Slide 1: Q2 2016 Investor Presentation
Q2 2016 Investor Presentation Revised June 1, 2016
Slide 2: Forward Looking Statements
Forward Looking Statements 1 This presentation contains Forward Looking Statements and other information designed to convey our projections and expectations regarding future results. There are a number of factors which could cause our actual results to vary materially from those projected in this pr
Slide 3: Corporate Profile & Update
Corporate Profile & Update <a Teed Fah
Slide 4: Key Discussion Points for First Quarter 2016
Key Discussion Points for First Quarter 2016 3 Solid Profitability: $24.7 million in operating income Underwriting Success: 94.5% Combined Ratio Favorable Development: $28.7 million Overall premiums essentially level despite fierce competition Growth in Workers’ Compensation and Lloyd’s segments Gro
Slide 5: ProAssurance Corporate Profile
ProAssurance Corporate Profile Healthcare - centric specialty liability insurance writer Healthcare Professional Liability (HCPL) Only public company writing predominately HCPL Workers' Compensation Life sciences and medical devices Attorney’s professional liability Market Cap: ~$2.9 billion Shareho
Slide 6: ProAssurance Corporate Profile
ProAssurance Corporate Profile 5 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 7: ProAssurance Brand Profile
ProAssurance Brand Profile 6 Specialty P&C Workers’ Comp Healthcare Professional Liability Medical Technology & Life Sciences Products Liability Legal Professional Liability Alternative Risk Transfer
Slide 8: Mission, Vision and Values
Mission, Vision and Values 7 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 9: Strategic Review
Strategic Review
Slide 10: Key High-Level Strategies
Key High - Level Strategies We have built a platform to address the challenges of the evolution of healthcare The creation of new delivery systems and entities is changing the competitive landscape in healthcare professional liability Financial strength and broad geographic reach are now simply “tab
Slide 11: The Reality of Healthcare
The Reality of Healthcare Healthcare cost is the main event. The Affordable Care Act is a side show America 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 pr
Slide 12: The Reality of Insurance
The Reality of Insurance 11 Insurance companies are awash in capital Pressure is mounting to “do something” with it Chase market share with low prices but disastrous long - term consequences Appease investors or policyholders with unwise capital - return strategies M&A will emerge, but may be more c
Slide 13: Establishing our Platform
Establishing our Platform 12 Early M&A built out our medical professional liability business by building scope and size We added capabilities through subsequent M&A PICA: podiatric and related specialties Medmarc: life sciences and medical technology ProAssurance Mid - Continent Underwriters: ancill
Slide 14: ProAssurance is Positioned to Succeed in HCPL
ProAssurance is Positioned to Succeed in HCPL 13 ProAssurance has the right combination of geographic scope, broad experience, and financial strength for success in the new world of healthcare liability SNL 2015 Statutory Data, >50% HCPL, Direct Written Premiums >$80 million Doctors Co National Limi
Slide 15: Strategic Successes in the Evolving Market
Strategic Successes in the Evolving Market The Certitude tm program in partnership with Ascension Health Shared risk through quota share participation by Ascension’s captive on first $ 1M ~2,150 insured physicians ~$22.3 million inforce premium Active in AL, CT, D.C ., FL, IL, IN, KS, MD, MI, NY, OK
Slide 16: Evolving Market Strategies: Alternative Risks
Evolving Market Strategies: Alternative Risks 15 Cross - selling / Cross - licensing targets existing insureds for additional policies Captive insurance programs allow large, sophisticated healthcare and workers’ compensation customers to control their own insurance programs Two joint healthcare pro
Slide 17: Evolving Market Strategies: Traditional Policies
Evolving Market Strategies: Traditional Policies 16 Cross - selling / Cross - licensing targets existing insureds for additional policies Risk sharing/high deductible programs Risk Purchasing Groups for specific specialties or regions Joint physician/hospital insurance products addressing the unique
Slide 18: Strategic Opportunities: ProAssurance Risk Solutions
Strategic Opportunities 17 ProAssurance Risk Solutions sm Proven expertise to address complex risk financing challenges in both healthcare and workers’ compensation Run - off liabilities in M&A transactions Assumption of existing reserve liabilities for large organizations seeking to repurpose capit
Slide 19: Strategic Opportunities Through Lloyd's
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 20: 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 21: 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 22: Key Investor Points
Key Investor Points 21 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 23: Q1 2016 Income Statement Highlights
Q1 2016 Income Statement Highlights Continued profitability in a challenging market in millions, except per share data Quarter Ended Year Ended March 31, 2016 2015 2015 2014 Gross Premiums Written $ 221 $ 221 $ 812 $ 780 Net Investment Result $ 22 $ 29 $ 112 $ 130 Total Revenues $ 193 $ 208 $ 772 $
Slide 24: Balance Sheet Highlights
Balance Sheet Highlights $1.26 $1.42 $1.70 $1.86 $2.16 $2.27 $2.39 $2.16 $1.96 $1.98 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 16 Shareholders’ Equity: 57% Increase Since 2007 Maintaining the financial strength required to keep our insurance promise 23 Book Value per share is affected by our c
Slide 25: The Payoff: Consistent Value Creation
Reflects all stock splits and includes all dividends in the year declared. Source: SNL The Payoff: Consistent Value Creation 24 $2.62 $3.85 $3.80 $4.77 $6.24 $6.59 $11.60 $15.74 $10.09 $8.34 $8.79 $10.50 $16.08 $19.56 $24.32 $24.96 $27.46 $26.39 $26.86 $30.30 $39.91 $42.19 $48.48 $45.15 $48.53 $52.4
Slide 26: The Payoff: Consistent Value Creation
$40.23 $43.56 $46.46 $47.41 $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 $35.42 48.45 Dividends Begin in 2011 Reflects all stock splits and includes all dividends in the year declared. Source: SNL The Payoff: Consisten
Slide 27: Capital Discussion
Capital Discussion We focus on the creation of meaningful shareholder value through a disciplined approach to capital management
Slide 28: Demonstrated Commitment to Capital Management
Demonstrated Commitment to Capital Management $290 million capital returned in 2015 $35 million returned YTD 2016 Buybacks balance share price vs. book value/share YTD 16: $1.9 mln / 39,400 shares 2015: $170 mln / 3.7 mln shares 2014: $ 222 mln / 4.9 mln shares Since 2007: $748 mln / 15.4 mln shares
Slide 29: Capital Growth and Total Capital Return
Capital Growth and Total Capital Return 28 A superb track record under the current senior management team ( Q2 2007 to 2015) Shareholders Equity grown from $1.2 billion to $2.0 billion (56%) $1.4 billion returned to shareholders through share repurchase and dividends Additionally, $754 million deplo
Slide 30: 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 31: Subsidiary Dividends to Corporate
Subsidiary Dividends to Corporate 30 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 32: 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 18% 18% 12% 10% 6% 2% 3% 3% 2% 13% $- $0.5 $1.0 $1.5 $2.0 $2.5 Q1 16 2015 2014 2013 2012 2011 2010 2009 2008 2007 $ in billions
Slide 33: Capital Management Priorities
Capital Management Priorities 32 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 34: Consolidated Operational Highlights
Consolidated Operational Highlights Our commentary on operational results and updates on recent transactions and strategy
Slide 35: Strong Operational Results
Strong Operational Results Lowest combined ratio of the top 100 Property & Casualty writers 2011 through 2014 * Second in 2009 and fourth in 2010 Combined ratio average 2009 - 2015: 70.0% Operating ratio average 2009 - 2015: 46.3% 69.1% 68.0% 52.5% 57.3% 70.6% 82.1% 90.5% 38.8% 39.8% 27.6% 32.6% 46.
Slide 36: Consistent Approach to Reserves
Consistent Approach to Reserves Recognizing loss trends as they appear No change in reserving philosophy or process Reserve Development History by Quarter by Year $16 $20 $19 $25 $40 $48 $53 $48 $34 $29 $20 $31 $37 $38 $50 $60 $39 $42 $35 $25 $30 $43 $33 $52 $50 $49 $43 $36 $44 $104 $108 $138 $184 $
Slide 37: 2016 Premiums, Policyholders & Distribution
1 2 Physician & Dental 46.6% Ancillary Healthcare 3.2% Life Sciences & Med Tech 3.4% Hospitals & Facilities 5.8% Attorneys 3.6% Workers' Comp 35.4% Other 0.1% Lloyd's 1.9% Specialty P&C: 63% Q1 2016 Policyholders : ~78,000 Physician & Dental 58.8% Ancillary Healthcare 10.8% Life Sciences & Med Tech
Slide 38: 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 39: Eastern Insurance Update
Eastern Insurance Update 38 Driver of significant top line growth for ProAssurance Profitable operations contributing to bottom line success Expected cross selling / cross licensing opportunities are emerging Approximately $5 million in premiums in Q1 2016 vs $800,000 in Q1 2015 Successfully adding
Slide 40: Lloyd's Syndicate 1729 Update
Lloyd’s Syndicate 1729 Update 39 First policies underwritten January 1, 2014 $6.9 million in gross premiums written (to ProAssurance) for quarter reported 3/31/16 Current capacity for 2016 is approximately $129 million * ProAssurance is providing 58% of underwriting capital $74.4 million in underwri
Slide 41: The ProAssurance Response
The ProAssurance Response 40 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 42: Segment Highlights
Segment Highlights We report results in three operational segments Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 43: Q1 2016 Specialty P&C Financial Highlights
Quarter Ended Year Ended March 31, 2016 2015 2015 2014 Gross Premiums Written $ 138.2 $ 143.5 $ 526 $ 533 Net Premiums Earned $ 119.7 $ 124.7 $ 443 $ 493 Total Revenues $ 112.0 $ 116.4 $ 448 $ 499 Net Losses & Loss Adjustment Expenses $ 71.2 $ 69.0 $ 250 $ 228 Underwriting & Operating Expenses $ 25.
Slide 44: Q1 2016 Specialty P&C Gross Written Premium
Q1 2016 Specialty P&C Gross Written Premium 43 Gross Written Premiums decreased $ 5.3M (3.7%) from $ 143.5M to $ 138.2M Physician new business of $4.3 mln , retention of 88%. Increase in two - year policies designed to improve retention. Facilities increase is due to new business of $2.8 mln ; 74% r
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 85% 87% 90% 90% 89% 90% 89% 89% 89% 88% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 16 Year
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 2015 Q1 2016 Annual 23% 28% 28% 19% 11% 3% -2% -6% -4% -2% -2% 0% -1% 0%
Slide 47: Differentiate Through Claims Defense
Differentiate Through Claims Defense 46 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
Quarter Ended Year Ended March 31, 2016 2015 2015 2014 Gross Premiums Written $ 78.0 $ 75.9 $ 244 $ 225 Net Premiums Earned $ 54.4 $ 51.3 $ 213 $ 195 Total Revenues $ 54.9 $ 51.4 $ 214 $ 195 Net Losses & Loss Adjustment Expenses $ 35.0 $ 32.1 $ 141 $ 126 Underwriting & Operating Expenses $ 17.8 $ 15
Slide 53: Consistent Profitability in Workers' Comp
Consistent Profitability in Workers' Comp 52 Historical Combined Ratio Average 88% since 2006 (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% 95.9% 97.2% 91.6% 94.3% 94.3
Slide 54: How Eastern Differentiates
How Eastern Differentiates 53 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 54 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 Almost 7,000 active policies in Traditional Programs Over 600 class c odes a ctively written 55 Physcians/Dentists 10.7% Nursing Homes Skilled 2.7% Hospital 6.4% Clerical / Office 15.7% Colleges/Schools
Slide 57: Workers' Compensation Risk Diversification
Physician / Dentists 3.9% Nursing Homes Skilled 4.0% Social Rehab Facilities 2.9% Retirement/Life Care Community 2.7% Clerical / Office 17.2% Colleges/Schools 6.8% Auto Dealers 6.3% Salesmen - Outside 5.7% Grocery Store - Retail 2.1% Restaurant 2.8% 13.5% Healthcare and Related Risks These are self
Slide 58: Broad Product Spectrum
Broad Product Spectrum Guaranteed Cost 50.0% INOVA (Alternative Markets) 33.6% Policyholder Dividend 11.4% Deductible Plans 4.1% Retrospective Rating 0.9% Guaranteed Cost Policies Loss - Sensitive Dividend Plans Deductible Plans Retrospective Rating Plans Alternative Market Programs ParallelPay – “
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 59 Few claims remain open from older accident years Eastern is recognized as a short - tail writer of workers’ compensation insurance 364 535 590 570 687 591 717 776 889 953 1,073 1,177 1,221 1,238 1,084 776 0 1 0 3 0 2 2 3 4 7 5 17 41 85 192 535 0 15
Slide 61: Workers' Comp Claim Closing Pattern: Alternative
Workers’ Comp Claim Closing Pattern: Alternative 60 Few claims remain open from older accident years Eastern is recognized as a short - tail writer of workers’ compensation insurance 66 103 175 267 407 424 310 325 336 385 403 502 493 550 558 439 0 0 0 0 0 0 0 1 0 0 3 2 8 25 77 264 0 100 200 300 400
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: Lloyd's Segment Highlights
Lloyd’s Segment Highlights Segment has achieved profitability New, highly - experienced healthcare professional liability underwriting team has joined Syndicate 1729 Extensive experience in Canada, Australia, South America and Middle East 63
Slide 65: YTD Lloyd's Segment Financial Highlights
Quarter Reported Year Ended March, 31 2016 2015 2015 2014 Gross Premiums Written $ 6.9 $ 4.7 $ 57 $ 34 Net Premiums Earned $ 1.4.6 $ 5.8 $ 38 $ 12 Total Revenues $ 13.0 $ 6.5 $ 39 $ 13 Net Losses & Loss Adjustment Expenses $ 6.2 $ 4.0 $ 25 $ 8 Underwriting & Operating Expenses $ 5.2 $ 3.6 $ 19 $ 10
Slide 66: Lloyd's Syndicate 1729: Business Detail
Lloyd’s Syndicate 1729: Business Detail Broad spread of risk Property is primarily US Full year casualty premium will include $14.1 million ceded by PRA/PICA (Podiatry) 65 For the period reported March 31, 2016 $ in millions Q1 2016 Syndicate 1729 Gross Written Premium is $12.0 million ProAssurance
Slide 67: Segment Highlights: Corporate
Segment Highlights Corporate U.S. investing activities Non - premium revenues Corporate expenses U. S. taxes
Slide 68: Q1 2016 Corporate Segment Financial Highlights
Quarter Ended Year Ended March 31, 2016 2015 2015 2014 Investment income $ 25.1 $ 27.1 $ 82 $ 93 Equity in earnings (loss) of unconsolidated subsidiaries $ (3.6) $ 1.6 $ 4 $ 3 Net realized investment gains (losses) $ (8.4) $ 4.8 $ (36) $ 8 Operating expenses $ 7.5 $ 5.4 $ 18 $ 7 Interest expense $ 3
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: 2016 Investment Strategy & Outlook
2016 Investment Strategy & Outlook 69 Continuing capital management activities will reduce the size of the portfolio Maintaining optimum allocation remains paramount Requires ongoing re - allocation Ensures non - correlation of returns Duration management is also important We will not extend duratio
Slide 71: ProAssurance Investment Profile
All as of 03/31/16 ProAssurance Investment Profile Fixed Income 74% Short Term (incl cash) 4% Equities & Equity Substitutes 20% BOLI 2% $3.7 Billion Overall Portfolio State & Muni 33% Corporate 46% Asset Backed 15% Govt & Agency 6% $2.8 Billion Fixed Income Portfolio (74% of Invested Assets) Average
Slide 72: Portfolio Detail: Asset Backed
Other 11% Auto 14% Non Agency MBS 7% Agency MBS/CMBS 68% ProAssurance Portfolio Detail: Asset Backed 3/31/16 Subject to Rounding Asset Backed: $404 Million (11% of Invested Assets) Weighted Average Rating: “ AAA” 71
Slide 73: Portfolio Detail: Corporate
Financials 29% Industrials 17% Utilities/ Energy 17% Other 1% Basic Materials 4% Technology 4% Communications 6% Consumer Oriented 22% ProAssurance Portfolio Detail: Corporate Corporates: $ 1.3 Billion (34% of Invested Assets) Weighted Average Rating: A - Top 20 Banks/Financials: $185 million in mil
Slide 74: Portfolio Detail: Energy Exposure
Fixed Income $144 72% LP $24 12% Equities & Other $31 16% ProAssurance Portfolio Detail: Energy Exposure Energy Related Exposure: $199 Million 3/31/16 73 Total energy exposure is 5% of invested assets $120 million is investment grade with a $0.5 million net unrealized gain 3.2% of invested assets $2
Slide 75: Portfolio Detail: Municipals
General Obligation 20% Special Revenue 68% Prerefunded 12% ProAssurance Portfolio Detail: Municipals Municipals: $900 Million (24% of Invested Assets) Top 10 Municipal Holdings in millions State of Texas $15 Connecticut State Housing Authority $13 Omaha Public Power $13 Missouri State Highways $13 U
Slide 76: Portfolio: Equities & Other
Equities 36% Alternative Equity & Debt 14% Real Estate LP 5% Private Equity 14% Convertible Bonds 3% Short Inv Grade Bond Fund 1% Inflation Focused Bond Fund 9% Tax Credits 18% ProAssurance Portfolio: Equities & Other 03/31/16 Equities & Other: $737 Million (20% of Invested Assets) 5.1 % TE Book Yld
Slide 77: Additional Financial Detail
Additional Financial Detail
Slide 78: Tax Credit Impact on Operating Results
- $0.6 - $5.2 - $5.7 - $8.0 - $7.5 - $7.7 - $10.4 $1.0 $6.9 $12.0 $20.0 $20.4 $24.9 $30.7 2010 2011 2012 2013 2014 2015 2016 Pre-Tax Losses Including Impairment Tax Credit Provision (Reduces Net Investment Income) (Reduces Taxes Due) Tax Credit Impact on Operating Results 77 Substantial tax benefits
Slide 79: Capital Growth: 2008–Q1 2016
Capital Growth: 2008‒Q1 2016 78 2008 2009 2010 2011 2012 2013 2014 2015 Q1 '16 Stock Issued $ 112,478 ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ Employee Stock Transactions $ 11,673 $ 7,205 $ 6,147 $ 6,167 $ 7,780 $ 9,261 $ 11,246 $ 8,221 $ 1,329 Earnings $ 177,725 $ 222,026 $ 231,598 $ 287,096 $ 275,470 $ 297,523 $ 196,565 $
Slide 80: Inside ProAssurance's Balance Sheet
Inside ProAssurance’s Balance Sheet Cash & Investments: 79.6% Insurance Receivables 10.7% Goodwill & Intangible Assets: 6.2% Other Assets: 3.5% Retained Earnings: 40.7% Other Equity: - 0.1% Reinsurance Payable & Other Liabilities: 10.5% Unearned Premiums: 7.9% Loss Reserves: 41.0% Assets: $4.9 bln L
Slide 81: Inside ProAssurance's Income Statement
Inside ProAssurance’s Income Statement 80 Net Premiums Earned: 91.8% Net Realized Investment Gains (Losses): - 4.3% Net Investment Income: 13.2% Other: - 0.7% Net Income: 10.0% Provision for Income Taxes: 0.7% Underwriting, Policy Acquisitions, Operating and Interest Expenses: 31.9% Net Losses and L
Slide 82: Book Value per Share History
Book Value per Share History 81 $21.35 $26.30 $30.17 $35.42 $36.85 $39.13 $38.17 $36.88 $37.30 $20.26 $24.04 $26.58 $31.93 $33.34 $35.64 $32.66 $31.17 $31.64 $20.80 $23.13 $25.29 $29.80 $30.98 $34.67 $31.63 $30.72 $30.76 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Book Va
Slide 83: Book Value per Share Components
Book Value per Share 82 Components 3/31/16 12/31/15 Change Total Book Value $ 37.30 $ 36.88 $ .42 Less: Goodwill & Intangible Assets 5.66 5.71 (0.05) Tangible Book Value $ 31.64 $ 31.17 $ 0.47 Less: Unrealized Gain / Loss 0.88 0.45 0.43 Tangible Book Value excl Unreal G/L $ 30.76 $ 30.72 $ 0.04 Esti
Slide 84: Components of Return on Equity
2.9% 4.4% - 1.7% - 0.3% - 1.4% Pre-Tax Underwriting Profit $13 Pre-Tax Investment Income $22 Non-Operating Gains $(8) Taxes $(1) Interest & Intangibles $(7) 3.7% 5.4% 0.9% - 1.4% - 1.5% Pre-Tax Underwriting Profit $20 Pre-Tax Investment Income $29 Non-Operating Gains ($5) Taxes $(8) Interest & Intan
Slide 85: 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 86: Q1 2016 Condensed Results by Segment
Q1 2016 Condensed Results by Segment 85 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination 2016 2015 Gross premiums written $ 138,246 $ 78,047 $ 6,896 $ — $ (2,655 ) $ 220,534 $ 221,342 Net premiums written 119,662 69,551 6,615 — — 195,828 197,613 Net premiums earned 110,755
Slide 87: 2015 Condensed Results by Segment
2015 Condensed Results by Segment 86 Specialty P&C Workers' Comp Lloyd' s Syndicate Corporate / Other Elimination 2015 2014 Gross premiums written $ 526,296 $ 243,608 $ 56,929 $ — $ (14,615 ) $ 812,218 $ 779,609 Net premiums written 442,126 218,338 48,821 — — 709,285 701,849 Net premiums earned 443,
Slide 88: 2015 Income Statement Highlights
2015 Income Statement Highlights Continued profitability in a challenging market in millions, except per share data Quarter Ended Year Ended December 31, 2015 2014 2015 2014 Gross Premiums Written $ 161 $ 148 $ 812 $ 780 Net Investment Result $ 26 $ 34 $ 112 $ 130 Total Revenues $ 186 $ 218 $ 772 $