statutory Data, >50% HCPL, Direct Written Premiums >$80 million Doctors Co National Limi
Slide 13: The ProAssurance Response
The ProAssurance Response 12 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 14: Strategic Successes in the Evolving Market
Strategic Successes in the Evolving Market The Certitude tm program in partnership with Ascension Health Shared risk through quota share participation by Ascension’s captive on first $1M ~2,370 insured physicians ~$21.5 million inforce Certitude premium Active in AL, CT, D.C ., FL, IL, IN, KS, MD, M
Slide 15: Broad Experience Across the Healthcare Market
Broad Experience Across the Healthcare Market More than 30 year of experience insuring hospitals and other healthcare facilities Experience ranges from community - based hospitals to major medical centers Enhanced coverages ( ProControl) and existing programs respond to today’s emerging trends 1 2 1
Slide 16: Addressing a Wide Spectrum of Risk Appetites
Addressing a Wide Spectrum of Risk Appetites 15 Coordinated sales & marketing efforts target insureds in these classes for additional products and services Traditional Policies • Primarily agent - sold • Remains the majority of our business • Proven performance supports discipline pricing Transition
Slide 17: Emerging Strategic Opportunities
Emerging Strategic Opportunities 16 ProAssurance Risk Solutions sm • 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 seeking to
Slide 18: Leveraging Existing Expertise in New Ways
Leveraging Existing Expertise in New Ways 17 Syndicate 1729 at Lloyds • Our 58% participation provides potential access to international medical professional liability opportunities • Increases flexibility for ProAssurance when working with complex risks • Primary and excess business can be written
Slide 19: 2016 Income Statement Highlights
2016 Income Statement Highlights Strong results from a focused strategy in millions, except per share data Three - Months Ended Nine - Months Ended September 30, 2016 2015 2016 2015 Gross Premiums Written $ 232.0 $ 235.9 $ 647.6 $ 651.3 Net Investment Result $ 21.9 $ 26.7 $ 68.7 $ 86.0 Total Revenue
Slide 20: Balance Sheet Highlights
Balance Sheet Highlights $1.26 $1.42 $1.70 $1.86 $2.16 $2.27 $2.39 $2.16 $1.96 $2.04 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q3 16 Shareholders’ Equity: 62% Increase Since 2007 Maintaining the financial strength required to keep our insurance promise 19 Book Value per share is affected by our c
Slide 21: Book Value + Dividends Declared: Consistent Value Creation
BOOK VALUE + DIVIDENDS DECLARED Scorecard at 10/31/16 BV + Dividends CAGR Since Inception (Sep 1991) 2804% 15% Reflects all stock splits and includes all dividends in the year declared. Source: SNL The Payoff: Consistent Value Creation 20 52% 88% 160% 521% 229% 314% 671% 884% 941% 1095% 1698% 2040%
Slide 22: Capital Discussion
Capital Discussion We focus on the creation of meaningful shareholder value through a disciplined approach to capital management
Slide 23: Demonstrated Commitment to Capital Management
Demonstrated Commitment to Capital Management $52 million returned YTD 2016 $290 million capital returned in 2015 Buybacks balance share price vs. book value/share YTD 16: $2.1 mln / 44,500 shares 2015: $170 mln / 3.7 mln shares 2014: $ 222 mln / 4.9 mln shares Since 2007: $748 mln / 15.4 mln shares
Slide 24: Capital Growth and Total Capital Return
Capital Growth and Total Capital Return 23 A superb track record under the current senior management team ( Q2 2007 to Q3 2016) Shareholders Equity grown from $1.3 billion to $2.0 billion (62%) $1.4 billion returned to shareholders through share repurchase and dividends Additionally, $754 million de
Slide 25: Capital and Liquidity Decisions
Share repurchase at prices with a reasonable payback period Options for deploying remaining capital Capital and Liquidity Decisions All decisions must recognize that we hold significant capital at the subsidiary level to maintain operating company ratings and satisfy regulatory requirements. Dividen
Slide 26: Subsidiary Dividends to Corporate
Subsidiary Dividends to Corporate 25 Primary source of liquidity Ordinary dividends permitted without regulatory approval Generally once per year/ subsidiary Amounts and criteria vary by domiciliary state Extraordinary dividends require regulatory approval Subsidiary capital requirements play a majo
Slide 27: 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 No Debt Prior to 2001 17% 18% 12% 10% 6% 2% 3% 3% 2% 13% $- $0.5 $1.0 $1.5 $2.0 $2.5 Q3 16 2015 2014 2013 2012 2011 2010 2009 2
Slide 28: Capital Management Priorities
Capital Management Priorities 27 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 29: Consolidated Operational Highlights
Consolidated Operational Highlights Our commentary on operational results and updates on recent transactions and strategy
Slide 30: Strong Operational Results
Strong Operational Results Lowest combined ratio of the top 100 Property & Casualty writers 2011 through 2014 * Second in 2009 and fourth in 2010 Combined ratio average 2009 - 2015: 70.0% Operating ratio average 2009 - 2015: 46.3% 69.1% 68.0% 52.5% 57.3% 70.6% 82.1% 90.5% 93.2% 38.8% 39.8% 27.6% 32.
Slide 31: 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 $48 $53 $48 $34 $29 $20 $31 $37 $38 $50 $60 $39 $42 $35 $37 $25 $30 $43 $33 $52 $50 $49 $43 $36 $29 $44 $104 $108 $13
Slide 32: 2016 Premiums, Policyholders & Distribution
1 2 Physicians & Dentists 46.5% Ancillary Healthcare 3.0% Life Sciences/ Medical Tech 3.9% Hospitals & Facilities 6.0% Attorneys 3.2% Lloyd's 7.8% Workers' Compensation 29.7% Other 0.1% Specialty P&C: 63% YTD Policyholder Count: ~77,000 Physicians & Dentists 59.6% Ancillary Healthcare 10.7% Life Sci
Slide 33: Reinsurance Programs
Reinsurance Programs Professional Liability Medical Technology & Life Sciences Workers' Compensation Reinsured Retention Coverage Offered up to Maximum Standard Policy Limits -------- 5% to 10% retained based on layer Coverage Offered up to Maximum Standard Policy Limits -------- 20% Retention s Cov
Slide 34: Segment Highlights
Segment Highlights We report results in three operational segments Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 35: 2016 Specialty P&C Financial Highlights
Three - Months Ended Nine Months Ended September 30 2016 2015 2016 2015 Gross Premiums Written $ 155.8 $ 160.5 $ 410.2 $ 416.7 Net Premiums Earned $ 116.2 $ 115.6 $ 334.5 $ 343.1 Total Revenues $ 117.2 $ 117.3 $ 339.1 $ 347.6 Net Losses & Loss Adjustment Expenses $ 72.3 $ 64.0 $ 205.8 $ 197.1 Underw
Slide 36: 2016 Specialty P&C Gross Written Premium
2016 Specialty P&C Gross Written Premium 35 $37 $25 $20 $15 $25 $30 $25 $23 $16 $25 Healthcare facilities Other healthcare providers Legal professionals Tail & other, professional liability Products liability 2016 2015 $268 $270 $19 $25 $287 $295 YTD 16 YTD 15 Physician 12-mo Physician 24-mo $ in mi
Slide 37: Strong Retention Despite Competition
Strong Retention Despite Competition Retention remains strong Continued underwriting vigilance is being used today to ensure future success Market share is important, but NOT as important as profitability 85% 87% 90% 90% 89% 90% 89% 89% 89% 89% 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 16 Yea
Slide 38: 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 2014 2015 YTD 16 Annual 23% 28% 28% 19% 11% 3% -2% -6% -4% -2% -2% 0% -1% 0% 0
Slide 39: Differentiate Through Claims Defense
Differentiate Through Claims Defense 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 importa
Slide 40: The Ohio Example: 2006–2013 Data
The Ohio Example: 2006 – 2013 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/Ohio2013MedicalProfessionalLiabilityClosedClaimReport.pdf 92% 75% 8% 25% ProAssurance All Oth
Slide 41: Benefits of Strong Defense
14.0% 40.4% 24.8% 26.4% 38.8% 66.8% PRA Industry On average, 28 points better than the industry The Bottom Line Benefits of Strong Defense Our ability and willingness to defend claims allows us to achieve better results 21.1% 17.6% 16.2% 4.6% 14.0% 10.7% 21.9% 21.6% 23.1% 24.0% 20.6% 20.1% 17.1% 28.
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% 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Calendar Year Combined Ratio 1991 - 2015 ProAssurance HCPL HCPL P&C Source: 1991 - 2015 A.M
Slide 43: ProAssurance Outperforms in Insurance
ProAssurance Outperforms in Insurance Source: A.M . Best Aggregates and Averages for Each Line of Business (1991 - 2015) 103.9% 99.7% 100.5% 106.7% 89.2% 95.0% 87.5% 68.3% 63.2% 88.5% 71.5% 67.2% 1991-2015 10-Year 2005-2015 5-Year 2010-2015 Average Combined Ratio Overall P&C MPL PRA - MPL Only PRA -
Slide 44: 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 45: 2016 Workers' Compensation Financial Highlights
Three - Months Ended Nine - Months Ended September 30, 2016 2015 2016 2015 Gross Premiums Written $ 59.9 $ 61.8 $ 194.9 $ 196.0 Net Premiums Earned $ 54.5 $ 54.6 $ 164.0 $ 159.4 Total Revenues $ 54.6 $ 54.6 $ 164.7 $ 159.8 Net Losses & Loss Adjustment Expenses $ 34.5 $ 36.1 $ 104.2 $ 102.5 Underwrit
Slide 46: Consistent Profitability in Workers' Comp
79.1% 65.6% 80.2% 87.7% 96.0% 89.7% 91.8% 93.0% 96.0% 95.9% 95.5% 91.6% 94.3% 95.1% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 16 Consistent Profitability in Workers' Comp 45 Historical Combined Ratio Average 88% since 2006 (1) excluding fair value adjustments, intangible asset amortizati
Slide 47: How Eastern Differentiates
How Eastern Differentiates 46 Disciplined individual account underwriting with focus on rate adequacy in rural territories Dedicated to effective claims management and returning injured workers to wellness Understands market dynamics and regulatory concerns Use of local knowledge that has always dif
Slide 48: Eastern Business Profile
Eastern Business Profile 47 Offices Licensed and actively seeking business Licensed, accepting “border” business Eastern Re (Cayman) Licensed in 30 states Avoiding high - hazard states within the Eastern footprint
Slide 49: Workers' Compensation Risk Diversification
Workers' Compensation Risk Diversification Wide diversification by class code and market segment Almost 7,000 active policies in Traditional Programs Over 600 class c odes a ctively written 48 Physicians/Dentists 10.7% Nursing Homes Skilled 2.2% Hospital 6.4% Clerical / Office 15.4% Colleges/Schools
Slide 50: Workers' Compensation Risk Diversification (Alternative)
Physician / Dentists 3.9% Nursing Homes Skilled 4.1% Social Rehab Facilities 3.0% Retirement/Life Care Community 2.7% Clerical / Office 16.7% Colleges/Schools 7.8% Auto Dealers 6.2% Salesmen - Outside 5.7% Grocery Store - Retail 1.8% Restaurant 2.7% 13.7% Healthcare and Related Risks These are self
Slide 51: Broad Product Spectrum
Broad Product Spectrum Guaranteed Cost 51% INOVA (Alternative Markets) 30% Policyholder Dividend 9% Deductible Plans 4% Retrospective Rating 2% Assumed 4% Guaranteed Cost Policies Loss - Sensitive Dividend Plans Deductible Plans Retrospective Rating Plans Alternative Market Programs ParallelPay – “
Slide 52: How Eastern Differentiates
How Eastern Differentiates Extensive medical cost containment strategies consistently updated and implemented as new trends emerge Ten - year weighted average implied medical inflation is 1.5 percent on an incurred basis Proactive claims management Use of Compromise & Release where permitted by law
Slide 53: Workers' Comp Claim Closing Pattern: Traditional
Workers’ Comp Claim Closing Pattern: Traditional 52 No claims open from 2002 and earlier Few claims remain open from other, older accident years Recognized as a short - tail writer of workers’ compensation 364 536 590 570 687 591 717 776 889 953 1,076 1,180 1,238 1,269 1,142 886 0 0 0 3 0 2 2 3 4 7
Slide 54: Workers' Comp Claim Closing Pattern: Alternative
Workers’ Comp Claim Closing Pattern: Alternative 53 66 103 175 267 407 423 310 325 336 385 404 502 498 560 585 506 0 0 0 0 0 0 0 1 0 0 2 2 3 15 48 154 0 100 200 300 400 500 600 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Accident Years 2000 2001 2002 2003 2004 200
Slide 55: How Eastern Differentiates
How Eastern Differentiates Captive insurance solutions provided through Eastern Re Segregated cell company based in Cayman Successfully driving new business opportunities for healthcare professional liability business Strategic partnerships with select independent agencies that share philosophies on
Slide 56: Segment Highlights
Segment Highlights We repo rt results in three operational segments Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 57: Lloyd's Segment Highlights
Lloyd’s Segment Highlights Operations maturing as the Syndicate is fully staffed A highly - experienced healthcare professional liability underwriting team joined Syndicate 1729 in March 2016 Extensive experience in Canada, Australia, South America and Middle East 56
Slide 58: 2016 Lloyd's Segment Financial Highlights
Three - Months Ended Nine - Months Ended September 30 2016 2015 2016 2015 Gross Premiums Written $ 19.0 $ 16.4 $ 50.9 $ 46.9 Net Premiums Earned $ 14.6 $ 11.9 $ 40.5 $ 26.8 Total Revenues $ 15.7 $ 11.9 $ 42.8 $ 27.7 Net Losses & Loss Adjustment Expenses $ 11.3 $ 8.7 $ 26.0 $ 18.3 Underwriting & Oper
Slide 59: Lloyd's Syndicate 1729: Business Detail
Lloyd’s Syndicate 1729: Business Detail Broad spread of risk Property is primarily US 58 For the nine months reported September 30, 2016 $ in millions YTD 2016 Syndicate 1729 Gross Written Premium is $88.3 million ProAssurance 57.6% Share is $50.9 million Broken out by category: Property Insurance $
Slide 60: Segment Highlights: Corporate
Segment Highlights Corporate U.S. investing activities Non - premium revenues Corporate expenses U. S. taxes
Slide 61: 2016 Corporate Segment Financial Highlights
Three - Months Ended Nine - Months Ended September 30, 2016 2015 2016 2015 Net Investment income $ 24.9 $ 26.7 $ 74.3 $ 81.5 Equity in earnings (loss) of unconsolidated subsidiaries $ (3.3) $ (0.2) $ (6.6) $ 3.8 Net realized investment gains (losses) $ 15.7 $ (36.6) $ 18.3 $ (35.6) Operating expense
Slide 62: Investment Portfolio Detail
Investment Portfolio Detail ProAssurance remains conservatively invested to ensure our ability to keep our long - term promise of insurance protection
Slide 63: 2016 Investment Strategy & Outlook
2016 Investment Strategy & Outlook 62 Continuing capital management activities are expected to reduce the size of the portfolio Maintaining optimum allocation remains paramount Requires ongoing re - allocation Ensures non - correlation of returns Duration management is also important We will not ext
Slide 64: ProAssurance Investment Profile
All as of 9/30/16 ProAssurance Investment Profile Fixed Income 71% Short Term (incl cash) 7% Equities & Equity Substitutes 20% BOLI 2% $3.8 Billion Overall Portfolio State & Muni 32% Corporate 49% Asset Backed 13% Govt & Agency 6% $2.8 Billion Fixed Income Portfolio (71% of Invested Assets) Average
Slide 65: Portfolio Detail: Asset Backed
Other (Primarily Auto & Credit Card) 26% CMBS 9% RMBS 61% ProAssurance Portfolio Detail: Asset Backed 9/30/16 Subject to Rounding $357 Million (13% of Fixed Income / 8% of Invested Assets) Weighted Average Rating: “ AAA” 64
Slide 66: Portfolio Detail: Corporate
Financials 31% Industrials 16% Utilities/ Energy 16% Other 1% Basic Materials 3% Technology 5% Communications 6% Consumer Oriented 22% ProAssurance Portfolio Detail: Corporate Corporates: $ 1.3 Billion ( 49% of Fixed Assets / 35% of Invested Assets) Weighted Average Rating: A - Top 20 Banks/Financia
Slide 67: Portfolio Detail: Energy Exposure
Fixed Income $141 69% LP $24 12% Equities & Other $40 19% ProAssurance Portfolio Detail: Energy Exposure Energy Related Exposure: $204 Million 9/30/16 66 Total energy exposure is 5% of invested assets $ 115 million is investment grade 3.0% of invested assets $ 25 million of below investment grade bo
Slide 68: Portfolio Detail: Municipals
General Obligation 18% Special Revenue 70% Prerefunded 12% ProAssurance Portfolio Detail: Municipals Municipals: $885 Million ( 32% of Fixed Income / 23% Invested Assets) Top 10 Municipal Holdings in millions Connecticut State Housing Authority $15 Omaha Public Power $13 San Antonio, TX Electric & G
Slide 69: Portfolio: Equities & Other
Equities 36% Alternative Equity & Debt 16% Real Estate LP 4% Private Equity 14% Convertible Bonds 4% Other Bond Funds 2% Inflation Focused Bond Fund 9% Tax Credits 15% ProAssurance Portfolio: Equities & Other 9/30/2016 Equities & Other: $785 Million (20% of Invested Assets) 68
Slide 70: Additional Financial Detail
Additional Financial Detail
Slide 71: Tax Credit Impact on Operating Results
- $0.6 - $5.2 - $5.7 - $10.9 - $11.6 - $8.9 - $16.5 - $25.4 - $19.8 - $21.1 - $20.9 - $15.7 - $7.4 - $3.3 $1.0 $6.9 $12.0 $21.0 $22.0 $25.5 $33.4 $34.4 $25.5 $25.6 $24.8 $18.8 $7.4 $1.3 0.4 1.7 6.3 10.1 10.4 16.6 16.9 9.0 5.8 4.5 3.9 3.1 0.0 - 1.9 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20
Slide 72: Combined Tax Credits Portfolio Detail
Combined Tax Credits Portfolio Detail Year Capital Contributions GAAP Income/(Loss) from Operations , Disposition & Impairment Total Credits (Source IRR Schedule) Tax Provision after Impairment Impact on Earnings 2016 $ 8,768,215 $ ( 16,497,464) $ 27,670,578 $ 33,444,687 $ 16,947,224 2017 $ 3,544,62
Slide 73: Capital Growth: 2008–Q3 2016
Capital Growth : 2008‒ Q3 2016 72 2008 2009 2010 2011 2012 2013 2014 2015 YTD '16* Stock Issued $ 112,478 ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ Employee Stock Transactions $ 11,673 $ 7,205 $ 6,147 $ 6,167 $ 7,780 $ 9,261 $ 11,246 $ 8,221 $ 6,596 Earnings $ 177,725 $ 222,026 $ 231,598 $ 287,096 $ 275,470 $ 297,523 $ 196,5
Slide 74: Inside ProAssurance's Balance Sheet
Inside ProAssurance’s Balance Sheet Cash & Investments: 79.3% Insurance Receivables 11.0% Goodwill & Intangible Assets: 5.9% Other Assets: 3.8% Retained Earnings: 40.6% Other Equity: 0.1% Reinsurance Payable & Other Liabilities: 11.4% Unearned Premiums: 8.1% Loss Reserves: 39.8% Assets: $5.0 bln Lia
Slide 75: Inside ProAssurance's Income Statement
Inside ProAssurance’s Income Statement 74 Net Premiums Earned: 85.3% Net Realized Investment Gains (Losses): 2.9% Net Investment Income: 11.9% Other: - 0.1% Net Income: 15.2% Provision for Income Taxes: 2.6% Underwriting, Policy Acquisitions, Operating and Interest Expenses: 29.1% Net Losses and Los
Slide 76: Book Value per Share History Through Q3 2016
Book Value per Share History Through Q3 2016 $21.35 $26.30 $30.17 $35.42 $36.85 $39.13 $38.17 $36.88 $38.38 $20.26 $24.04 $26.58 $31.93 $33.34 $35.64 $32.66 $31.17 $32.80 $20.80 $23.13 $25.29 $29.80 $30.98 $34.67 $31.63 $30.72 $31.74 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/
Slide 77: Book Value per Share Components
Book Value per Share 76 Components 9/30/16 12/31/15 Change Total Book Value $ 38.38 $ 36.88 $ 1.50 Less: Goodwill & Intangible Assets 5.58 5.71 (0.13) Tangible Book Value $ 32.80 $ 31.17 $ 1.63 Less: Unrealized Gain / Loss 1.06 0.45 0.61 Tangible Book Value excl Unreal G/L $ 31.74 $ 30.72 $ 1.02 Est
Slide 78: Components of Return on Equity
3.3% 4.6% 1.1% - 1.1% - 1.5% Pre-Tax Underwriting Profit $51 Pre-Tax Investment Income $69 Non-Operating Gains $17 Taxes $(16) Interest & Intangibles $(25) 4.3% 5.5% - 2.3% - 1.1% - 1.2% Pre-Tax Underwriting Profit $66 Pre-Tax Investment Income $86 Non-Operating Gains $(36) Taxes $(17) Interest & In
Slide 79: Our Four Reporting Segments
Our Four Reporting Segments 78 • 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 • Internal
Slide 80: Q3 2016 Condensed Results by Segment
Q3 2016 Condensed Results by Segment 79 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination Q3 2016 Q3 2015 Gross premiums written $ 155,838 $ 59,910 $ 18,956 $ — $ (2,688 ) $ 232,016 $ 235,905 Net premiums written 134,989 54,444 16,342 — — 205,775 213,110 Net premiums earned
Slide 81: 2016 Condensed Results by Segment
2016 Condensed Results by Segment 80 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination Total YTD 2016 Total YTD 2015 Gross premiums written $ 410,201 $ 194,420 $ 50,870 $ — $ (7,927 ) $ 647,564 $ 651,343 Net premiums written 354,510 175,986 42,575 — — 573,071 581,855 Net pr
Slide 82: 2015 Condensed Results by Segment
2015 Condensed Results by Segment 81 Specialty P&C Workers' Comp Lloyd' s Syndicate Corporate / Other Elimination Total for 2015 Total for 2014 Gross premiums written $ 526,296 $ 243,608 $ 56,929 $ — $ (14,615 ) $ 812,218 $ 779,609 Net premiums written 442,126 218,338 48,821 — — 709,285 701,849 Net
Slide 83: Substantial HPL Claims Experience
Substantial HPL Claims Experience 82 More than 10,000 Hospital Professional Liability (HPL) claims handled since the inception of ProAssurance Higher proportion of HPL settlements than for physician claims, due to the requests of hospital insureds 6,527 437 3,733 279 10,260 716 Closed Open Total Law