Proassurance Corporation · NYSE:PRA
Proassurance — Investor Presentation (June 2015)
85 slides from Proassurance's investor presentation, Jun 18, 2015
Slide 1: Forward Looking Statements
Forward Looking Statements 2 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: Mission, Vision and Values
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 integrated family of specialty companies, products,
Slide 4: Financial Performance
Financial Performance Our commentary on financial results
Slide 5: Q1 2015 Income Statement Highlights
Q1 2015 Income Statement Highlights Solid profitability in a challenging market in millions, except per share data March 31, 2015 2014 Gross Premiums Written $ 221 $ 218 Net Investment Result $ 29 $ 31 Total Revenues $ 208 $ 208 Total Expenses (Includes Loss Costs) $ 162 $ 147 Net Income (Includes R
Slide 6: 2014 Income Statement Highlights
2014 Income Statement Highlights Solid profitability in a challenging market December 31, 2014 2013 Gross Premiums Written $ 780 $ 568 Net Investment Result $ 130 $ 137 Total Revenues $ 852 $ 740 Total Expenses (Includes Loss Costs) $ 590 $ 375 Net Income (Includes Realized Investment Gains in both
Slide 7: Balance Sheet Highlights
Balance Sheet Highlights Split adjusted, in billions, except Book Value per share Shareholders’ Equity $ 2.1 $ 2.2 $ 2.4 - 10 % Total Investments 3.9 4.0 3.9 + 2 % Total Assets 5.1 5.2 5.2 ̶ Policy Liabilities 2.4 2.4 2.4 + 2 % 2014 - 2013 3/31/15 12/31/14 12/31/13 CHANGE $1.26 $1.42 $1.70 $1.86 $2.
Slide 8: Capital Discussion
Capital Discussion We focus on the creation of meaningful shareholder value through a disciplined approach to capital management
Slide 9: Demonstrated Commitment to Capital Management
Demonstrated Commitment to Capital Management Capital return at historic levels $134 million YTD $443 million in 2014 Dividends Declared YTD: $34.1 mln Declared 2014 : $221 mln Quarterly dividend: $0.31/share Yield: Approximately 2.7% Share Buyback YTD $100 mln 2.2 mln shares $181 mln remains author
Slide 10: Capital Growth and Total Capital Return
Capital Growth and Total Capital Return 11 A superb track record under the current senior management team ( Q2 2007 to Q1 2015) Shareholders Equity grown from $1.15 billion to $2.13 billion (84%) Additionally, $ 1.2 billion returned to shareholders in the form of share repurchase and dividends Addit
Slide 11: Subsidiary Dividends to Corporate
Subsidiary Dividends to Corporate 12 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 12: 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 16% 12% 10% 6 % 2% 3% 3% 2% 13% 16% 22% 25 % $- $0.5 $1.0 $1.5 $2.0 $2.5 Q1 15 2014 2013 2012 2011 2010 2009 2008 2007 2006 200
Slide 13: Capital Management Priorities
Capital Management Priorities 14 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 14: Historical Book Value Per Share + Dividends
Historical Book Value Per Share + Dividends Split Adjusted Dividends Shown in the Year Declared $2.62 $3.85 $4.77 $6.24 $ 11.60 $15.75 $10.09 $8.34 $10.50 $16.08 $19.56 $24.32 $ 24.96 $27.46 $26.39 $30.30 $39.91 $42.19 $48.48 $45.18 91 93 95 97 99 01 03 05 07 09 11 13 5/31/15 $ 1.84 $3.32 $4.91 $6.6
Slide 15: 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 2.5 $- $10.00 $20.00 $30.00 $40.00 $50.00 Sep-91 Dec-92 Mar-94 Jun-95 Sep-96 Dec-97 Ma
Slide 16: Consolidated Operational Highlights
Consolidated Operational Highlights Our commentary on operational results and updates on recent transactions and strategy
Slide 17: Corporate Highlights
Corporate Highlights 18 Eastern Insurance Alliance Significant contributions to Q1 results Leading cross - selling initiatives Significant interest Cross licensing of agents also producing results from shared interests Lloyd’s Syndicate 1729 $25.7 million in gross premiums written YTD 2014 ( 12 mont
Slide 18: 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% 91.1% 38.8% 39.8% 27.6% 32.6% 46.1% 64.2 % 75.2% 2009 2010 2011 2012 2013 2014 Q1 15 Combined Ratio and Operating Ratio History Com
Slide 19: 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 20: 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 $25 $30 $43 $33 $52 $50 $ 49 $43 $44 $104 $108 $138 $184 $114 $ 82
Slide 21: Q1 2015 Premiums, Policyholder & Distribution
1 2 Physician & Dental 48.4% Ancillary Healthcare 3.2% Life Sciences & Med Tech 3.2% Hospitals & Facilities 5.5% Attorneys 4.3% Workers' Comp 34.3% Lloyd's 0.9% Other 0.2 % Specialty P&C Q1 2015 Policyholders: ~79,000 Physician & Dental 57.6% Ancillary Healthcare 11.1% Life Sciences & Med Tech 1.5%
Slide 22: Eastern Insurance Transaction Update
Eastern Insurance Transaction Update Significant contributor to top line growth and bottom line profitability Expected cross selling opportunities are emerging Continues building the platform to serve the needs of larger integrated health systems and healthcare delivery organizations Workers’ compen
Slide 23: Lloyd's Syndicate Update
Lloyd’s Syndicate Update First policies underwritten January 1, 2014 $25.7 million in gross premiums written for the twelve months ended December 31, 2014 * $4.7 million in Q4 2014 * Approximate Syndicate capacity for 2015 will be $111 mln ProAssurance has committed approximately $64 million in unde
Slide 24: Opportunities and Strategies
Opportunities and Strategies ProAssurance is Evolving to Anticipate the Risks Facing an Increasingly Complex healthcare Delivery System
Slide 25: 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 Affordable Care Act (ACA) is creating
Slide 26: Insurance Marketplace Realities
Insurance Marketplace Realities 27 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 with unwise capital - return strategies
Slide 27: The ProAssurance Response
The ProAssurance Response 28 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 28: Positioned to Succeed
Positioned to Succeed 29 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 E
Slide 29: Continuing Emphasis on Strategic M&A
Continuing Emphasis on Strategic M&A 30 Well known, seasoned acquirer with a successful track record 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 PROTECTIVE
Slide 30: Strategic Successes
Strategic Successes Leveraging our reach, expertise and financial strength $26 mln in annualized premium in the Certitude tm program in partnership with Ascension Health Insuring Ascension - affiliated physicians through coordinated, jointly insured programs Adding Ascension - employed physicians an
Slide 31: Strategic Opportunities: Alternative Risk
Strategic Opportunities 32 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 operating
Slide 32: Strategic Opportunities: ProAssurance Risk Solutions
Strategic Opportunities 33 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 33: 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 34: 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 35: 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 36: Key Investor Points
Key Investor Points 37 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 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: Q1 2015 Specialty P&C Financial Highlights
March 31, Y - OVER - Y Change 2015 2014 Gross Premiums Written $ 144 $ 152 - 5% Net Premiums Earned $ 115 $ 126 - 9% Total Revenues $ 116 $ 128 - 9% Net Losses & Loss Adjustment Expenses $ 69 $ 61 +13% Underwriting & Operating Expenses $ 27 $ 34 - 21% Operating Result $ 20 $ 33 - 39% Q1 2015 Special
Slide 39: Q1 2015 Specialty P&C Gross Written Premium
Q1 2015 Specialty P&C Gross Written Premium 40 Total Gross Written Premiums decreased $8.8M (5.8%) from $152.3M to $143.5M Physician new business of $7.4M was more than offset by losses due to retention of 85% Facilities increase is due to losses due to retention of 92% partially offset by new busin
Slide 40: Strong Retention Despite Competition
Strong Retention Despite Competition Retention remains strong Q1 affected adversely by physician consolidation 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% 85% 2006
Slide 41: 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 Q1 15 Annual 23% 28% 28% 19% 11% 3% -2% -6% -4% -2% -2% 0% -1% 0% -1% Cum
Slide 42: Differentiate Through Claims Defense
Differentiate Through Claims Defense 43 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 43: The Ohio Example: 2006–2012 Data
The Ohio Example: 2006 – 2012 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/Ohio2012MedicalProfessionalLiabilityClosedClaimReport.pdf 92% 75% 8 % 25% ProAssurance All Ot
Slide 44: 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 % 3
Slide 45: 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 46: 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 47: Q1 2015 Workers' Compensation Highlights
March 31, Y - OVER - Y Change 2015 2014 Gross Premiums Written $ 76 $ 66 +15% Net Premiums Earned $ 69 $ 61 +13% Total Revenues $ 51 $ 46 +11% Net Losses & Loss Adjustment Expenses $ 32 $ 29 - 10% Underwriting & Operating Expenses $ 15 $ 16 - 6% Segregated Portfolio Cell Dividend Expense $ 2 $ 1 +10
Slide 48: Consistent Profitability in Workers' Comp
Consistent Profitability in Workers' Comp 49 Historical Combined Ratio (1) excluding fair value adjustment and 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 % 92.6% 91.1% 89.8% 2006 2007 2008 2009 2010 2011
Slide 49: How Eastern Differentiates
How Eastern Differentiates 50 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 50: Eastern Business Profile
Eastern Business Profile 51 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 51: Workers' Compensation Risk Diversification
Workers' Compensation Risk Diversification Wide diversification by class code and market segment 7,143 active policies in Traditional Programs Over 600 class c odes a ctively written 52 Physcians/Dentists 10.2% Nursing Homes Skilled 2.6% Hospital , 6.8 % Clerical / Office , 16.4% Colleges/Schools 9.
Slide 52: Workers' Compensation Risk Diversification
Workers' Compensation Risk Diversification Wide diversification by class code and market segment 2,311 active Inova ® policies (Alternative Markets) Over 4 00 class c odes a ctively written 53 Physician / Dentists 5.8% Nursing Homes Skilled 3.2% Residential Elderly - Non - Medical , 2.0% Social Reha
Slide 53: Broad Product Spectrum
Broad Product Spectrum Guaranteed Cost 55.0% INOVA (Alternative Markets) 26.3 % Policyholder Dividend 8.2% Deductible Plans 3.5% Retrospective Rating 3.6% Residual market 3.4% Guaranteed Cost Policies Loss - Sensitive Dividend Plans Deductible Plans Retrospective Rating Plans Alternative Market Prog
Slide 54: How Eastern Differentiates
How Eastern Differentiates Extensive medical cost containment strategies Average five - year medical cost inflation of 0.6% Proactive claims management Use of Compromise & Release where permitted by law Strategic use of return - to - wellness initiatives Use of a proactive, unique claims approach th
Slide 55: Workers' Comp Claim Closing Pattern: Traditional
Workers’ Comp Claim Closing Pattern: Traditional 56 Few claims remain open from older accident years Eastern is recognized as a short - tail writer of workers’ compensation insurance 63 201 364 535 590 570 687 591 717 776 887 951 1,069 1,158 1,182 1,104 643 1 3 0 2 2 3 6 9 10 36 80 208 567 0 200 400
Slide 56: Workers' Comp Claim Closing Pattern: Alternative
Workers’ Comp Claim Closing Pattern: Alternative 57 Few claims remain open from older accident years Eastern is recognized as a short - tail writer of workers’ compensation insurance 35 66 103 175 267 407 424 310 324 334 383 402 494 480 498 337 0 2 2 3 5 8 22 82 272 0 100 200 300 400 500 600 1999 20
Slide 57: 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 58: Segment Highlights
Segment Highlights We repo rt results in three operational segments Specialty Property Casualty Insurance Workers’ Compensation Insurance Lloyd’s Syndicate 1729
Slide 59: Lloyd's Segment Highlights
As reported 3/31/15 December 31, Y - OVER - Y Change 2014 2013 Gross Premiums Written $ 38.4 ‒ - 7% Net Premiums Earned $ 18.2 ‒ - 6% Total Revenues $ 19.5 ‒ - 6% Net Losses & Loss Adjustment Expenses $ 12.4 Underwriting & Operating Expenses $ 13.1 ‒ +4% Operating Results $ - 6.1 ‒ - 27% YTD 2014 Ll
Slide 60: Lloyd's Syndicate 1729: Business Detail
Lloyd’s Syndicate 1729: Business Detail Broad spread of risk Casualty includes $14.8 million ceded by PRA/PICA (Podiatry) Property is primarily US 61 For the 12 months ended March 31, 2015 $ in millions Casualty $23.6 61% Property Insurance , $ 6.0 , 16 % Property Reinsurance $7.2 19% Catastrophe Re
Slide 61: Segment Highlights: Corporate
Segment Highlights Corporate U.S. investing activities Non - premium revenues Corporate expenses U. S. taxes
Slide 62: Q1 2015 Corporate Segment Highlights
March 31, Y - OVER - Y Change 2015 2014 Investment income $ 27.1 $ 29.7 - 9% Equity in earnings (loss) of unconsolidated subsidiaries 1.6 1.8 - 11% Net realized investment gains (losses) 4.8 2.7 +78% Other income 0.2 0.5 - 60% Operating expenses 5.4 2.4 125% Interest expense 3.6 3.6 ̶ Income taxes 7
Slide 63: Corporate Segment Financial Highlights
Corporate Segment Financial Highlights Overall investment result decreased 9% 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 64
Slide 64: Additional Financial Detail
Additional Financial Detail
Slide 65: Capital Growth: 2008–2014
Capital Growth: 2008‒2014 2008 2009 2010 2011 2012 2013 2014 Dividends (15,269) (192,466) (64,777) (220,464) Earnings 177,725 222,026 231,598 287,096 275,470 297,523 196,565 Employee Stock Transactions 11,673 7,205 6,147 6,855 7,780 9,261 11,246 Stock Issued 112,478 - - - - - - Treasury Stock (87,56
Slide 66: Inside ProAssurance's Balance Sheet
Inside ProAssurance’s Balance Sheet Cash & Investments: 80.9% Insurance Receivables 9.7% Goodwill & Intangible Assets: 6.0% Other Assets: 3.4% Retained Earnings: 39.3% Other Equity: 2.3 % Reinsurance Payable & Other Liabilities: 11.1% Unearned Premiums: 7.3% Loss Reserves: 40.0% Assets: $5.1 bln Lia
Slide 67: Inside ProAssurance's Income Statement - YTD
Inside ProAssurance’s Income Statement - YTD 68 Net Premiums Earned: 82.7% Net Realized Investment Gains: 2.3% Net Investment Income: 13.2% Other: 1.8% Net Income: 18.2 % Provision for Income Taxes: 3.7% Underwriting, Policy Acquisitions, Operating and Interest Expenses: 27.5% Net Losses and Loss Ad
Slide 68: Book Value per Share History
Book Value per Share History Through Q1 2015 69 $ 21.35 $26.30 $30.17 $35.42 $36.85 $39.13 $38.17 $38.39 $ 20.26 $24.04 $26.58 $31.93 $33.34 $35.64 $32.66 $32.81 $ 20.80 $23.13 $25.29 $29.80 $30.98 $34.67 $31.63 $31.62 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/2014 Book Value per S
Slide 69: Book Value per Share Components
Book Value per Share 70 Components 3/31/15 12/31/14 Change Total Book Value $ 38.39 $ 38.17 $ 0.22 Less: Goodwill & Intangible Assets 5.58 5.519 0.07 Tangible Book Value $ 32.81 $ 32.66 $ 0.15 Less: Unrealized Gain / Loss 1.19 1.03 0.16 Tangible Book Value excl Unreal G/L $ 31.62 $ 31.63 $ (0.01) Es
Slide 70: Components of Return on Equity
3.9% 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 & Intangibles $(8) Q 1 2015 Return on Equity: 7.1 % Components of Return on Equity 71 Long - term ROE target: 12% - 14% 6.3% 5.7% 0.7% - 2.9% - 1.2 % Pre-Tax Underwri
Slide 71: Investment Portfolio Detail
Investment Portfolio Detail ProAssurance remains conservatively invested to ensure our ability to keep our long - term promise of insurance protection
Slide 72: 2015 Investment Developments
2015 Investment Developments Maintaining duration of approximately four years Tax effective book yield: 3.9% Overall credit quality is stable at A+ 73 2015 Investment Strategy & Outlook Diversification and non - correlation of returns Managing duration
Slide 73: Q1 2015 Investment Profile
3/31/15 ProAssurance: Q1 2015 Investment Profile Fixed Income 78% Short Term (incl cash) 3% Equities & Equity Substitutes 18% BOLI 1% $3.9 Billion Overall Portfolio State & Muni 34 % Corporate 47% Asset Backed 15% Govt & Agency , 4% $ 3.0 Billion Fixed Income Portfolio Average duration: 3.6 years Un
Slide 74: Portfolio Detail: Asset Backed
Other 14% Auto 11% Non Agency MBS 1% Agency MBS/CMBS 64 % Non Agency CMBS 10% ProAssurance Portfolio Detail: Asset Backed 3/31/15 Subject to Rounding Asset Backed: $450 Million Weighted Average Rating: “ AAA” 75
Slide 75: Portfolio Detail: Corporate
Financials 30% Industrials 29 % Utilities/ Energy 20% Other 1% Consumer Oriented 20% ProAssurance Portfolio Detail: Corporate Corporates: $ 1.4 Billion Weighted Average Rating: A - Top 20 Banks/Financials: $ 218 million in millions JPM Chase $25 Citi $10 Goldman Sachs $18 Simon Property $9 GECC $17
Slide 76: Portfolio Detail: Energy Exposure
Fixed Income $192 75% LP $40 16% Equities & Other $24 9% ProAssurance Portfolio Detail: Energy Exposure Energy Related Exposure: $256 Million 3/31/15 77 149 million is investment grade with a $ 6 million net gain 3.8 % of invested assets $ 42 million of bonds with an unrealized loss of $ 7.2 million
Slide 77: Portfolio Detail: Municipals
General Obligation 22% Special Revenue 62% Prerefunded 16% ProAssurance Portfolio Detail: Municipals Municipals: $ 1.0 Billion Investment policy has always required investment grade rating prior to applying the effect of insurance Top 10 Municipal Holdings in millions State of Texas $15 Por t Author
Slide 78: Portfolio: Equities & Other
Equities 37% Alternative Equity & Debt 12% Real Estate LP 3% Private Equity 15% Convertible Bonds 5% Inflation Focused Bond Fund 9% Tax Credits 19 % ProAssurance Portfolio: Equities & Other 3/31/15 Equities & Other: $715 Million 5.5% TE Book Yield 13% TE IRR 79
Slide 79: Portfolio Detail: Various
ProAssurance Portfolio Detail: Various Govt MMF 88% Lloyd's 6% Prime MMF (Bermuda) 5% Other 1% Best Rating: A , 8 % Best Rating: A+ 57% Best Rating: A++ 35% Rated A1/P1 or better Money Markets: Moody’s: Aaa S&P: AAA Weighted average rating Moody’s: AA3 S&P: AA - A. M. Best: A+ Treasuries 70% FHLB De
Slide 80: Additional Details
Additional Details Py PROASSURANCE. Treated Fy
Slide 81: Now Reporting in Four Segments
Now Reporting in Four Segments 82 • 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 82: Q1 2015 Condensed Results by Segment
Q1 2015 Condensed Results by Segment 83 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination YTD 2015 Gross premiums written $ 143,535 $ 75,851 $ 4,699 $ — $ (2,743 ) $ 221,342 Net premiums written 124,670 68,934 4,009 — — 197,613 Net premiums earned 114,864 51,277 5,758 — — 1
Slide 83: 2014 Condensed Results by Segment
2014 Condensed Results by Segment 84 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination 2014 Gross premiums written $ 532,608 $ 225,363 $ 33,731 $ — $ (12,093 ) $ 779,609 Net premiums written 467,046 202,697 32,106 — — 701,849 Net premiums earned $ 492,733 $ 194,540 $ 12,458
Slide 84: Operational Results vs Top P&C Writers: Combined Ratio
Operational Results vs Top 100 P&C Writers Consistently achieving superior results 69.1% 68.0% 52.5% 57.3% 70.6 % 82.1% 99.5% 99.4% 106.8% 102.0% 97.1% 2009 PRA Rank: 2 2010 PRA Rank: 4 2011 PRA Rank: 1 2012 PRA Rank: 1 2013 PRA Rank: 1 2014 PRA Top 100 P&C AVERAGE 85 PRA Data: As reported Industry
Slide 85: Operational Results vs Top P&C Writers: Operating Ratio
Operational Results vs Top 100 P&C Writers Consistently achieving superior results 38.8% 39.8% 27.6 % 32.6% 46.1% 64.2% 88.2% 89.8% 97.4% 93.4% 89.1 % 2009 PRA Rank: 1 2010 PRA Rank: 3 2011 PRA Rank: 1 2012 PRA Rank: 1 2013 PRA Rank: 1 2014 PRA Top 100 P&C AVERAGE 86 PRA Data: As reported Industry D