Proassurance Corporation · NYSE:PRA
Proassurance — 2013 Securities Research Conference
23 slides from Proassurance's conference presentation, May 14, 2013
Slide 1: 2013 Securities Research Conference Investor Presentation
2013 Securities Research Conference Investor Presentation May 14, 2013 2013 Securities Research Conference Edward L. Rand, Jr. Chief Financial Officer Frank B. O’Neil Investor Relations Officer Investor Presentation
Slide 2: Forward Looking Statements and Non-GAAP Measures
This presentation contains Forward Looking Statements and other information designed to convey our projections and expectations regarding future results. There are a number of factors which could cause our actual results to vary materially from those projected in this presentation. The principal ris
Slide 3: ProAssurance Financial & Strategy Overview
ProAssurance Financial & Strategy Overview Edward L. Rand, Jr. Chief Financial Officer
Slide 4: ProAssurance Corporate Profile
ProAssurance Corporate Profile Specialty liability insurance writer Healthcare Professional Liability (HCPL) Life sciences and medical devices Attorney’s professional liability Market Cap: ~$3.0 billion Shareholders’ Equity: $2.4 billion Total Assets: $5.3 billion Claims-Paying Ratings: “A” by A. M.
Slide 5: Q1 2013 Highlights
Q1 2013 Highlights Increased Net and Operating Income Y- O -Y ROE of 13.4% Book Value per share now $38.19 4% increase since year-end 2012 Book Value per Share has grown each year since Recent transactions contributing to our results with integration proceeding as planned
Slide 6: Q1 2013 Income Statement Highlights
March 31, Y-OVER-Y Change 2013 2012 Gross Premiums Written $ 163 $ 170 -4% Net Investment Result 32 31 +2% Total Expenses (Includes Loss Costs) 95 105 -10% Net Income (Includes Realized Investment Gains & Losses and gain on acquisition) $ 113 $ 56 +103% Operating Income $ 60 $ 48 +24% Net Income per
Slide 7: Five year Premium History
Five year Premium History Disciplined Underwriting Focused on writing profitable business to ensure long-term success Premium decline driven by competition, physician consolidation and rate actions driven by an improving loss environment Gross Premiums Written Net Premiums Earned
Slide 8: Q1 2013 Income Statement Highlights
March 31, Y-OVER-Y Change 2013 2012 Gross Premiums Written $ 163 $ 170 -4% Net Investment Result 32 31 +2% Total Expenses (Includes Loss Costs) 95 105 -10% Net Income (Includes Realized Investment Gains & Losses and gain on acquisition) $ 113 $ 56 +103% Operating Income $ 60 $ 48 +24% Net Income per
Slide 9: Seeking Increased Yield But Balancing Risk
$4.3 Billion Portfolio Fixed Income: 84% Short Term: 2% Equity and Equity Substitutes: 12% BOLI: 1% Seeking Increased Yield But Balancing Risk We continue to focus on maintaining a high quality, well diversified fixed income portfolio We are making incremental changes to obtain higher yields in blue
Slide 10: Q1 2013 Balance Sheet Highlights
Shareholders’ Equity Q1 2013 Balance Sheet Highlights Split adjusted, in billions, except Book Value per share Shareholders’ Equity $ 2.4 $ 2.3 +4% Total Investments 4.3 3.9 +10% Total Assets 5.2 4.9 +6% Policy Liabilities 2.5 2.3 +9% 3/31/13 12/31/12 CHANGE 66% increase since 2008 Book Value per Sh
Slide 11: Historical Financial Performance
Net Income 1 Operating Income 2 Historical Financial Performance Our disciplined, long-term approach drives consistent profitability $ in millions 1 Includes a gain of $35.5 million in the first quarter of 2013 in connection with our acquisition of Medmarc as a result of the value of the net assets
Slide 12: Consistent Approach to Reserves
Consistent Approach to Reserves Consistent reserving practices provide protection against a loss trend reversal and capital erosion $ in thousands
Slide 13: Capital Management Priorities / Share Repurchase History
Share Repurchase History Capital Management Priorities Preferred use is to support growth through M&A or new business We balance future needs with current market reality Regular dividend is $1.00/share ~2% yield based on 5/8/13 closing price Prudent share repurchase program $321 million spent to rep
Slide 14: The Payoff: Consistent Book Value Growth
Captures our focus on long-term excellence Increased every year we have been public The Payoff: Consistent Book Value Growth Inception to 3/31/13 CAGR: 16% Cumulative: 2,179% 10 Year Summary (2003 -2012) CAGR: 16% Cumulative: 360% Historical Book Value Per Share Split Adjusted Dividends Shown in the
Slide 15: The Payoff: Steady Share Price Increase
Share price reflects investor confidence in our business decisions and long-term strategy The Payoff: Steady Share Price Increase Historical Share Price Reflects all stock splits 2012 excludes $2.50/share special dividend Inception to 3/31/13 CAGR: 15% Cumulative: 1,706% 10 Year Summary (2002 -2012)
Slide 16: Strategies for Future Success
Strategies for Future Success Frank B. O’Neil Senior Vice-President
Slide 17: Building a Bridge to the Future
Building a Bridge to the Future Our core business is at a pivot point We are uniquely positioned to succeed by serving the emerging market and remaining legacy business Smaller competitors with less experience and capacity have decisions to make Legacy business is largely single-state, solo and smal
Slide 18: Building a Bridge to the Future
Building a Bridge to the Future Larger risks will demand sophisticated coverages that span the continuum of healthcare Broad healthcare liability experience is our foundation We added capacity & capability through M&A Example: Medmarc, PICA and Mid-Continent Home Healthcare Non-Traditional Delivery
Slide 19: ProAssurance Will Grow Prudently
ProAssurance Will Grow Prudently ProAssurance is a demonstrated leader in M&A We will broaden our lines of coverage as needed Healthcare-related Through prudent leverage of our expertise and the addition of specialized expertise The market will firm and we are prepared to grow organically Past histo
Slide 20: Strategy for an Evolving Market
Strategy for an Evolving Market Shaped by a healthcare landscape that will change—with or without federal healthcare reform Expanding our capabilities and commitment across the continuum of healthcare Building on two decades of hospital experience Recent expansion into products liability for life sc
Slide 21: Strategy for an Evolving Market
Strategy for an Evolving Market Leverage our reach, expertise and financial strength with larger accounts Largest non-profit healthcare system in the US Now in Michigan, Florida, Illinois, Indiana and Texas Insuring Ascension-affiliated physicians through coordinated, jointly insured programs Financ
Slide 22: Strategy for an Evolving Market
Strategy for an Evolving Market Joint physician/hospital insurance products to address the unique risk tolerance and claims- handling expectation of each insured Partnerships with existing physician-focused companies to leverage hospital expertise Recently announced California venture with CAP-MPT:
Slide 23: Healthcare Reform
Healthcare Reform No meaningful change after the election Known: More customers for us May accelerate the growth of hospital-owned practices and consolidation into larger groups Provides an opportunity for us due to our geographic reach, long-term experience in hospitals and our financial strength W