Proassurance Corporation · NYSE:PRA
Proassurance — Q4 2015 Earnings Presentation
87 slides from Proassurance's earnings presentation, Feb 26, 2016
Slide 1: Q1 2016 Investor Presentation
Q1 2016 Investor Presentation
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: 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 4: 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 5: 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 6: Financial Performance
Financial Performance Our commentary on financial results
Slide 7: 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 $
Slide 8: 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 4.9 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 $1.96 2007 2008 2009 2010 2011 2012 201
Slide 9: The Payoff: Consistent Value Creation
3% 52% 50% 88% 146% 160% 357% 521% 298% 229% 247% 314% 534% 671% 862% 884% 983% 941% 959% 1095% 1484% 1698% 2012% 2040% 2201% 2228% 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Reflects all stock splits and includes all dividends in the year declared. Source: SNL The Pa
Slide 10: The Payoff: Consistent Value Creation (Book Value + Dividends)
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 $47.41 Dividends B
Slide 11: 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 12: Capital Discussion
Capital Discussion We focus on the creation of meaningful shareholder value through a disciplined approach to capital management
Slide 13: Demonstrated Commitment to Capital Management
Demonstrated Commitment to Capital Management $290 million capital return in 2015 $443 million in 2014 Share buybacks balance share price vs. book value/share 2015: $170 mln / 3.7 mln shares 2014: $ 222 mln / 4.9 mln shares Since 2007: $746 mln / 15.4 mln shares $112 mln authorized at 12/31/15 Divid
Slide 14: 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 2015) Shareholders Equity grown from $1.2 billion to $1.9 billion (56%) $1.4 billion returned to shareholders through share repurchase and dividends Additionally, $754 million deplo
Slide 15: 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 16: 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 17: 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% 12% 10% 6% 2% 3% 3% 2% 13% 16% 22% 25% $- $0.5 $1.0 $1.5 $2.0 $2.5 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2
Slide 18: 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 19: Consolidated Operational Highlights
Consolidated Operational Highlights Our commentary on operational results and updates on recent transactions and strategy
Slide 20: 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 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: 2015 Premiums, Policyholders & Distribution
1 2 Physician & Dental 49.2% Ancillary Healthcare 3.2% Life Sciences & Med Tech 4.1% Hospitals & Facilities 4.6% Attorneys 3.5% Workers' Comp 30.0% Lloyd's 5.2% Other 0.2% Specialty P&C: 65% 2015 Policyholders: ~78,000 Physician & Dental 58.4% Ancillary Healthcare 10.8% Life Sciences & Med Tech 1.5%
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 23 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 24 First policies underwritten January 1, 2014 $46.9 million in gross premiums written (to ProAssurance) for the nine months reported 12/31/15 Current capacity for 2015 is approximately $113.5 million ProAssurance is providing 58% of underwriting capital $65 million in
Slide 26: The ProAssurance Response
The ProAssurance Response 25 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: Affordable Care Act
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 28 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 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 Ex
Slide 31: Continuing Emphasis on Strategic M&A
Continuing Emphasis on Strategic M&A 30 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 31 *www.ascensionhealth.org/
Slide 33: Strategic Successes: Certitude
Strategic Successes: Certitude 32 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 33 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 34 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 35 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 39 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: 2015 Specialty P&C Financial Highlights
Quarter Ended Year Ended December 31, 2015 2014 2015 2014 Gross Premiums Written $ 110 $ 103 $ 526 $ 533 Net Premiums Earned $ 100 $ 118 $ 443 $ 493 Total Revenues $ 100 $ 120 $ 448 $ 499 Net Losses & Loss Adjustment Expenses $ 53 $ 37 $ 250 $ 228 Underwriting & Operating Expenses $ 26 $ 32 $ 106 $
Slide 43: Q4 2015 Specialty P&C Gross Written Premium
Q4 2015 Specialty P&C Gross Written Premium 42 Gross Written Premiums increased $6.8 mln (6.6%) from $102.9 mln to $109.6 mln Physician increase is due to new business of $7.0 mln , retention of 91% Facilities increase is due to new business of $1.4 mln offset by 81% retention Lawyers increase is du
Slide 44: 2015 Specialty P&C Gross Written Premium
2015 Specialty P&C Gross Written Premium 43 $37 $33 $28 $20 $33 $34 $34 $28 $19 $35 Healthcare facilities Other healthcare providers Legal professionals Tail & other, professional liability Products liability 2015 2014 $345 $362 $30 $20 $375 $382 2015 2014 Physician 12-mo Physician 24-mo Year ended
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% 89% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 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 Annual 23% 28% 28% 19% 11% 3% -2% -6% -4% -2% -2% 0% -1% 0% 1% Cumul
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: 2015 Workers' Compensation Financial Highlights
Quarter Ended Year Ended December 31, 2015 2014 2015 2014 Gross Premiums Written $ 48 $ 44 $ 244 $ 225 Net Premiums Earned $ 54 $ 51 $ 213 $ 195 Total Revenues $ 54 $ 51 $ 214 $ 195 Net Losses & Loss Adjustment Expenses $ 38 $ 34 $ 141 $ 126 Underwriting & Operating Expenses $ 16 $ 15 $ 64 $ 45 Oper
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% 101.3% 92.7% 99.7% 2006 2007
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 6,987 active policies in Traditional Programs Over 600 class c odes a ctively written 55 Physcians/Dentists 10.5% Nursing Homes Skilled 2.7% Hospital 6.3% Clerical / Office 15.6% Colleges/Schools 10.3% A
Slide 57: Workers' Compensation Risk Diversification (Alternative)
These are self - insured, segregated portfolio cells within Eastern’s alternative markets facility 2,699 active Inova ® policies Over 4 00 class codes actively written Physician / Dentists 4.5% Nursing Homes Skilled 3.4% Social Rehab Facilities 3.0% Retirement/Life Care Community 2.7% Clerical / Off
Slide 58: Broad Product Spectrum
Broad Product Spectrum Guaranteed Cost 58.0% INOVA (Alternative Markets) 29.0% Policyholder Dividend 7.4% Deductible Plans 3.5% Retrospective Rating 2.1% 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 59 Few claims remain open from older accident years Eastern is recognized as a short - tail writer of workers’ compensation insurance 364 535 590 570 687 591 717 776 889 955 1,073 1,176 1,220 1,224 1,040 0 1 0 3 0 2 2 3 4 6 5 18 40 96 222 0 250 500 75
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 66 103 175 267 407 424 310 325 336 385 403 502 493 543 529 0 0 0 0 0 0 0 1 0 0 3 2 8 30 100 0 150 300 450 600 2000 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: Lloyd's Segment Financial Highlights
As reported December 31, 2015 Quarter Ended Year Ended September 30, 2015 2014 2015 2014 Gross Premiums Written $ 10 $ 7 $ 57 $ 34 Net Premiums Earned $ 11 $ 6 $ 38 $ 12 Total Revenues $ 12 $ 6 $ 39 $ 13 Net Losses & Loss Adjustment Expenses $ 7 $ 4 $ 25 $ 8 Underwriting & Operating Expenses $ 5 $ 4
Slide 65: Lloyd's Syndicate 1729: Business Detail
Casualty $26.9 47% Property Insurance $16.4 29% Property Reinsurance $2.7 5% Catastrophe Reinsurance $ 10.9 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 64 For the 12 months reported December 31
Slide 66: Segment Highlights: Corporate
Segment Highlights Corporate U.S. investing activities Non - premium revenues Corporate expenses U. S. taxes
Slide 67: 2015 Corporate Segment Financial Highlights
Quarter Ended Year Ended December 31, 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 $ 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 67
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 3.5 years and A+ credit quality Obtained a tax effective income yield of 4.0% 69 2016 Investment Strategy & Outlook Continuing capital management activities will reduce the size of the portfolio Maintaining optimum allocation remains para
Slide 71: Investment Profile
All as of 12/31/15 ProAssurance: Q3 2015 Investment Profile Fixed Income 76% Short Term (incl cash) 3% 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 12/31/15 Subject to Rounding Asset Backed: $408 Million (10% of Invested Assets) Weighted Average Rating: “ AAA” 71
Slide 73: Portfolio Detail: Corporate
Financials 31% Industrials 16% Utilities/ Energy 17% Other 1% Basic Materials 4% Technology 4% Communications 7% Consumer Oriented 20% ProAssurance Portfolio Detail: Corporate Corporates: $ 1.3 Billion (35% of Invested Assets) Weighted Average Rating: A - Top 20 Banks/Financials: $212 million in mil
Slide 74: Portfolio Detail: Energy Exposure
Fixed Income $145 79% LP $22 12% Equities & Other $16 9% ProAssurance Portfolio Detail: Energy Exposure Energy Related Exposure: $199 Million 12/31/15 73 Total energy exposure is 5% of invested assets $121 million is investment grade with a $2 million net unrealized loss 3.3% of invested assets $24
Slide 75: Portfolio Detail: Municipals
General Obligation 25% Special Revenue 60% Prerefunded 15% ProAssurance Portfolio Detail: Municipals Municipals: $0.9 Billion (26% of Invested Assets) Top 10 Municipal Holdings in millions State of Texas $15 Connecticut State Housing Authority $13 Omaha Public Power $13 South Carolina State Public S
Slide 76: Portfolio: Equities & Other
Equities 36% Alternative Equity & Debt 13% Real Estate LP 5% Private Equity 14% Convertible Bonds 4% Short Inv Grade Bond Fund 1% Inflation Focused Bond Fund 9% Tax Credits 18% ProAssurance Portfolio: Equities & Other 12/31/15 Equities & Other: $713 Million (20% of Invested Assets) 5.8% TE Book Yiel
Slide 77: Additional Financial Detail
Additional Financial Detail
Slide 78: Tax Credit Impact on Operating Results
Tax Credit Impact on Operating Results 77 Substantial tax benefits and amortization expenses - $0.6 - $5.2 - $5.7 - $8.0 - $7.5 - $7.7 - $12.5 - $21.0 - $19.8 $1.0 $6.9 $12.0 $20.0 $20.4 $24.9 $31.5 $27.6 $21.3 $0.3 $1.7 $6.3 $12.0 $13.0 $17.2 $18.9 $6.6 $1.5 2010 2011 2012 2013 2014 2015 2016 2017
Slide 79: Capital Growth: 2008–2015
Capital Growth: 2008‒2015 2008 2009 2010 2011 2012 2013 2014 2015 Dividends (15,269) (192,466) (64,777) (220,464) (119,866) Earnings 177,725 222,026 231,598 287,096 275,470 297,523 196,565 116,197 Employee Stock Transactions 11,673 7,205 6,147 6,167 7,780 9,261 11,246 8,221 Stock Issued 112,478 Trea
Slide 80: Inside ProAssurance's Balance Sheet
Inside ProAssurance’s Balance Sheet Cash & Investments: 79.3% Insurance Receivables 10.4% Goodwill & Intangible Assets: 6.2% Other Assets: 4.1% Retained Earnings: 40.5% Other Equity: - 0.6% Reinsurance Payable & Other Liabilities: 11.8% Unearned Premiums: 7.4% Loss Reserves: 40.9% Assets: $4.9 bln L
Slide 81: Inside ProAssurance's Income Statement
Inside ProAssurance’s Income Statement 80 Net Premiums Earned: 89.9% Net Realized Investment Gains: - 5.4% Net Investment Income: 14.1% Other: 1.4% Net Income: 15.0% Provision for Income Taxes: 1.6% Underwriting, Policy Acquisitions, Operating and Interest Expenses: 30.2% Net Losses and Loss Adjustm
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 $20.26 $24.04 $26.58 $31.93 $33.34 $35.64 $32.66 $31.17 $20.80 $23.13 $25.29 $29.80 $30.98 $34.67 $31.63 $30.72 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/2014 12/31/2015 Book Value per Share Tan
Slide 83: Book Value per Share Components
Book Value per Share 82 Components 12/31/15 12/31/14 Change Total Book Value $ 36.88 $ 38.17 $ (1.31) Less: Goodwill & Intangible Assets 5.71 5.51 0.20 Tangible Book Value $ 31.17 $ 32.66 $ (1.51) Less: Unrealized Gain / Loss 0.45 1.03 (0.58) Tangible Book Value excl Unreal G/L $ 30.72 $ 31.63 $ 0.9
Slide 84: Components of Return on Equity
3.9% 5.5% - 2.0% - 0.6% - 1.2% Pre-Tax Underwriting Profit $81 Pre-Tax Investment Income $112 Non-Operating Gains $(42) Taxes $(13) Interest & Intangibles $(23) 6.3% 5.7% 0.7% - 2.9% - 1.2% Pre-Tax Underwriting Profit $143 Pre-Tax Investment Income $130 Non-Operating Gains $16 Taxes $(65) Interest &
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: Q4 2015 Condensed Results by Segment
Q4 2015 Condensed Results by Segment 85 Specialty P&C Workers' Comp Lloyd's Syndicate Corporate / Other Elimination 2015 2014 Gross premiums written $ 109,641 $ 47,644 $ 10,043 $ — $ (6,452 ) $ 160,876 $ 147,599 Net premiums written 80,562 40,279 6,590 — — 127,431 133,276 Net premiums earned 100,249
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,