Proassurance Corporation · NYSE:PRA
Proassurance — NYSSA 2017 Insurance Conference Meetings
89 slides from Proassurance's conference presentation, Mar 20, 2017
Slide 1: Forward Looking Statements and Non-GAAP Measures
0 NYSSA 2017 Insurance Conference Meetings Forward Looking Statements 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 actu
Slide 2: Key Updates – March 2017
Key Updates – March 2017
Slide 3: Key Update: Strong Operational Results
2 NYSSA 2017 Insurance Conference Meetings Key Update: Strong Operational Results Premium GROWTH of 2.8 % , despite a highly competitive marketplace Specialty P&C: +1.8% Workers’ Compensation +1.8% Lloyd’s Syndicate: +14.5 % New Business : $96 million (Specialty P&C + Workers’ Compensation) Coordina
Slide 4: Key Updates: 2016 Return on Equity & Future Goals
3 NYSSA 2017 Insurance Conference Meetings Key Updates: 2016 Return on Equity & Future Goals Revising ROE target to seven points above the ten - year Treasury rate (risk - free rate ) Prior long - term return target of 12% - 14% is unrealistic in the current interest rate environment Ten year treasu
Slide 5: Components of Return on Equity
4 NYSSA 2017 Insurance Conference Meetings Components of Return on Equity 6.0% 10.0% 11.5 9.2% 4.3% 5.0% 1.7% - 1.3% - 1.7% Pre-Tax Underwriting Profit $81 Pre-Tax Investment Income $94 Non-Operating Gains $33 Taxes $(25) Interest & Intangibles $(32) 2016 Return on Equity: 8.0% 3.9% 5.5% - 2.0% - 0.
Slide 6: Key Updates: Capital Management
5 NYSSA 2017 Insurance Conference Meetings Key Updates: Capital Management Special dividend of $4.69/per common share paid on January 9, 2017, alongside a regular dividend of $0.31/per common share for Q4 2016 Dividends declared in 2016 returned $315 million of capital to shareholders Underscores ou
Slide 7: Superb Track Record of Capital Management
6 NYSSA 2017 Insurance Conference Meetings Superb Track Record of Capital Management Current Management Team’s Tenure Began Q2 2007 At 3/1/17 | $ in 000’s Year Dividends Declared* Share Repurchase Strategic Acquisitions Total* Special Regular 2007 ̶ ̶ $54,201 ̶ $54,201 2008 ̶ ̶ 87,561 ̶ 87,561 2009
Slide 8: Capital and Liquidity Decisions
7 NYSSA 2017 Insurance Conference Meetings 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. Dividends from subsidiaries to the holding company are our prima
Slide 9: Subsidiary Dividends to Corporate
8 NYSSA 2017 Insurance Conference Meetings $144 $149 $229 $150 $162 $56 $294 $311 $285 2016 2015 2014 Ordinary Extraordinary Subsidiary Dividends to Corporate Subsidiary Dividend History (in Millions) 2017 ORDINARY Dividend Capacity is $174 Million Ordinary dividends permitted without regulatory app
Slide 10: Strong Capital Position and Minimal Debt
9 NYSSA 2017 Insurance Conference Meetings $450 million long - term debt $250 million 10 - year notes due 11/15/2023 @ 5.30% Coupon Additional $100 million in secured borrowing from credit facility in December to fund dividend • Additional borrowing will be paid off as collateral matures • Colla
Slide 11: Capital Management Priorities
10 NYSSA 2017 Insurance Conference Meetings Capital Management Priorities Conceptual Model of Projected A. M. Best BCAR Scores if Increase Premium Reduce Surplus “A+” Rating Threshold The manner in which capital is used has an effect on financial ratings Excess Capital vs. Excess Capacity
Slide 12: Corporate Profile
Corporate Profile
Slide 13: ProAssurance Corporate Profile
12 NYSSA 2017 Insurance Conference Meetings ProAssurance Corporate Profile Healthcare - centric specialty insurance writer Healthcare Professional Liability (HCPL) • Only public company writing predominantly HCPL Life sciences and medical device liability Workers' compensation Legal professi
Slide 14: ProAssurance Brand Profile
13 NYSSA 2017 Insurance Conference Meetings ProAssurance Brand Profile Specialty P&C Healthcare Professional Liability Workers’ Comp Alternative Risk Transfer Medical Technology & Life Sciences Products Liability Legal Professional Liability
Slide 15: Mission, Vision and Values
14 NYSSA 2017 Insurance Conference Meetings 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 integrate
Slide 16: Consolidated Financial Highlights
Consolidated Financial Highlights Our commentary on consolidated operational results
Slide 17: 2016 Income Statement Highlights
16 NYSSA 2017 Insurance Conference Meetings 2016 Income Statement Highlights Strong results from a focused strategy Three - Months Ended Year Ended December 31 2016 2015 2016 2015 Gross Premiums Written $187.5 $160.9 $835.0 $812.2 Net Investment Result $25.6 $ 26.3 $94.3 $112.3 Total Revenues $ 237.
Slide 18: Balance Sheet Highlights
17 NYSSA 2017 Insurance Conference Meetings Balance Sheet Highlights Maintaining the financial strength required to keep our insurance promise while continuing to create value for our shareholders 2016 2015 2014 2013 Shareholders’ Equity $1.8 $2.0 $2.2 $2.4 Total Investments $ 3.9 $3.7 $4.0 $3.9 Tot
Slide 19: The Payoff: Consistent Value Creation
18 NYSSA 2017 Insurance Conference Meetings The Payoff: Consistent Value Creation Reflects all stock splits and includes all dividends in the year declared. Source: SNL 52% 88% 160% 521% 229% 314% 671% 884% 941% 1095% 1698% 2040% 3116% 91 96 01 06 11 16 Scorecard at 3/15/17 Total Return CAGR Since I
Slide 20: Consolidated Operational Highlights
Consolidated Operational Highlights Our commentary on our markets and strategy
Slide 21: Strong Operational Results / Consistent Profitability
20 NYSSA 2017 Insurance Conference Meetings Combined ratio average 2009 - 2016: 72.7% Operating ratio average 2009 - 2016: 50.2% Strong Operational Results / Consistent Profitability Combined Ratio and Operating Ratio History 69.1% 68.0% 52.5% 57.3% 70.6% 82.1% 90.5% 91.4% 38.8% 39.8% 27.6% 32.6% 46
Slide 22: Disciplined Approach to Reserves
21 NYSSA 2017 Insurance Conference Meetings Recognizing loss trends as they appear No change in reserving philosophy or process Disciplined Approach to Reserves $ in millions 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 $3
Slide 23: 2016 Premiums, Policyholders & Distribution
22 NYSSA 2017 Insurance Conference Meetings 2016 Premiums, Policyholders & Distribution All Data as of 12/31/2016 YTD Policyholder Count: ~ 77,000 2016 Gross Premium: $ 835 mln Physicians & Dentists 45% Ancillary Healthcare 3% Life Sciences/ Medical Tech 4% Hospitals & Facilities 8% Attorneys 3% Wor
Slide 24: Reinsurance Programs
23 NYSSA 2017 Insurance Conference Meetings Reinsurance Programs Professional Liability Medical Technology & Life Sciences Workers' Compensation Retention Reinsured Coverage Offered up to $25 million -------- 5% to 12.5% retained based on layer Coverage Offered up to $9 million -------- 10% Retentio
Slide 25: Strategic Review
Strategic Review
Slide 26: Reality: Healthcare Costs are the Real Issue
25 NYSSA 2017 Insurance Conference Meetings The question is cost vs. care — we can deliver more care than we can afford Restructuring is producing profound changes in healthcare The U.S. spends a greater proportion of GDP on healthcare and the percentage is increasing Reality: Healthcare Costs are
Slide 27: Reality: Traditional Practices are Fading
26 NYSSA 2017 Insurance Conference Meetings The fork in the road for traditional HCPL companies Their core markets are disappearing and they do not have the financial size and capability to insure large, more complex risks Reality: Traditional Practices are Fading Source: 2016 Physicians Foundatio
Slide 28: Reality: ProAssurance Can Meet the Challenges
27 NYSSA 2017 Insurance Conference Meetings The HCPL Industry Traditional practices are fading Excess capital is being used to try to maintain market share at the expense of a sustainable future Capital & geographic constraints challenge many small insurers Few companies are able to respond to new c
Slide 29: Emerging Issues in Healthcare
28 NYSSA 2017 Insurance Conference Meetings 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 purch
Slide 30: ProAssurance is Positioned to Succeed in HCPL
29 NYSSA 2017 Insurance Conference Meetings ProAssurance has the right combination of geographic scope, broad experience, and financial strength for success in the new world of healthcare liability ProAssurance is Positioned to Succeed in HCPL Size & Scope of Top HCPL Writers SNL 2015 Statutory Data
Slide 31: ProAssurance is Positioned to Succeed in HCPL
30 NYSSA 2017 Insurance Conference Meetings ProAssurance is Positioned to Succeed in HCPL Our long - term focus on financial strength is central to our overall strategy and success We have proven our ability to thrive across insurance cycles We have an unmatched combination of financial strength and
Slide 32: Strategic Successes in the Evolving Market
31 NYSSA 2017 Insurance Conference Meetings The Certitude tm program in partnership with Ascension Health Shared risk through quota share participation by Ascension’s captive on first $1M ~ 2,400 insured physicians ~$25.6 million inforce Certitude direct premium Active in AL, CT, D.C., FL, I
Slide 33: Addressing a Wide Spectrum of Risk Appetites
32 NYSSA 2017 Insurance Conference Meetings Addressing a Wide Spectrum of Risk Appetites Traditional Policies Primarily agent - sold or direct Remains the majority of our business Proven performance supports discipline pricing Transitional Risk sharing/high deductible programs control cost and build
Slide 34: Emerging Strategic Opportunities
33 NYSSA 2017 Insurance Conference Meetings Emerging Strategic Opportunities 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
Slide 35: Leveraging Existing Expertise in New Ways
34 NYSSA 2017 Insurance Conference Meetings Leveraging Existing Expertise in New Ways 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
Slide 36: Broad Experience Across the Healthcare Market
35 NYSSA 2017 Insurance Conference Meetings 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 Broad Ex
Slide 37: Segment Highlights
Segment Highlights We report results in three operational segments: Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 38: 2016 Specialty P&C Financial Highlights
37 NYSSA 2017 Insurance Conference Meetings 2016 Specialty P&C Financial Highlights Three - Months Ended Year Ended December 31 2016 2015 2016 2015 Gross Premiums Written $125.5 $109.6 $535.7 $526.3 Net Premiums Earned $ 122.7 $100.2 $457.8 $443.3 Total Revenues $ 124.0 $ 100.3 $463.1 $447.9 Net Los
Slide 39: 2016 Specialty P&C Gross Written Premium
38 NYSSA 2017 Insurance Conference Meetings Total Gross Written Premiums increased $9.4M (1.8%) from $ 526.3 mln to $ 535.7 mln Physician new business of $32.8 mln, retention of 88% Facilities increase is due to new business of $17.4 mln; and an $11.8 mln one - time premium Legal professional liabil
Slide 40: Strong Retention Despite Competition
39 NYSSA 2017 Insurance Conference Meetings Retention remains strong Continued underwriting vigilance is being used today to ensure future success Market share is important, but NOT as important as profitability Strong Retention Despite Competition Year - over - Year Premium Retention – Physicians
Slide 41: No Overall Change in HCPL Loss Trends
40 NYSSA 2017 Insurance Conference Meetings No Overall Change in HCPL Loss Trends PICA excluded to facilitate accurate comparisons over time Current accident year loss ratio adjustments have been minor — in either direction Minimal changes on renewed business MD/DO Charged Rate History 2001 2002 200
Slide 42: Differentiate Through Claims Defense
41 NYSSA 2017 Insurance Conference Meetings 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 Increas
Slide 43: Ohio Closed Claim Example
42 NYSSA 2017 Insurance Conference Meetings Comprehensive, reliable data provided by the Ohio Department of Insurance Broad range of competitors and business approaches The Ohio Example: 2005 – 2014 Data www.insurance.ohio.gov/Legal/Reports/Documents/Ohio2013MedicalProfessionalLiabilityClosedClaimRe
Slide 44: Benefits of Strong Defense
43 NYSSA 2017 Insurance Conference Meetings Source: 2008 - 2015, Statutory Basis, A.M. Best Aggregates & Averages 2014: Preliminary data from SNL The Bottom Line Benefits of Strong Defense Our ability and willingness to defend claims allows us to achieve better results ProAssurance Stand Alone Loss
Slide 45: ProAssurance Outperforms in HCPL
44 NYSSA 2017 Insurance Conference Meetings Source: 1991 - 2015 A.M. Best Aggregates and Averages, Medical Malpractice Lines of Business. Policyholder Dividends Included. ProAssurance Outperforms in HCPL ProAssurance consistently outperforms in a volatile line of business Calendar Year Combined Rati
Slide 46: ProAssurance Outperforms in Insurance
45 NYSSA 2017 Insurance Conference Meetings Source: A.M. Best Aggregates and Averages for Each Line of Business (1991 - 2015) ProAssurance Outperforms in Insurance Average Combined Ratio 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 201
Slide 47: Segment Highlights
Segment Highlights We report results in three operational segments: Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 48: 2016 Workers' Compensation Financial Highlights
47 NYSSA 2017 Insurance Conference Meetings 2016 Workers’ Compensation Financial Highlights Three - Months Ended Year Ended December 31 2016 2015 2016 2015 Gross Premiums Written $53.5 $47.6 $247.9 $243.6 Net Premiums Earned $ 56.8 $53.7 $220.8 $213.2 Total Revenues $ 57.0 $ 53.9 $221.7 $213.7 Net L
Slide 49: Consistent Profitability in Workers' Comp
48 NYSSA 2017 Insurance Conference Meetings (1) Excluding fair value adjustments, intangible asset amortization, transaction - related and other one - time charges. Consistent Profitability in Workers' Comp Historical Combined Ratio Average 88% since 2006 79.1% 65.6% 80.2% 87.7% 96.0% 89.7% 91.8% 93
Slide 50: How Eastern Differentiates
49 NYSSA 2017 Insurance Conference Meetings How Eastern Differentiates Understands market dynamics and regulatory concerns Use of local knowledge that has always differentiated ProAssurance Disciplined individual account underwriting with focus on rate adequacy in rural territories Dedicated to ef
Slide 51: Eastern Business Profile
50 NYSSA 2017 Insurance Conference Meetings Eastern Business Profile Licensed in 30 states Avoiding high - hazard states within the Eastern footprint Offices Licensed and actively seeking business Licensed, accepting “border” business Eastern Re (Cayman)
Slide 52: Workers' Comp Risk Diversification: Traditional
51 NYSSA 2017 Insurance Conference Meetings Wide diversification by class code and market segment Approximately 7,000 active policies in Traditional Programs Over 600 class codes actively written Workers' Compensation Risk Diversification Top 10 Classes (Traditional) Payroll Exposure as of Decem
Slide 53: Workers' Comp Risk Diversification: Alternative
52 NYSSA 2017 Insurance Conference Meetings These are self - insured, segregated portfolio cells within Eastern’s alternative markets facility 2,800 active Inova ® policies Over 400 class codes actively written Workers' Compensation Risk Diversification Top 10 Classes (Alternative) Payroll Expos
Slide 54: Broad Product Spectrum
53 NYSSA 2017 Insurance Conference Meetings Guaranteed Cost Policies Loss - Sensitive Dividend Plans Deductible Plans Retrospective Rating Plans Alternative Market Programs ParallelPay – “Pay as you Go” TPA Services Claims Administration and Risk Management Broad Product Spectrum $248 Mln Gross Wr
Slide 55: How Eastern Differentiates
54 NYSSA 2017 Insurance Conference Meetings 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 Strategic use of return - to - well
Slide 56: Workers' Comp Claim Closing Pattern: Traditional
55 NYSSA 2017 Insurance Conference Meetings 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 Workers’ Comp Claim Closing Pattern: Traditional 12/31/16 364 536 590 570 687 591 717 778 890 953 1,
Slide 57: Workers' Comp Claim Closing Pattern: Alternative
56 NYSSA 2017 Insurance Conference Meetings No claims open from 2006 and earlier Few claims remain open from other, older accident years Recognized as a short - tail writer of workers’ compensation Workers’ Comp Claim Closing Pattern: Alternative 12/31/16 66 103 175 267 407 423 310 325 336 385 404
Slide 58: How Eastern Differentiates
57 NYSSA 2017 Insurance Conference Meetings How Eastern Differentiates Captive insurance solutions provided through Eastern Re Value - added risk management services cements brand loyalty Strategic partnerships with select independent agencies that share philosophies on controlling workers’ compensa
Slide 59: Segment Highlights
Segment Highlights We report results in three operational segments: Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 60: Lloyd's Segment Highlights
59 NYSSA 2017 Insurance Conference Meetings Lloyd’s Segment Highlights Operations maturing as the Syndicate is more fully staffed Extensive experience in Canada, Australia, South America and Middle East A highly - experienced healthcare professional liability underwriting team joined Syndicate 1729
Slide 61: 2016 Lloyd's Segment Financial Highlights
60 NYSSA 2017 Insurance Conference Meetings 2016 Lloyd’s Segment Financial Highlights Three - Months Ended Year Ended December 31 2016 2015 2016 2015 Gross Premiums Written $ 14.3 $ 10.0 $65.2 $56.9 Net Premiums Earned $ 14.1 $ 10.9 $54.7 $37.7 Total Revenues $ 14.8 $ 11.7 $57.6 $39.3 Net Losses & L
Slide 62: Lloyd's Syndicate 1729: Business Detail
61 NYSSA 2017 Insurance Conference Meetings Total 2016 Underwriting capacity: $111 million ProAssurance 57.6% share is $63.9 million Syndicate 1729 Gross Written Premium is $113.2 million ProAssurance 57.6% Share is $65.2 million Lloyd’s Syndicate 1729: Business Detail For the twelve months repo
Slide 63: Segment Highlights: Corporate
Segment Highlights Corporate U.S. investing activities Non - premium revenues Corporate expenses U.S. taxes
Slide 64: 2016 Corporate Segment Financial Highlights
63 NYSSA 2017 Insurance Conference Meetings The decline in earnings from unconsolidated subsidiaries was primarily the result of an acceleration in the recognition of estimated partnership losses related to tax credit investments (see slides 74 & 75) Investment income continues to decline due to low
Slide 65: Investment Portfolio Detail
Investment Portfolio Detail ProAssurance remains conservatively invested to ensure our ability to keep our long - term promise of insurance protection
Slide 66: 2016 Investment Review and 2017 Investment Strategy
65 NYSSA 2017 Insurance Conference Meetings Seeking better risk - adjusted returns Remaining sensitive to potential changes in tax rates 2016 Investment Review Duration management We will not extend duration in search of incremental yield Optimizing our allocation E nsures non - correlation of ret
Slide 67: ProAssurance Investment Profile
66 NYSSA 2017 Insurance Conference Meetings 12/31/16 Full portfolio disclosure on our website: investor.proassurance.com/CustomPage/Index?KeyGenPage=305596 ProAssurance Investment Profile $ 2.6 Billion Fixed Income Portfolio (67% of Invested Assets) $ 3.9 Billion Overall Portfolio Sources of Liquidi
Slide 68: Portfolio Detail: Asset Backed
67 NYSSA 2017 Insurance Conference Meetings 12/31/16 Subject to Rounding ProAssurance Portfolio Detail: Asset Backed $357 Million ( 14% of Fixed Income/9% of Invested Assets) RMBS 61% Other (Primarily Auto & Credit Card) … CMBS 9% Weighted Average Rating: “AAA”
Slide 69: Portfolio Detail: Corporate
68 NYSSA 2017 Insurance Conference Meetings 12/31/16 ProAssurance Portfolio Detail: Corporate Corporates: $1.3 Billion (49% of Fixed Assets/33% of Invested Assets) Top 20 Banks/Financials: $188 million in millions JPM $22 NRUC $9 Goldman $15 Simon Property $9 Bank of America $15 HCP $7 PNC Bank $12
Slide 70: Portfolio Detail: Energy Exposure
69 NYSSA 2017 Insurance Conference Meetings Total energy exposure is 5% of invested assets $106 million is investment grade 3.0% of invested assets $25 million of below investment grade bonds <1% of invested assets ProAssurance Portfolio Detail: Energy Exposure 12/31/16 Energy Related Exposure:
Slide 71: Portfolio Detail: Municipals
70 NYSSA 2017 Insurance Conference Meetings 12/31/16 ProAssurance Portfolio Detail: Municipals Municipals: $800 Million ( 31% of Fixed Income / 20% Invested Assets) General Obligation 20% Prerefunded 10% Special Revenue 70% Weighted Average Rating: AA Top 10 Municipal Holdings in millions Connecticu
Slide 72: Portfolio: Equities & Other
71 NYSSA 2017 Insurance Conference Meetings 12/31/16 ProAssurance Portfolio: Equities & Other Equities & Other: $810 Million ( 21% of Invested Assets) Equities 36% Alternative Equity & Debt 16% Real Estate LP 5% Private Equity 14% Convertible Bonds 4% Other 2% Inflation Focused Bond Fund 9% Tax Cred
Slide 73: Additional Financial Detail
Additional Financial Detail
Slide 74: Tax Credit Impact on Operating Results
73 NYSSA 2017 Insurance Conference Meetings Tax Credit Impact on Operating Results Substantial tax benefits and amortization expenses - $0.8 - $5.6 - $6.2 - $10.0 - $10.7 - $10.3 - $24.8 - $23.1 - $20.0 - $21.3 - $21.1 - $15.7 - $7.3 - $3.2 - $1.3 $1.2 $7.7 $12.3 $20.8 $21.7 $26.0 $36.2 $33.8 $25.6
Slide 75: Combined Tax Credits Portfolio Detail & Projections
74 NYSSA 2017 Insurance Conference Meetings Combined Tax Credits Portfolio Detail & Projections Year Capital Contributions GAAP Income/(Loss) from Operations, Disposition & Impairment Total Credits (Source IRR Schedule) Tax Provision after Impairment Impact on Earnings 2016 $ 8,701,852 $ (24,817,214
Slide 76: Capital Growth: 2008-2016
75 NYSSA 2017 Insurance Conference Meetings Capital Growth: 2008‒2016 2008 2009 2010 2011 2012 2013 2014 2015 2016 Beginning Equity* $ 1,255 $ 1,424 $ 1,705 $ 1,856 $ 2,164 $ 2,271 $ 2,394 $ 2,158 $ 1,958 Stock Issued $ 112,478 ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ Employee Stock Transactions $ 11,673 $ 7,205 $ 6,147 $ 6
Slide 77: Inside ProAssurance's Balance Sheet
76 NYSSA 2017 Insurance Conference Meetings 12/31/16 Inside ProAssurance’s Balance Sheet Cash & Investments 79.8% Insurance Receivables 10.7% Goodwill & Intangible Assets 5.8% Other Assets 3.7% Loss Reserves 39.4% Retained Earnings 36.0% Reinsurance Payable & Other Liabilities 17.7% Unearned Premium
Slide 78: Inside ProAssurance's Income Statement
77 NYSSA 2017 Insurance Conference Meetings Inside ProAssurance’s Income Statement Net Premiums Earned 84.3% Net Investment Income 11.5% Net Realized Investment Gains (Losses) 4.0% Other: 0.2% Net Losses and Loss Adjustment Expenses 50.9% Underwriting, Policy Acquisitions, Operating and Interest Exp
Slide 79: Book Value per Share History
78 NYSSA 2017 Insurance Conference Meetings Book Value per Share History $21.35 $26.30 $30.17 $35.42 $36.85 $39.13 $38.17 $36.88 $33.78 $20.26 $24.04 $26.58 $31.93 $33.34 $35.64 $32.66 $31.17 $28.24 $20.80 $23.13 $25.29 $29.80 $30.98 $34.67 $31.63 $30.72 $27.91 12/31/08 12/31/09 12/31/10 12/31/11 12
Slide 80: Book Value per Share Components
79 NYSSA 2017 Insurance Conference Meetings Book Value per Share Components 12/31/16 12/31/15 Change Total Book Value $33.78 $36.88 $(3.10) Less: Goodwill & Intangible Assets 5.54 5.71 ( 0.17) Tangible Book Value $28.24 $31.17 $(2.93) Less: Unrealized Gain / Loss 0.33 0.45 $(0.12) Tangible Book
Slide 81: Ceded Premiums Written
80 NYSSA 2017 Insurance Conference Meetings Ceded Premiums Written Year Ended 12/31/16 HCPL, incl Podiatry Products Lawyers 2016 2015 2016 2015 2016 2015 Gross written premium $ 476.8 $ 464.6 $ 33.3 $ 33.4 $ 25.6 $ 28.3 Ceded premiums 63.9 70.3 11.1 11.4 2.0 2.5 Net written premium 412.9 394.3 22.2
Slide 82: Net Investment Result
81 NYSSA 2017 Insurance Conference Meetings Net Investment Result Excluding Capital Gains / (Losses) 12/31/16 12/31/15 Change Net Investment Income Fixed maturities $ 84,386 $ 96,315 $ (11,929 ) Equities 14,887 13,317 1,570 Short - term and Other investments 3,353 2,035 1,318 BOLI 2,008 2,053 (45 )
Slide 83: Our Four Reporting Segments
82 NYSSA 2017 Insurance Conference Meetings Our Four Reporting Segments ProAssurance Consolidated Specialty P&C Workers’ Compensation Lloyd’s Corporate / Other Healthcare Professional Liability Products Liability Lawyers’ Professional Liability Traditional Captive Market Facility Syndicate 1729 (58%
Slide 84: Q4 2016 Condensed Results by Segment
83 NYSSA 2017 Insurance Conference Meetings Q4 2016 Condensed Results by Segment Fourth Quarter 2016 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination Q4 2016 Q4 2015 Gross premiums written $ 125,523 $ 53,520 $ 14,287 $ — $ (5,880 ) $ 187,450 $ 160,876 Net premiums written
Slide 85: 2016 Condensed Results by Segment
84 NYSSA 2017 Insurance Conference Meetings 2016 Condensed Results by Segment Year Ended 12/31/16 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination Total YTD 2016 Total YTD 2015 Gross premiums written $ 535,725 $ 247,940 $ 65,157 $ — $ (13,808 ) $ 835,014 $ 812,218 Net prem
Slide 86: 2015 Condensed Results by Segment
85 NYSSA 2017 Insurance Conference Meetings 2015 Condensed Results by Segment 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 442,12
Slide 87: ProAssurance's Path to Success
86 NYSSA 2017 Insurance Conference Meetings ProAssurance’s Path to Success 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 traditional HCPL 2
Slide 88: Key State Rate Comparison
87 NYSSA 2017 Insurance Conference Meetings Annual Premium for a $ 1M / $3M Policy Filed or Approved at 1/01/17 Key State Rate Comparison 87 Birmingham Indianapolis Denver Louisville Dallas St Louis Cleveland New York, NY Washington Miami Detroit Chicago Family Practice (No Surgery) $7,484 $8,461 $1
Slide 89: Substantial HPL Claims Experience
88 NYSSA 2017 Insurance Conference Meetings Substantial HPL Claims Experience 12/31/16 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,
ProAssurance — NYSSA 2017 Insurance Conference Meetings on 6ix