Proassurance Corporation · NYSE:PRA
Proassurance — Investor Presentation (December 2015)
86 slides from Proassurance's investor presentation, Dec 3, 2015
Slide 1: Forward Looking Statements
Forward Looking Statements 1 This presentation contains Forward Looking Statements and other information designed to convey our projections and expectations regarding future results. There are a number of factors which could cause our actual results to vary materially from those projected in this pr
Slide 2: ProAssurance Corporate Profile
ProAssurance Corporate Profile Healthcare - centric specialty insurance writer Healthcare Professional Liability (HCPL) Only public company writing predominately HCPL Life sciences and medical device liability Workers' compensation Legal professional liability Alternative Risk Transfer Market Cap: $
Slide 3: ProAssurance Brand Profile
ProAssurance Brand Profile 3 Specialty P&C Workers’ Comp Healthcare Professional Liability Medical Technology & Life Sciences Products Liability Legal Professional Liability Alternative Risk Transfer
Slide 4: Mission, Vision and Values
Mission, Vision and Values 4 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,
Slide 5: Financial Performance
Financial Performance Our commentary on financial results
Slide 6: Income Statement Highlights
September 30, 2015 Income Statement Highlights Solid profitability in a challenging market in millions, except per share data Qtr Ended Nine Months Ended September 30, 2015 2014 2015 2014 Gross Premiums Written $ 236 $ 227 $ 651 $ 632 Net Investment Result $ 27 $ 33 $ 86 $ 96 Total Revenues $ 175 $
Slide 7: Balance Sheet Highlights
Balance Sheet Highlights Split adjusted, in billions, except Book Value per share Shareholders’ Equity $ 2.0 $ 2.2 $ 2.4 Total Investments 3.7 4.0 3.9 Total Assets 5.0 5.2 5.2 Total Policy Liabilities 2.4 2.4 2.4 $1.26 $1.42 $1.70 $1.86 $2.16 $2.27 $2.39 $2.16 $2.00 2007 2008 2009 2010 2011 2012 201
Slide 8: The Payoff: Consistent Value Creation
52% 50% 88% 146% 160% 357% 521% 298% 229% 247% 314% 534% 671% 862% 884% 983% 941% 959% 1095% 1484% 1698% 2012% 2040% 2343% 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 TOTAL RETURN at 11/30/15 Split Adjusted Since Inception: 2343% 10 Year 11/30/05 – 11/30/15 : 161% 5 Year
Slide 9: The Payoff: Consistent Value Creation
Reflects all stock splits and includes all dividends in the year declared. Source: SNL The Payoff: Consistent Value Creation 9 $1.84 $2.29 $3.14 $3.32 $4.28 $4.91 $5.79 $6.62 $6.96 $7.61 $8.01 $8.75 $9.39 $10.46 $12.30 $16.81 $19.35 $21.35 $26.30 $30.17 $35.67 $40.23 $43.56 $46.46 $48.29 Q3 2015 Boo
Slide 10: Focused on Shareholder Value
Focused on Shareholder Value Maintaining profitability and bottom line focus Growing book value per share R epurchasing shares above book value per share Producing sustainable shareholder value 0.0 0.5 1.0 1.5 2.0 $- $10.00 $20.00 $30.00 $40.00 $50.00 Sep-91 Feb-93 Jul-94 Dec-95 May-97 Oct-98 Mar-00
Slide 11: Capital Discussion
Capital Discussion We focus on the creation of meaningful shareholder value through a disciplined approach to capital management
Slide 12: Demonstrated Commitment to Capital Management
Demonstrated Commitment to Capital Management Capital return at historic levels $288 million YTD $443 million in 2014 Share Buyback YTD $167.5 mln 3.6 mln shares $114 mln remains authorized 2014 Buyback: $222.4 mln 4.9 mln shares $743 mln since 2007 Dividends Declared YTD: $120 mln Declared 2014: $2
Slide 13: Capital Growth and Total Capital Return
Capital Growth and Total Capital Return 13 A superb track record under the current senior management team ( Q2 2007 to Q3 2015) Shareholders Equity grown from $1.2 billion to $2.0 billion (67%) $1.4 billion returned to shareholders through share repurchase and dividends Additionally, $754 million de
Slide 14: 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 15: Subsidiary Dividends to Corporate
Subsidiary Dividends to Corporate 15 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 16: 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 17% 12% 10% 6% 2% 3% 3% 2% 13% 16% 22% 25% $- $0.5 $1.0 $1.5 $2.0 $2.5 Q3 15 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
Slide 17: Capital Management Priorities
Capital Management Priorities 17 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 18: Consolidated Operational Highlights
Consolidated Operational Highlights Our commentary on operational results and updates on recent transactions and strategy
Slide 19: Strong Operational Results
Strong Operational Results 2009 - 2014 Combined Ratio: 82.1% (Avg Since 2009: 66.6%) Operating Ratio: 64.2% (Avg Since 2009: 41.5%) 69.1% 68.0% 52.5% 57.3% 70.6% 82.1% 89.9% 38.8% 39.8% 27.6% 32.6% 46.1% 64.2% 74.4% 2009 2010 2011 2012 2013 2014 YTD 15 Combined Ratio and Operating Ratio History Comb
Slide 20: ProAssurance Outperforms in Insurance
ProAssurance Outperforms in Insurance Source: A.M . Best Aggregates and Averages for Each Line of Business (1991 - 2013), 2014 Data is preliminary for SNL 104.2% 100.0% 101.5% 107.0% 89.3% 91.1% 87.8% 69.9% 59.2% 88.7% 72.5% 63.1% 1991-2014 10-Year 5-Year Average Combined Ratio Overall P&C MPL PRA -
Slide 21: 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 $20 $31 $37 $38 $50 $60 $39 $42 $35 $25 $30 $43 $33 $52 $50 $49 $43 $36 $44 $104 $108 $138 $184 $114
Slide 22: Premiums, Policyholder & Distribution
1 2 Physician & Dental 48.5% Ancillary Healthcare 3.0% Life Sciences & Med Tech 3.9% Hospitals & Facilities 4.8% Attorneys 3.6% Workers' Comp 30.0% Lloyd's 6.0% Other 0.2% Specialty P&C: 64.0% YTD 2015 Policyholders: ~79,000 Physician & Dental 58.4% Ancillary Healthcare 10.8% Life Sciences & Med Tec
Slide 23: 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 24: Eastern Insurance Update
Eastern Insurance Update 24 Driver of significant top line growth in 2015 Profitable operations also contributing to bottom line success Expected cross selling / cross licensing opportunities are emerging $2.9 million in YTD premiums Continues building the platform to serve the needs of larger integ
Slide 25: Lloyd's Syndicate 1729 Update
Lloyd’s Syndicate 1729 Update 25 First policies underwritten January 1, 2014 $46.9 million in gross premiums written (to ProAssurance) for the nine months reported 9/30/15 Current capacity for 2015 is approximately $113.5 million ProAssurance is providing 58% of underwriting capital $65 million in u
Slide 26: The ProAssurance Response
The ProAssurance Response 26 Our long - term focus on financial strength is central to our overall strategy and success ProAssurance has always evolved ahead of the curve We have proven our ability to thrive across insurance cycles We have an unmatched combination of financial strength and deep expe
Slide 27: Healthcare Realities
Healthcare Realities American healthcare is wrestling with the question of cost vs. care — we can deliver more care than we can afford Restructuring is producing profound changes in healthcare Healthcare delivery is being pushed down to lower cost providers The U.S. spends a greater proportion of GD
Slide 28: Healthcare Realities
Healthcare Realities The Affordable Care Act (ACA) is creating additional layers of complexity Healthcare delivery will be in continuous flux for years to come Will additional coverage under the ACA help or hurt Worker’s Compensation writers? Will the healthcare burden shift Potential liability effe
Slide 29: Insurance Marketplace Realities
Insurance Marketplace Realities 29 Insurance companies are awash in capital Pressure is mounting to “do something” with it M&A — the hunter vs. the hunted Chase market share with low prices but disastrous long - term consequences Appease investors or policyholders with unwise capital - return strate
Slide 30: Positioned to Succeed
Positioned to Succeed 30 ProAssurance has the right combination of geographic scope, broad experience, and financial strength for success in the new world of healthcare liability Medical Protective (Main Berkshire HCPL) National Recent Hospital Experience $570 Doctors Co National Limited Hospital Ex
Slide 31: Continuing Emphasis on Strategic M&A
Continuing Emphasis on Strategic M&A 31 Seeking additional M&A but current environment may favor organic growth 1. Purchased Company 2. Demutualization Original Companies OHIC HOSPITALS ONLY 2 1 1 1 1 1 1 1 1 1 1 3 4 4 1 4 3. Renewal Rights 4. Assumed Business 2 2 † 2 3 1 3 3 1 SERTA 2 PROFESSIONAL
Slide 32: Strategic Successes
Strategic Successes Leveraging our reach, expertise and financial strength The Certitude tm program in partnership with Ascension Health CAPAssurance is a joint venture California - based CAP - MPT 30 - years of profitable experience in the hospital and facilities market 32 *www.ascensionhealth.org/
Slide 33: Strategic Successes: Certitude
Strategic Successes: Certitude 33 Largest Catholic healthcare system in the U.S. 20,000+ physicians (affiliated or employed) Coverage for affiliated physicians with staff privileges at Ascension facilities Insurance operations performed by ProAssurance Joint marketing; coordinated claims and risk ma
Slide 34: Strategic Successes: CAPAssurance
Strategic Successes: CAPAssurance 34 Joint program with CAP - MPT, incepted June 2013 Hospitals and large physician groups, now in four states Written by ProAssurance on E&S paper Joint efforts on underwriting, marketing, claims and risk management Utilizes CAP - MPT’s local knowledge and relationsh
Slide 35: Strategies for an Evolving Market
Strategies for an Evolving Market 35 Alternative risk and self - insurance opportunities Captive insurance programs allow large, sophisticated healthcare and workers’ compensation customers to control their own insurance programs Eastern Re brings proven experience and expertise in establishing and
Slide 36: Strategic Opportunities: ProAssurance Risk Solutions
Strategic Opportunities 36 ProAssurance Risk Solutions sm Newly formed unit brings proven expertise to address complex risk financing challenges in both healthcare and workers’ compensation Run - off liabilities in M&A transactions Assumption of existing reserve liabilities for large organizations s
Slide 37: Strategic Opportunities Through Lloyd's Syndicate 1729
Strategic Opportunities Through Lloyd’s Syndicate 1729 is an investment opportunity with significant insurance benefits Potentially provides access to international medical professional liability opportunities Leverage Medmarc’s expertise to underwrite international medical technology and life scien
Slide 38: Strategic Opportunities Through Medmarc
Strategic Opportunities Through Medmarc Medmarc is a market - leader in medical products and life sciences liability Increasing presence in device and drug development by larger healthcare organizations Increasing globalization of testing and development efforts are a natural fit with Lloyd’s Syndic
Slide 39: Strategic Opportunities Through Mid-Continent
Strategic Opportunities Through Mid - Continent ProAssurance Mid - Continent Underwriters addresses the needs of ancillary healthcare providers This market is increasing rapidly as the push to reduce healthcare costs drives care through lower cost providers who are an important part of the healthcar
Slide 40: Key Investor Points
Key Investor Points 40 ProAssurance has always evolved ahead of the curve in our industry — we continue that trend We have proven our ability to thrive across insurance cycles and produce significant returns for long - term shareholders Our long - term focus on financial strength and sustained value
Slide 41: Segment Highlights
Segment Highlights We report results in three operational segments Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 42: Specialty P&C Financial Highlights
Qtr Ended Six Months Ended September 30, 2015 2014 2015 2014 Gross Premiums Written $ 161 $ 163 $ 417 $ 430 Net Premiums Earned $ 116 $ 124 $ 343 $ 375 Total Revenues $ 117 $ 125 $ 348 $ 379 Net Losses & Loss Adjustment Expenses $ 64 $ 64 $ 197 $ 191 Underwriting & Operating Expenses $ 26 $ 34 $ 80
Slide 43: Q3 2015 Specialty P&C Gross Written Premium
Q3 2015 Specialty P&C Gross Written Premium 43 $10 $10 $6 $6 $9 $9 $10 $7 $5 $10 Healthcare facilities Other healthcare providers Legal professionals Tail & other, professional liability Products liability 2015 2014 $111 $116 $8 $5 $119 $121 Q3 2015 Q3 2014 Physician 12-mo Physician 24-mo $ in milli
Slide 44: YTD 2015 Specialty P&C Gross Written Premium
YTD 2015 Specialty P&C Gross Written Premium 44 $30 $25 $23 $18 $25 $29 $26 $23 $17 $28 Healthcare facilities Other healthcare providers Legal professionals Tail & other, professional liability Products liability 2015 2014 $270 $290 $25 $17 $295 $307 YTD 2015 YTD 2014 Physician 12-mo Physician 24-mo
Slide 45: 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 84% 85% 87% 90% 90% 89% 90% 89% 89% 88% 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015 Y
Slide 46: 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 9/30/2015 Annual 23% 28% 28% 19% 11% 3% -2% -6% -4% -2% -2% 0% -1% 0% 1%
Slide 47: Differentiate Through Claims Defense
Differentiate Through Claims Defense 47 We leverage our financial strength to give our insureds the opportunity for an uncompromising defense of each claim Differentiates our product Provides long - term financial and marketing advantages Retains business and deters future lawsuits Increasingly impo
Slide 48: 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 49: The Bottom Line Benefits of Strong Defense
On average, 29 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 20.6% 21.1% 17.6% 16.2% 4.6% 14.0% 10.7% 21.9% 43.7% 23.1% 24.0% 20.6% 20.1% 17.1% 28.0% 27.3% 64.3% 44.2% 41.6% 36.8% 24.6% 31.1
Slide 50: 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 Calendar Year Combined Ratio 1991 - 2014 ProAssurance MPL Source: 1991 - 2013 A.M. Best Aggreg
Slide 51: 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 52: Workers' Compensation Financial Highlights
Qtr Ended Nine Months Ended September 30, 2015 2014 2015 2014 Gross Premiums Written $ 62 $ 60 $ 196 $ 181 Net Premiums Earned $ 55 $ 50 $ 159 $ 144 Total Revenues $ 55 $ 50 $ 160 $ 144 Net Losses & Loss Adjustment Expenses $ 36 $ 33 $ 103 $ 92 Underwriting & Operating Expenses $ 16 $ 15 $ 47 $ 45 O
Slide 53: Consistent Profitability in Workers' Comp
Consistent Profitability in Workers' Comp 53 Historical Combined Ratio (1) excluding fair value adjustments, intangible asset amortization, transaction - related and other one - time charges (1) 79.1% 65.6% 80.2% 87.7% 96.0% 89.7% 91.8% 93.0% 96.0% 94.0% 92.7% 92.4% 2006 2007 2008 2009 2010 2011 201
Slide 54: How Eastern Differentiates
How Eastern Differentiates 54 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 55: Eastern Business Profile
Eastern Business Profile 55 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 56: Workers' Compensation Risk Diversification
Workers' Compensation Risk Diversification Wide diversification by class code and market segment 7,057 active policies in Traditional Programs Over 600 class c odes a ctively written 56 Physicians/Dentists 10.2% Nursing Homes Skilled 2.7% Hospital 7.3% Clerical / Office 16.0% Colleges/Schools 10.2%
Slide 57: Workers' Compensation Risk Diversification
Workers' Compensation Risk Diversification Wide diversification by class code and market segment 2,626 active Inova ® policies (Alternative Markets) Over 4 00 class c odes a ctively written 57 Physician / Dentists 4.7% Nursing Homes Skilled 3.4% Social Rehab Facilities 3.1% Retirement/Life Care Comm
Slide 58: Broad Product Spectrum
Broad Product Spectrum Guaranteed Cost 57.2% INOVA (Alternative Markets) 28.4% Policyholder Dividend 7.9% Deductible Plans 4.0% Retrospective Rating 2.5% Guaranteed Cost Policies Loss - Sensitive Dividend Plans Deductible Plans Retrospective Rating Plans Alternative Market Programs ParallelPay – “ P
Slide 59: 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 60: Workers' Comp Claim Closing Pattern: Traditional
Workers’ Comp Claim Closing Pattern: Traditional 60 Few claims remain open from older accident years Eastern is recognized as a short - tail writer of workers’ compensation insurance 63 201 364 535 590 570 687 591 717 776 888 952 1,071 1,166 1,199 1,155 801 1 3 0 2 2 3 5 8 8 29 62 160 448 0 200 400
Slide 61: Workers' Comp Claim Closing Pattern: Alternative
Workers’ Comp Claim Closing Pattern: Alternative 61 Few claims remain open from older accident years Eastern is recognized as a short - tail writer of workers’ compensation insurance 35 66 103 175 267 407 424 310 324 334 384 404 495 484 511 411 0 2 2 1 3 7 17 67 214 0 100 200 300 400 500 600 1999 20
Slide 62: How Eastern Differentiates
How Eastern Differentiates Captive insurance solutions provided through Eastern Re Segregated cell company based in Cayman Opens additional business opportunities for healthcare professional liability business Strategic partnerships with select independent agencies that share philosophies on control
Slide 63: Segment Highlights
Segment Highlights We repo rt results in three operational segments Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 64: YTD Lloyd's Segment Financial Highlights
As reported September 30, 2015 Qtr Ended Six Months Ended June 30, 2015 2014 2015 2014 Gross Premiums Written $ 16 $ 6 $ 47 $ 27 Net Premiums Earned $ 12 $ 3 $ 27 $ 6 Total Revenues $ 12 $ 3 $ 28 $ 7 Net Losses & Loss Adjustment Expenses $ 9 $ 3 $ 18 $ 4 Underwriting & Operating Expenses $ 6 $ 3 $ 1
Slide 65: Lloyd's Syndicate 1729: Business Detail
Casualty $24.5 52% Property Insurance $11.9 25% Property Reinsurance $1.9 4% Catastrophe Reinsurance $8.6 19% Lloyd’s Syndicate 1729: Business Detail Broad spread of risk Casualty includes $14.9 million ceded by PRA/PICA (Podiatry) Property is primarily US 65 For the 9 months reported September 30,
Slide 66: Segment Highlights: Corporate
Segment Highlights Corporate U.S. investing activities Non - premium revenues Corporate expenses U. S. taxes
Slide 67: Corporate Segment Financial Highlights
Qtr Ended Nine Months Ended September 30, 2015 2014 2015 2014 Investment income $ 27 $ 33 $ 82 $ 93 Equity in earnings (loss) of unconsolidated subsidiaries $ (0.2) $ .3 $ 4 $ 3 Net realized investment gains (losses) $ (37) $ (8) $ (36) $ 8 Operating expenses $ 5 $ 3 $ 18 $ 7 Interest expense $ 4 $
Slide 68: Corporate Segment Financial Highlights
Corporate Segment Financial Highlights Overall investment result decreased primarily due to lower average balances on fixed income investments Corporate segment expenses increased due to a change in our process for allocating expenses Segment expenses decreased correspondingly 68
Slide 69: Investment Portfolio Detail
Investment Portfolio Detail ProAssurance remains conservatively invested to ensure our ability to keep our long - term promise of insurance protection
Slide 70: 2015 Investment Overview and 2016 Strategy
2015 Investment Overview Maintained duration of approximately four years Obtained a tax effective book yield of 4.0% Maintained duration at 3.6% and credit quality at A+ 70 2016 Investment Strategy & Outlook Continuing capital management activities will reduce the size of the portfolio Maintaining o
Slide 71: Q3 2015 Investment Profile
All as of 9/30/15 ProAssurance: Q3 2015 Investment Profile Fixed Income 75% Short Term (incl cash) 4% Equities & Equity Substitutes 19% BOLI 2% $3.7 Billion Overall Portfolio State & Muni 34% Corporate 46% Asset Backed 15% Govt & Agency 5% $2.8 Billion Fixed Income Portfolio (75% of Invested Assets)
Slide 72: Portfolio Detail: Asset Backed
Other 13% Auto 12% Non Agency MBS 1% Agency MBS/CMBS 64% Non Agency CMBS 10% ProAssurance Portfolio Detail: Asset Backed 9/30/15 Subject to Rounding Asset Backed: $408 Million (10% of Invested Assets) Weighted Average Rating: “ AAA” 72
Slide 73: Portfolio Detail: Corporate
Financials 31% Industrials 28% Utilities/ Energy 20% Other 1% Consumer Oriented 20% ProAssurance Portfolio Detail: Corporate Corporates: $ 1.3 Billion (35% of Invested Assets) Weighted Average Rating: A - Top 20 Banks/Financials: $ 204 million in millions JPM Chase $24 BBT $9 Goldman Sachs $19 Bank
Slide 74: Portfolio Detail: Energy Exposure
Fixed Income $168 71% LP $36 15% Equities & Other $33 14% ProAssurance Portfolio Detail: Energy Exposure Energy Related Exposure: $237 Million 9/30/15 74 $136 million is investment grade with a $2 million net unrealized gain 3.7% of invested assets $31 million of below inv grade bonds with an unreal
Slide 75: Portfolio Detail: Municipals
General Obligation 21% Special Revenue 61% Prerefunded 18% ProAssurance Portfolio Detail: Municipals Municipals: $ 1.0 Billion (26% of Invested Assets) Top 10 Municipal Holdings in millions State of Texas $15 Connecticut State Housing Authority $13 Omaha Public Power $12 Missouri State Highways $12
Slide 76: Portfolio: Equities & Other
Equities 35% Alternative Equity & Debt 14% Real Estate LP 4% Private Equity 14% Convertible Bonds 4% Short Inv Grade Bond Fund 1% Inflation Focused Bond Fund 9% Tax Credits 19% ProAssurance Portfolio: Equities & Other 3/31/15 Equities & Other: $708 Million (19% of Invested Assets) 5.6% TE Book Yield
Slide 77: Additional Financial Detail
Additional Financial Detail
Slide 78: Capital Growth: 2008–Q3 2015
Capital Growth: 2008‒Q3 2015 2008 2009 2010 2011 2012 2013 2014 Q2 15 Dividends (15,269) (192,466) (64,777) (220,464) (33,931) Earnings 177,725 222,026 231,598 287,096 275,470 297,523 196,565 70,972 Employee Stock Transactions 11,673 7,205 6,147 6,167 7,780 9,261 11,246 2,655 Stock Issued 112,478 Tr
Slide 79: Inside ProAssurance's Balance Sheet
Inside ProAssurance’s Balance Sheet Cash & Investments: 79.6% Insurance Receivables 10.5% Goodwill & Intangible Assets: 6.2% Other Assets: 3.7% Retained Earnings: 40.8% Other Equity: - 0.3% Reinsurance Payable & Other Liabilities: 10.7% Unearned Premiums: 8.1% Loss Reserves: 40.7% Assets: $5.0 bln L
Slide 80: Inside ProAssurance's Income Statement - YTD
Inside ProAssurance’s Income Statement - YTD 80 Net Premiums Earned: 90.3% Net Realized Investment Gains: - 6.1% Net Investment Income: 14.0% Other: 1.8% Net Income: 13.9% Provision for Income Taxes: 2.8% Underwriting, Policy Acquisitions, Operating and Interest Expenses: 29.1% Net Losses and Loss A
Slide 81: Book Value per Share History
Book Value per Share History Through Q3 2015 81 $21.35 $26.30 $30.17 $35.42 $36.85 $39.13 $38.17 37.76 $20.26 $24.04 $26.58 $31.93 $33.34 $35.64 $32.66 32.01 $20.80 $23.13 $25.29 $29.80 $30.98 $34.67 $31.63 31.33 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/2014 Book Value per Share T
Slide 82: Book Value per Share Components
Book Value per Share 82 Components 9/30/15 12/31/14 Change Total Book Value $ 37.76 $ 38.17 $ (0.41) Less: Goodwill & Intangible Assets 5.75 5.51 0.24 Tangible Book Value $ 32.01 $ 32.66 $ (0.65) Less: Unrealized Gain / Loss 0.68 1.03 (0.35) Tangible Book Value excl Unreal G/L $ 31.33 $ 31.63 $ 0.30
Slide 83: Components of Return on Equity
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 & Intangibles $(16) 5.2% 5.4% 0.5% - 2.5% - 1.2% Pre-Tax Underwriting Profit $92 Pre-Tax Investment Income $96 Non-Operating Gains $8 Taxes $(43) Interest & Int
Slide 84: Now Reporting in Four Segments
Now Reporting in Four Segments 84 • Healthcare Professional Liability • Products Liability • Lawyers’ Professional Liability Specialty P&C • Traditional • Captive Market Facility Workers’ Compensation • Syndicate 1729 (58%) (including investments & taxes) Lloyd’s • PRA Corp – parent company • Intern
Slide 85: Q3 2015 Condensed Results by Segment
Q3 2015 Condensed Results by Segment 85 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination 2015 2014 Gross premiums written $ 160,516 $ 61,788 $ 16,355 $ — $ (2,754 ) $ 235,905 $ 226,686 Net premiums written 140,846 56,244 16,019 — — 213,110 200,909 Net premiums earned 115,5
Slide 86: YTD 2015 Condensed Results by Segment
YTD 2015 Condensed Results by Segment 86 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination 2015 2014 Gross premiums written $ 416,656 $ 195,964 $ 46,886 $ — $ (8,163 ) $ 651,343 $ 632,011 Net premiums written 361,564 178,060 42,231 — — 581,855 568,575 Net premiums earned 34