Proassurance Corporation · NYSE:PRA
Proassurance — Investor Presentation (June 2017)
98 slides from Proassurance's investor presentation, Jun 22, 2017
Slide 1: Forward Looking Statements Non-GAAP Measures
0 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 2: Corporate Profile
Corporate Profile
Slide 3: ProAssurance Corporate Profile
2 ProAssurance Investor Presentation as of June 22, 2017 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 L
Slide 4: YTD 2017 Premiums, Policyholders & Distribution
3 ProAssurance Investor Presentation as of June 22, 2017 YTD 2017 Premiums, Policyholders & Distribution 3/31/17 YTD Policyholder Count: ~ 73,000 YTD 2017 Gross Premium: $ 231 mln Physicians & Dentists 44% Ancillary Healthcare 3% Life Sciences/ Medical Tech 3% Hospitals & Facilities 6% Attorneys 3%
Slide 5: Our Four Reporting Segments
4 ProAssurance Investor Presentation as of June 22, 2017 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 Syndic
Slide 6: ProAssurance Brand Profile
5 ProAssurance Investor Presentation as of June 22, 2017 ProAssurance Brand Profile Specialty P&C Healthcare Professional Liability Workers’ Comp Alternative Risk Transfer Medical Technology & Life Sciences Products Liability Legal Professional Liability
Slide 7: ProAssurance's Path to Success
6 ProAssurance Investor Presentation as of June 22, 2017 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 tradi
Slide 8: Management is Experienced & Invested
7 ProAssurance Investor Presentation as of June 22, 2017 Management is Experienced & Invested Proven e xecutive management remains in place Officer/SVP: 16 years average tenure / 29 years average total industry experience VP level: 15 years average experience /28 years average total industry exp
Slide 9: Key Updates – May 2017
Key Updates – May 2017
Slide 10: Workers' Compensation Expansion
9 ProAssurance Investor Presentation as of June 22, 2017 Workers’ Compensation Expansion Eastern Alliance Insurance Group acquiring renewal rights to the workers’ compensation book of Great Falls Insurance Company Great Falls is headquartered in Auburn, Maine Transaction will add Maine and New Ham
Slide 11: Eastern Specialty Risk: Higher Risk But NOT High Risk
10 ProAssurance Investor Presentation as of June 22, 2017 Eastern Specialty Risk: Higher Risk But NOT High Risk Focusing on the next level of risk: higher hazard but not typical “high hazard” Some classes previous written by Eastern in High Modification programs $1.5 million in new business in Q
Slide 12: Q1 2017 Recap: A Solid Quarter All Around
11 ProAssurance Investor Presentation as of June 22, 2017 Q1 2017 Recap: A Solid Quarter All Around Premium GROWTH of 4.9% Specialty P&C: - 1.0% Workers’ Compensation +7.9% Lloyd’s Syndicate: +84.4% Coordinated SALES SUCCESS : $7.7 mil Net Realized INVESTMENT GAINS : $13.3 mil in Q1 2017 vs loss of
Slide 13: Key Updates: Return on Equity & Future Goals
12 ProAssurance Investor Presentation as of June 22, 2017 Key Updates : 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
Slide 14: Components of Return on Equity
13 ProAssurance Investor Presentation as of June 22, 2017 Components of Return on Equity 11.5% 9.2% 2.3% 5.5% 2.7% 0.3% - 1.7% Pre-Tax Underwriting Profit $11 Pre-Tax Investment Result $25 Non-Operating Gains $12 Taxes $1 Interest & Intangibles $(8) Q1 2017 Return on Equity: 9.1% 3.0% 4.4% - 1.8% -
Slide 15: Subsidiary Dividend History
14 ProAssurance Investor Presentation as of June 22, 2017 $59 $144 $149 $229 $99 $150 $162 $56 $158 $294 $311 $285 YTD 17 2016 2015 2014 Ordinary Extraordinary Subsidiary Dividends to Corporate Subsidiary Dividend History (in Millions) 2017 ORDINARY Dividend Capacity is $174 Million Ordinary dividen
Slide 16: Capital and Liquidity Decisions
15 ProAssurance Investor Presentation as of June 22, 2017 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 compan
Slide 17: Key Updates: Capital Management
16 ProAssurance Investor Presentation as of June 22, 2017 Key Updates: Capital Management Regular quarterly dividends of $0.31/per common share Special dividend of $4.69/per common share paid on January 9, 2017 Dividends declared in 2016 returned $315 million of capital to shareholders Underscores o
Slide 18: Superb Track Record of Capital Management
17 ProAssurance Investor Presentation as of June 22, 2017 Superb Track Record of Capital Management Current Management Team’s Tenure Began Q2 2007 At 6/15/17 | $ in 000’s Year Dividends Declared Share Repurchase Strategic Acquisitions Total* Special Regular 2007 ࡳ ࡳ $54,201 ࡳ $54,201 2008 ࡳ ࡳ 87,561
Slide 19: Capital Growth: 2008–Q1 2017
18 ProAssurance Investor Presentation as of June 22, 2017 Capital Growth: 2008‒Q1 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2017 Beginning Equity* $ 1,255 $ 1,424 $ 1,705 $ 1,856 $ 2,164 $ 2,271 $ 2,394 $ 2,158 $ 1,958 $ 1,799 Cumulative - effect adjustment: ASU 2016 - 09 adoptio n - - -
Slide 20: Strong Capital Position and Minimal Debt
19 ProAssurance Investor Presentation as of June 22, 2017 $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
Slide 21: Capital Management Priorities
20 ProAssurance Investor Presentation as of June 22, 2017 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 Capac
Slide 22: Consistent Value Creation
21 ProAssurance Investor Presentation as of June 22, 2017 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% 3162% 91 96 01 06 11 16 Scorecard at 6/15/17 Total Return CAGR Since
Slide 23: Consolidated Financial & Operational Highlights
Consolidated Financial & Operational Highlights
Slide 24: Q1 2017 Income Statement Highlights
23 ProAssurance Investor Presentation as of June 22, 2017 Q1 2017 Income Statement Highlights Strong results from a focused strategy Three - Months Ended March 31 2017 2016 Gross Premiums Written $231.3 $220.5 Net Investment Result $24.9 $21.8 Total Revenues $233.0 $193.4 Net Losses and ALAE $119.2
Slide 25: Balance Sheet Highlights
24 ProAssurance Investor Presentation as of June 22, 2017 $1.26 $1.42 $1.70 $1.86 $2.16 $2.27 $2.39 $2.16 $1.96 $1.80 $1.83 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2017 Balance Sheet Highlights Maintaining the financial strength required to keep our insurance promise while continuing to
Slide 26: Strong Operational Results / Consistent Profitability
25 ProAssurance Investor Presentation as of June 22, 2017 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%
Slide 27: Disciplined Approach to Reserves
26 ProAssurance Investor Presentation as of June 22, 2017 $16 $20 $19 $25 $40 $48 $53 $48 $34 $29 $29 $20 $31 $37 $38 $50 $60 $39 $42 $35 $37 $25 $30 $43 $33 $52 $50 $49 $43 $36 $29 $44 $104 $108 $138 $184 $114 $82 $49 $56 $49 $11 $17 $23 $36 $105 $185 $207 $234 $326 $272 $223 $182 $161 $144 $29 200
Slide 28: Reinsurance Programs
27 ProAssurance Investor Presentation as of June 22, 2017 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 -------
Slide 29: Segment Financial Highlights & Strategic Review: Specialty P&C
Segment Financial Highlights & Strategic Review Specialty P & C
Slide 30: Q1 2017 Specialty P&C Gross Written Premium
29 ProAssurance Investor Presentation as of June 22, 2017 Total Gross Written Premiums were $136.9 mil — decrease of 1.0% Q - o - Q Physician decrease is due to normal cycle of 24 - month policy renewals. Retention: 90%. Physician new business: $6.4 mil Facilities decrease is due to renewal timing.
Slide 31: Retention remains strong
30 ProAssurance Investor Presentation as of June 22, 2017 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 Retentio
Slide 32: No Overall Change in HCPL Loss Trends
31 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 33: ProAssurance Outperforms in Insurance
32 ProAssurance Investor Presentation as of June 22, 2017 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 2005-2
Slide 34: ProAssurance Outperforms in HCPL
33 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 35: Strategy Update: Healthcare Costs are the Real Issue
34 ProAssurance Investor Presentation as of June 22, 2017 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 Strategy Update
Slide 36: Strategy Update: Traditional Practices are Fading
35 ProAssurance Investor Presentation as of June 22, 2017 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 Strategy Update: Traditional Practices are Fading Source: 201
Slide 37: Strategy Update: ProAssurance Can Meet the Challenges
36 ProAssurance Investor Presentation as of June 22, 2017 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 re
Slide 38: Emerging Issues in Healthcare
37 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 39: ProAssurance is Positioned to Succeed in HCPL
38 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 40: ProAssurance is Positioned to Succeed in HCPL
39 ProAssurance Investor Presentation as of June 22, 2017 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 financia
Slide 41: Strategy Update: Successes in the Evolving Market
40 ProAssurance Investor Presentation as of June 22, 2017 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, C
Slide 42: Addressing a Wide Spectrum of Risk Appetites
41 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 43: Emerging Strategic Opportunities: ProAssurance Risk Solutions
42 ProAssurance Investor Presentation as of June 22, 2017 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 reserv
Slide 44: Leveraging Existing Expertise in New Ways
43 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 45: Segment Highlights & Strategic Review: Workers' Compensation
Segment Highlights & Strategic Review Workers’ Compensation
Slide 46: Q1 2017 Workers' Compensation Financial Highlights
45 ProAssurance Investor Presentation as of June 22, 2017 Q1 2017 Workers’ Compensation Financial Highlights Three - Months Ended March 31 2017 2016 Gross Premiums Written $84.2 $78.0 Net Premiums Earned $55.3 $54.4 Total Revenues $55.4 $54.9 Net Losses & Loss Adjustment Expenses $34.7 $35.0 Underwr
Slide 47: Consistent Profitability in Workers' Comp
46 ProAssurance Investor Presentation as of June 22, 2017 (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%
Slide 48: Eastern Outperforms in Workers' Compensation
47 ProAssurance Investor Presentation as of June 22, 2017 Source: 1996 - 2015 A.M. Best Aggregates and Averages, Workers’ Compensation. Policyholder Dividends Included. Eastern Outperforms in Workers’ Compensation Eastern consistently outperforms in a volatile line of business Calendar Year Combined
Slide 49: Eastern Alliance Insurance Group
48 ProAssurance Investor Presentation as of June 22, 2017 Eastern Alliance Insurance Group Best - in - Class Claims, Risk Management and Underwriting Business Model Broad Product Spectrum 41 State Licenses – Core Operations in 16 States Select Agency Partnerships 231 Contracts / 669 Locations Work
Slide 50: Strategy Update: How Eastern Differentiates
49 ProAssurance Investor Presentation as of June 22, 2017 Strategy Update: 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 ru
Slide 51: Broad Workers' Compensation Product Spectrum
50 ProAssurance Investor Presentation as of June 22, 2017 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 Workers’ Compensatio
Slide 52: Traditional Market Risk Diversification
51 ProAssurance Investor Presentation as of June 22, 2017 Physician/Dentists 11% Hospital 6% Clerical / Office 15% Colleges/Schools 10% Auto Dealer 6% Auto Service Center 2% Outside Sales 4% Restaurants 3% Fast Food 2% Bank 2% 17% Healthcare Risks Wide diversification by class code and market segmen
Slide 53: Workers' Comp Claim Closing Pattern: Traditional
52 ProAssurance Investor Presentation as of June 22, 2017 No claims open from 2002 and earlier 21 net claims open 2010 and prior 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 1,076 1,18
Slide 54: Strategy Update: Alternative Market Overview
53 ProAssurance Investor Presentation as of June 22, 2017 Strategy Update: Alternative Market Overview Inova® is our alternative insurance brand Alternative insurance s tructure u tilizes a segregated p ortfolio c ompany (Eastern Re) with segregated p ortfolio c ells housing captives Alternative mar
Slide 55: Strategy Update: How Eastern RE Differentiates
54 ProAssurance Investor Presentation as of June 22, 2017 Strategy Update: How Eastern RE Differentiates Captive insurance solutions provided through Eastern Re Value - added risk management services cements brand loyalty Strategic partnerships with select independent agencies that share philosophie
Slide 56: How Inova Benefits Insureds
55 ProAssurance Investor Presentation as of June 22, 2017 How Inova ® Benefits Insureds “A” Rated Paper – WC / “A+” Rated Paper – MPL / GL Stable Off - Shore Facility Eastern Re Ltd, S.P.C. established in 1987 Cayman Islands Monetary Authority regulation Segregated portfolio cells statutorily
Slide 57: Alternative Market Risk Diversification
56 ProAssurance Investor Presentation as of June 22, 2017 These segregated portfolio cells within Eastern’s alternative markets facility 2,800 active Inova ® policies Over 400 class codes actively written Alternative Market Risk Diversification Top 10 Classes (Alternative) Payroll Exposure as of
Slide 58: Workers' Comp Claim Closing Pattern: Alternative
57 ProAssurance Investor Presentation as of June 22, 2017 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 3
Slide 59: Inova: Direct Written Premium Trends
58 ProAssurance Investor Presentation as of June 22, 2017 Inova: Direct Written Premium Trends DPW in 000’s 18 year track record of growth and profitability 2016 DWP = $75.9 million Year - over - year growth of 7.4% $847 $2,451 $5,082 $12,159 $17,257 $25,786 $28,512 $27,032 $26,912 $29,113 $28,790 $
Slide 60: Segment Highlights & Strategic Review: Lloyd's
Segment Highlights & Strategic Review Lloyd’s
Slide 61: Strategy Update: Lloyd's
60 ProAssurance Investor Presentation as of June 22, 2017 Strategy Update: Lloyd’s ProAssurance provides 58% of capital to Syndicate 1729 Small ownership interest in the underlying underwriting arm, Dale Underwriting Partners $220 million capital commitment is best viewed as an investment Early stag
Slide 62: Lloyd's Syndicate 1729: Business Detail
61 ProAssurance Investor Presentation as of June 22, 2017 Current Underwriting capacity: $126 million ProAssurance 57.6% share is $72.3 million 2016 Syndicate 1729 Gross Written Premium was $113.2 million ProAssurance 57.6% Share was $65.2 million Lloyd’s Syndicate 1729: Business Detail For the
Slide 63: Q1 2017 Lloyd's Segment Financial Highlights
62 ProAssurance Investor Presentation as of June 22, 2017 Q1 2017 Lloyd’s Segment Financial Highlights Three - Months Ended March 31 2017 2016 Gross Premiums Written $12.7 $6.9 Net Premiums Earned $14.6 $12.4 Total Revenues $15.4 $13.0 Net Losses & Loss Adjustment Expenses $9.5 $6.2 Underwriting & O
Slide 64: Segment Highlights & Strategic Review: Corporate & Investments
Segment Highlights & Strategic Review Corporate & Investments
Slide 65: Corporate Segment Financial Highlights
64 ProAssurance Investor Presentation as of June 22, 2017 Segment operating results were higher than in the first quarter of 2017, due to a $21.6 million increase in net realized investment gains, and an increase of $ 5.4 million in earnings from unconsolidated subsidiaries . Investment income conti
Slide 66: 2016 Investment Review and 2017 Investment Strategy
65 ProAssurance Investor Presentation as of June 22, 2017 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 - corr
Slide 67: Q1 2017 Consolidated Net Investment Result
66 ProAssurance Investor Presentation as of June 22, 2017 Q1 2017 Consolidated Net Investment Result 3/31/17 3/31/16 Change Net Investment Income Fixed maturities $ 20,121 $ 22, 575 $ ( 2, 454 ) Equities 3,644 3,643 1 Short - term and Other investments 801 40 5 3 96 BOLI 455 460 (5 ) Investment fees
Slide 68: ProAssurance Investment Profile
67 ProAssurance Investor Presentation as of June 22, 2017 03/31/17 Full portfolio disclosure on our website: investor.proassurance.com/CustomPage/Index?KeyGenPage=305596 ProAssurance Investment Profile $ 2.6 Billion Fixed Income Portfolio (69% of Invested Assets) $ 3.7 Billion Overall Portfolio Sour
Slide 69: ProAssurance Recent Investment Performance
68 ProAssurance Investor Presentation as of June 22, 2017 ProAssurance Recent Investment Performance Management reporting item which is ‘tax equivalent,’ unaudited, and non GIPS Average Total Portfolio Outperformance for the last five years is 0.55% Weighted Returns 2012 - 2016 / PRA vs Benchmarks 2
Slide 70: Portfolio Detail: Asset Backed
69 ProAssurance Investor Presentation as of June 22, 2017 03/31/17 Subject to Rounding ProAssurance Portfolio Detail: Asset Backed $351 Million ( 14% of Fixed Income/9% of Invested Assets) RMBS 59% Other (Primarily Auto & Credit Card) … CMBS 9% Weighted Average Rating: “AAA”
Slide 71: Portfolio Detail: Corporate
70 ProAssurance Investor Presentation as of June 22, 2017 03/31/17 ProAssurance Portfolio Detail: Corporate Corporates: $1.3 Billion (49% of Fixed Assets/35% of Invested Assets) Top 20 Banks/Financials: $200 million in millions JPM $24 NRUC $9 PNC $18 Athene $9 Goldman $16 B of A $8 The Doctor’s Co
Slide 72: Portfolio Detail: Municipals
71 ProAssurance Investor Presentation as of June 22, 2017 03/31/17 ProAssurance Portfolio Detail: Municipals Municipals: $770 Million ( 30% of Fixed Income / 21% Invested Assets) General Obligation 18% Prerefunded 10% Special Revenue 72% Weighted Average Rating: AA Top 10 Municipal Holdings in milli
Slide 73: Portfolio: Equities & Other
72 ProAssurance Investor Presentation as of June 22, 2017 03/31/17 ProAssurance Portfolio: Equities & Other Equities & Other: $802 Million ( 21% of Invested Assets) Equities 39% Alternative Equity & Debt 17% Real Estate LP 5% Private Equity 13% Convertible Bonds 3% Inflation Focused Bond Fund 9% Tax
Slide 74: Additional Financial Detail
Additional Financial Detail
Slide 75: Tax Credit Impact on Operating Results
74 ProAssurance Investor Presentation as of June 22, 2017 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.
Slide 76: Combined Tax Credits Portfolio Detail & Projections
75 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 77: Capital Growth: 2008–2016
76 ProAssurance Investor Presentation as of June 22, 2017 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 ࡳ ࡳ ࡳ ࡳ ࡳ ࡳ ࡳ ࡳ Employee Stock Transactions $ 11,673 $ 7,2
Slide 78: 2016 Income Statement Highlights
77 ProAssurance Investor Presentation as of June 22, 2017 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 R
Slide 79: Book Value per Share History
78 ProAssurance Investor Presentation as of June 22, 2017 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/
Slide 80: Book Value per Share Components
79 ProAssurance Investor Presentation as of June 22, 2017 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)
Slide 81: 2016 Ceded Premiums Written
80 ProAssurance Investor Presentation as of June 22, 2017 2016 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 premiu
Slide 82: 2016 Net Investment Result
81 ProAssurance Investor Presentation as of June 22, 2017 2016 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
Slide 83: 2016 Condensed Results by Segment
82 ProAssurance Investor Presentation as of June 22, 2017 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 $ 81
Slide 84: 2015 Condensed Results by Segment
83 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 85: Additional Strategic Information: Specialty P&C Segment
Additional Strategic Information Specialty P & C Segment
Slide 86: 2016 Specialty P&C Gross Written Premium
85 ProAssurance Investor Presentation as of June 22, 2017 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 profe
Slide 87: 2016 Specialty P&C Financial Highlights
86 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 88: Key State Rate Comparison
87 ProAssurance Investor Presentation as of June 22, 2017 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
Slide 89: Broad Experience Across the Healthcare Market
88 ProAssurance Investor Presentation as of June 22, 2017 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 t
Slide 90: Claims Defense Still Defines ProAssurance
89 ProAssurance Investor Presentation as of June 22, 2017 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 la
Slide 91: Substantial HPL Claims Experience
90 ProAssurance Investor Presentation as of June 22, 2017 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 hospit
Slide 92: The Ohio Example: 2005–2014 Data
91 ProAssurance Investor Presentation as of June 22, 2017 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/Ohio2013MedicalProfessionalLiabilit
Slide 93: The Bottom Line Benefits of Strong Defense
92 ProAssurance Investor Presentation as of June 22, 2017 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 Sta
Slide 94: Additional Strategic Information: Workers' Compensation Segment
Additional Strategic Information Workers’ Compensation S egment
Slide 95: 2016 Workers' Compensation Financial Highlights
94 ProAssurance Investor Presentation as of June 22, 2017 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.
Slide 96: Inova Program Structure
95 ProAssurance Investor Presentation as of June 22, 2017 PROASSURANCE EASTERN Re Ltd., S.P.C. Cayman Domicile Founded in 1987 Segregated Portfolio Cell (SPC) Segregated Portfolio Cell (SPC) Segregated Portfolio Cell (SPC) Individual Segregated Portfolio Cell Loss Fund * Commission Front (Underwriti
Slide 97: Additional Strategic Information: Lloyd's Segment
Additional Strategic Information Lloyd’s S egment
Slide 98: 2016 Lloyd's Segment Financial Highlights
97 ProAssurance Investor Presentation as of June 22, 2017 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