Industry Overview - The Zacks Property and Casualty Insurance industry has performed well in 2025, driven by better pricing, prudent underwriting standards, increased exposure, streamlined operations, a wider global presence, and a solid capital position [1] - The industry has returned 7.9% year-to-date, compared to the Finance sector and the Zacks S&P 500 composite's growth of 14.9% [2] - Global commercial insurance rates declined by 4% in Q2 2025, marking the fourth consecutive decrease after seven years of increases [4][7] Driving Forces - Increased technology advancements and an improving rate environment have contributed positively to the industry [1] - Heavy investments in blockchain, telematics, and insurtech are enhancing efficiency and long-term profitability [7][10] - The global insured losses from natural catastrophes reached $80 billion in the first half of 2025, nearly double the 10-year average, impacting profitability and policy renewal rates [5] Company Performance - Heritage Insurance Holdings, Inc. (HRTG) has seen significant growth, with a 125.5% increase in shares year-to-date, driven by its expanding commercial residential business and improving pricing [15][12] - ProAssurance Corporation (PRA) has benefited from strong premium growth and strategic acquisitions, with shares rallying 50% year-to-date and a 16.8% year-over-year growth in earnings estimates for 2025 [17][16] - HCI Group, Inc. (HCI) has also shown strong performance, with shares up 56.5% year-to-date and a 120.2% year-over-year growth in earnings estimates for 2025 [20][19] Future Outlook - Gross premiums in the insurance industry are estimated to exceed $722 billion by 2030, indicating a positive growth trajectory [4] - The insurance industry is expected to generate around $4.7 billion in annual global premiums from AI-related insurance by 2032, with a CAGR of nearly 80% [10]

Core Insights - ProAssurance Corporation (PRA) reported a second-quarter 2025 adjusted operating income of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.19, and an increase from $0.21 in the same period last year [1][11] - Operating revenues decreased by 2.4% year over year to $271.9 million, but still surpassed the consensus estimate by 2% [1][2] - The company experienced a decline in gross premiums written by 3.1% year over year to $216.9 million, with net premiums earned also decreasing by 3.1% to $232.4 million [3][6] Financial Performance - Net investment income rose by 6.5% year over year to $38.9 million, driven by higher book yields, and exceeded the consensus estimate of $37.5 million [4][11] - Total expenses decreased by 8.5% year over year to $249.3 million, lower than the estimate of $260.3 million, primarily due to a reduction in net losses and loss adjustment expenses [4][5] - Net income for the second quarter was $21.9 million, reflecting a 41.4% increase year over year, with a combined ratio improving to 103.6% from 110.9% in the prior-year quarter [5][11] Segment Analysis - Specialty P&C Segment revenues declined by 2.4% year over year to $181.4 million, but were above the Zacks Consensus Estimate of $178.7 million [6] - Workers' Compensation Insurance Segment revenues fell by 0.6% year over year to $42 million, missing the consensus estimate [8] - The Segregated Portfolio Cell Reinsurance Segment saw gross premiums written decline by 18% year over year to $13 million, missing estimates [12] Operational Metrics - The combined ratio for the Specialty P&C Segment improved to 95.2% from 106.8% in the prior-year quarter, while the Workers' Compensation Insurance Segment's combined ratio deteriorated to 115.4% from 113.2% [7][9] - The Corporate Segment's net investment income increased by 6.9% year over year to $38 million, surpassing estimates [14] Financial Position - As of June 30, 2025, ProAssurance had cash and cash equivalents of $41.6 million, down from $54.9 million at the end of 2024, while total investments rose to $4.4 billion [15] - Total shareholders' equity increased by 6.1% to $1.3 billion, with book value per share rising to $24.80 from $23.49 at the end of 2024 [16] Share Repurchase Update - ProAssurance did not repurchase any common shares in the second quarter of 2025, with a remaining capacity of $55.9 million for future repurchases or debt retirement [17]

Core Insights - ProAssurance reported a revenue of $271.94 million for the quarter ended June 2025, reflecting a decrease of 2.4% year-over-year, but exceeding the Zacks Consensus Estimate by 1.96% [1] - The company's EPS was $0.52, significantly higher than the $0.23 reported in the same quarter last year, resulting in an EPS surprise of 173.68% compared to the consensus estimate of $0.19 [1] Financial Performance Metrics - Net Loss Ratio was reported at 68.8%, better than the average estimate of 77% from three analysts [4] - Underwriting Expense Ratio stood at 34.8%, slightly above the average estimate of 33.9% [4] - Combined Ratio was 103.6%, outperforming the average estimate of 110.9% [4] - Net premiums earned totaled $232.41 million, surpassing the average estimate of $225.22 million, but showing a year-over-year decline of 3.1% [4] - Net investment income was $38.93 million, exceeding the average estimate of $37.5 million, with a year-over-year increase of 6.5% [4] - Equity in earnings of unconsolidated subsidiaries was $4.58 million, compared to the average estimate of $3.07 million, reflecting a 47% decrease year-over-year [4] - Other income was reported at $0.6 million, significantly lower than the average estimate of $2.68 million, marking a 71.5% decline year-over-year [4] Segment Performance - Net Premiums Earned in Specialty Property & Casualty was $179.31 million, slightly below the average estimate of $180.34 million, with a year-over-year decrease of 2.8% [4] - Net Premiums Earned in Segregated Portfolio Cell Reinsurance was $11.56 million, compared to the average estimate of $12.1 million, reflecting a 14.7% year-over-year decline [4] - Net Premiums Earned in Workers Compensation was $41.54 million, close to the average estimate of $41.61 million, showing a minor decrease of 0.5% year-over-year [4] - Net investment income in Segregated Portfolio Cell Reinsurance was $0.9 million, slightly below the average estimate of $0.91 million, with an 8.4% year-over-year decline [4] Stock Performance - ProAssurance shares returned +0.6% over the past month, underperforming the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance in the near term [3]

Company Performance - ProAssurance (PRA) reported quarterly earnings of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, and up from $0.23 per share a year ago, representing an earnings surprise of +173.68% [1] - The company posted revenues of $271.94 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.96%, although this is a decrease from year-ago revenues of $278.54 million [2] - Over the last four quarters, ProAssurance has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Performance - ProAssurance shares have increased approximately 49.6% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.6% [3] - The current consensus EPS estimate for the upcoming quarter is $0.31 on revenues of $267.23 million, and for the current fiscal year, it is $0.91 on revenues of $1.08 billion [7] Industry Outlook - The Insurance - Property and Casualty industry, to which ProAssurance belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of ProAssurance's stock may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

[FORM 10-Q General Information](index=1&type=section&id=FORM%2010-Q%20General%20Information) ProAssurance Corporation filed its Q2 2025 Form 10-Q, detailing its large accelerated filer status and key registrant information - ProAssurance Corporation filed its **Form 10-Q** for the quarterly period ended **June 30, 2025**. The company is a **large accelerated filer** and is not a shell company[1](index=1&type=chunk)[4](index=4&type=chunk)[5](index=5&type=chunk) Registrant Information | Field | Value | | :--- | :--- | | Commission File Number | 0-16533 | | Exact Name of Registrant | ProAssurance Corporation | | State of Incorporation | Delaware | | I.R.S. Employer Identification No. | 63-1261433 | | Principal Executive Offices Address | 100 Brookwood Place, Birmingham, AL 35209 | | Telephone Number | (205) 877-4400 | | Trading Symbol | PRA | | Exchange Registered On | New York Stock Exchange | | Common Stock Outstanding (July 31, 2025) | 51,413,643 shares | [Glossary of Terms and Acronyms](index=2&type=section&id=Glossary%20of%20Terms%20and%20Acronyms) This section provides a glossary defining key terms and acronyms used throughout the report for enhanced clarity - The report includes a glossary defining various terms and acronyms used throughout the document, such as **AAD (Annual aggregate deductible)**, **AOCI (Accumulated other comprehensive income (loss))**, **MPL (Medical Professional Liability)**, and **SEC (Securities and Exchange Commission)**, to ensure clarity and understanding for readers[7](index=7&type=chunk)[8](index=8&type=chunk)[9](index=9&type=chunk) [Caution Regarding Forward-Looking Statements](index=4&type=section&id=Caution%20Regarding%20Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to significant risks and uncertainties, with no obligation for revisions - The document contains **forward-looking statements** based on estimates and anticipations of future events, which are **subject to significant risks, assumptions, and uncertainties** that could cause actual results to differ materially. These statements are identified by specific words and cover various aspects of the business, including liquidity, capital requirements, investment performance, and regulatory actions[12](index=12&type=chunk)[13](index=13&type=chunk)[16](index=16&type=chunk) - Readers are cautioned not to place undue reliance on these statements, which are valid only as of the date made. The company explicitly declines any obligation to publicly release revisions to these statements unless required by law[16](index=16&type=chunk) [Risk Factors (General)](index=4&type=section&id=Risk%20Factors%20(General)) The company faces various general risk factors, including economic, regulatory, and operational challenges, detailed in its 2024 Form 10-K - Numerous factors could cause actual results to differ materially from forward-looking statements, including changes in economic conditions (inflation, unemployment), regulatory and legislative actions, tort reforms, interest and tax rate changes, financial market performance, and changes in accounting policies[14](index=14&type=chunk) - Other **significant risks** include the impact of healthcare system changes, consolidation of insureds, cyclical insurance industry trends, uncertainties in loss reserve estimates, availability and cost of reinsurance, litigation outcomes, and the availability and security of technology infrastructure, including cyber-attack susceptibility[14](index=14&type=chunk)[17](index=17&type=chunk) - The principal risk factors are detailed in the company's **December 31, 2024 Form 10-K report**, with no material changes noted other than those specifically disclosed in this 10-Q[15](index=15&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's analysis [ITEM 1. FINANCIAL STATEMENTS](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents ProAssurance's unaudited condensed consolidated financial statements and detailed notes for Q2 2025 [Condensed Consolidated Balance Sheets (Unaudited)](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS%20(UNAUDITED)%20-%20JUNE%2030%2C%202025%20AND%20DECEMBER%2031%2C%202024) This section presents the unaudited condensed consolidated balance sheets, detailing changes in assets, liabilities, and equity Condensed Consolidated Balance Sheets (Unaudited) (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Total Investments | $4,379,327 | $4,367,427 | | Cash and cash equivalents | $41,605 | $54,881 | | Premiums receivable, net | $252,473 | $228,900 | | Receivable from reinsurers on unpaid losses and loss adjustment expenses | $361,278 | $409,069 | | Deferred tax asset, net | $142,694 | $163,928 | | Total Assets | $5,485,603 | $5,574,273 | | **Liabilities** | | | | Reserve for losses and loss adjustment expenses | $3,134,904 | $3,257,696 | | Unearned premiums | $425,551 | $418,756 | | Debt less unamortized debt issuance costs | $422,633 | $424,873 | | Total Liabilities | $4,210,353 | $4,372,524 | | **Shareholders' Equity** | | | | Total Shareholders' Equity | $1,275,250 | $1,201,749 | | Total Liabilities and Shareholders' Equity | $5,485,603 | $5,574,273 | - **Total assets decreased by $88.67 million** from **December 31, 2024**, to **June 30, 2025**, **primarily due to a decrease** in cash and cash equivalents, receivables from reinsurers, and deferred tax assets[21](index=21&type=chunk) - **Total liabilities decreased by $162.17 million**, **mainly driven by a reduction** in the reserve for losses and loss adjustment expenses and other liabilities[21](index=21&type=chunk) - **Shareholders' equity increased by $73.5 million**, **primarily due to an increase** in retained earnings and accumulated other comprehensive income (loss)[21](index=21&type=chunk) [Condensed Consolidated Statements of Changes in Capital (Unaudited)](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20CAPITAL%20(UNAUDITED)%20-%20THREE%20AND%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20AND%202024) This section details changes in shareholders' equity, including common stock, paid-in capital, and retained earnings Condensed Consolidated Statements of Changes in Capital (Unaudited) (In thousands) | Item | Balance at Dec 31, 2024 | 3 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2025 | Balance at Jun 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Common Stock | $638 | $1 | $2 | $640 | | Additional Paid-in Capital | $408,471 | $1,406 | $1,565 | $410,036 | | Accumulated Other Comprehensive Income (Loss) | $(172,391) | $18,302 | $55,835 | $(116,556) | | Retained Earnings | $1,434,725 | $21,921 | $16,099 | $1,450,824 | | Treasury Stock | $(469,694) | $0 | $0 | $(469,694) | | **Total Shareholders' Equity** | **$1,201,749** | **$40,260** | **$73,501** | **$1,275,250** | - **Total shareholders' equity increased by $73.5 million** for the six months ended **June 30, 2025**, **primarily driven by a significant increase** in **accumulated other comprehensive income (loss)** and **retained earnings**[23](index=23&type=chunk) - **Accumulated other comprehensive income (loss) improved** from **$(172.39) million** at **December 31, 2024**, to **$(116.56) million** at **June 30, 2025**, reflecting **positive other comprehensive income (loss) of $55.84 million** during the six-month period[23](index=23&type=chunk) - Net income contributed **$21.92 million** for the three months and **$16.10 million** for the six months ended **June 30, 2025**, to retained earnings[23](index=23&type=chunk) [Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20AND%20COMPREHENSIVE%20INCOME%20(UNAUDITED)%20-%20THREE%20AND%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20AND%202024) This section presents the unaudited condensed consolidated statements of income and comprehensive income Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (In thousands, except per share data) | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | | | | | | Net premiums earned | $232,407 | $239,867 | $468,682 | $484,017 | | Net investment income | $38,933 | $36,558 | $75,883 | $70,455 | | Total revenues | $276,753 | $290,355 | $548,831 | $575,053 | | **Expenses** | | | | | | Net losses and loss adjustment expenses | $159,937 | $186,000 | $349,898 | $380,694 | | Total expenses | $249,318 | $272,426 | $527,728 | $551,807 | | Income (loss) before income taxes | $27,435 | $17,929 | $21,103 | $23,246 | | Total income tax expense (benefit) | $5,514 | $2,421 | $5,004 | $3,112 | | Net income (loss) | $21,921 | $15,508 | $16,099 | $20,134 | | Other comprehensive income (loss), after tax | $18,302 | $924 | $55,835 | $(1,548) | | Comprehensive income (loss) | $40,223 | $16,432 | $71,934 | $18,586 | | Basic EPS | $0.43 | $0.30 | $0.31 | $0.39 | | Diluted EPS | $0.42 | $0.30 | $0.31 | $0.39 | - Net income for the three months ended **June 30, 2025**, **increased by $6.41 million (41.35%)** to **$21.92 million**, compared to **$15.51 million** in the prior year period. For the six months, net income **decreased by $4.04 million (20.04%)** to **$16.10 million**[24](index=24&type=chunk) - **Total revenues decreased by $13.60 million (4.68%)** for the three months and **$26.22 million (4.56%)** for the six months ended **June 30, 2025**, **primarily due to lower net premiums earned**[24](index=24&type=chunk) - Net losses and loss adjustment expenses **decreased by $26.06 million (14.01%)** for the three months and **$30.80 million (8.09%)** for the six months ended **June 30, 2025**, contributing to **improved profitability**[24](index=24&type=chunk) - **Other comprehensive income (loss) significantly increased** to **$18.30 million** for the three months and **$55.84 million** for the six months ended **June 30, 2025**, compared to **$0.92 million** and **$(1.55) million**, respectively, in the prior year, **largely due to investment performance**[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(UNAUDITED)%20-%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20AND%202024) This section presents the unaudited condensed consolidated statements of cash flows, detailing operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | Activity | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $(39,674) | $(24,499) | $(15,175) | | Net cash provided (used) by investing activities | $34,233 | $(1,970) | $36,203 | | Net cash provided (used) by financing activities | $(7,835) | $(2,552) | $(5,283) | | Increase (decrease) in cash and cash equivalents | $(13,276) | $(29,021) | $15,745 | | Cash and cash equivalents at end of period | $41,605 | $36,877 | $4,728 | - Net cash used in operating activities **increased by $15.18 million** to **$(39.67) million** for the six months ended **June 30, 2025**, **primarily due to higher operating expenses** and **lower net premium receipts**[27](index=27&type=chunk)[174](index=174&type=chunk) - Net cash provided by investing activities **significantly improved by $36.20 million**, moving from **$(1.97) million** used in 2024 to **$34.23 million** provided in 2025, **largely driven by proceeds** from the sale of capital assets and higher proceeds from sales/maturities of fixed maturities[27](index=27&type=chunk)[173](index=173&type=chunk) - Net cash used in financing activities **increased by $5.28 million** to **$(7.84) million**, **mainly due to higher repayments** under the **Revolving Credit Agreement** and capital contributions received from external segregated portfolio cell participants[27](index=27&type=chunk)[28](index=28&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=12&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section provides an overview of Notes to Condensed Consolidated Financial Statements [Basis of Presentation](index=12&type=section&id=Basis%20of%20Presentation) The financial statements are prepared under GAAP, with segment reorganization and merger-related disclosures - ProAssurance operates in four reportable segments: **Specialty P&C**, **Workers' Compensation Insurance**, **Segregated Portfolio Cell Reinsurance**, and **Corporate**. A segment reorganization in **Q1 2025** recast prior period segment information to align with current CODM oversight[32](index=32&type=chunk)[33](index=33&type=chunk) - The company entered into a **Merger Agreement** with **The Doctors Company** on **March 19, 2025**, for **$25.00 cash per share**. Stockholders approved the merger on **June 24, 2025**, and FTC granted early termination of the waiting period on **July 2, 2025**. The merger is expected to close in the **first half of 2026**, subject to remaining regulatory approvals[42](index=42&type=chunk)[43](index=43&type=chunk)[46](index=46&type=chunk) - Pre-tax transaction-related costs of approximately **$4.5 million** and **$11.6 million** were incurred for the three and six months ended **June 30, 2025**, respectively, related to the proposed merger[45](index=45&type=chunk) - In **Q1 2025**, ProAssurance sold its Franklin, TN property, recognizing a **$2.2 million gain** in other income (expense) and generating **$19.3 million** in proceeds from investing activities[47](index=47&type=chunk) [Fair Value Measurement](index=14&type=section&id=Fair%20Value%20Measurement) Fair value is measured using a three-level hierarchy, primarily for investments, with specific methodologies detailed - Fair value measurements are categorized into a three-level hierarchy: **Level 1** (quoted prices in active markets), **Level 2** (observable market data), and **Level 3** (non-observable inputs and entity's own assumptions)[50](index=50&type=chunk)[52](index=52&type=chunk) Total Assets at Fair Value (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets categorized within the fair value hierarchy | $4,044,200 | $4,028,615 | | Assets carried at NAV (Investment in unconsolidated subsidiaries) | $218,452 | $226,269 | | **Total assets at fair value** | **$4,262,652** | **$4,254,884** | Level 3 Fair Value Measurements – Assets (In thousands) | Asset Type | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--- | :--- | :--- | | Corporate debt, limited observable inputs | $80,344 | $81,062 | | Residential mortgage backed, other commercial mortgage backed and other asset-backed securities | $9,449 | $3,774 | | Equity investments | $4,526 | $5,506 | | Other investments | $1,021 | $500 | | **Total Level 3 Assets** | **$95,340** | **$90,842** | - Unfunded contractual commitments related to investments carried at **NAV** totaled approximately **$213.6 million** as of **June 30, 2025**, **primarily for non-public equity funds** and credit funds[70](index=70&type=chunk) [Investments](index=21&type=section&id=Investments) The investment portfolio consists primarily of available-for-sale fixed maturities, with detailed income and gain/loss analysis Available-for-sale fixed maturities (In thousands) | Category | Amortized Cost (Jun 30, 2025) | Estimated Fair Value (Jun 30, 2025) | Gross Unrealized Losses (Jun 30, 2025) | | :--- | :--- | :--- | :--- | | U.S. Treasury obligations | $253,693 | $246,070 | $8,343 | | State and municipal bonds | $484,985 | $470,552 | $18,211 | | Corporate debt | $1,817,137 | $1,749,456 | $75,742 | | Residential mortgage-backed securities | $565,604 | $517,973 | $50,609 | | Other asset-backed securities | $455,923 | $451,961 | $6,764 | | **Total** | **$3,810,930** | **$3,659,830** | **$170,082** | - As of **June 30, 2025**, 1,961 debt securities (**48.4%** of available-for-sale fixed maturities) were in an unrealized loss position, totaling **$170.08 million** in unrealized losses. The company does not intend to sell these securities and expects to recover their amortized cost[92](index=92&type=chunk)[95](index=95&type=chunk) Net Investment Income (In thousands) | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Fixed maturities | $36,594 | $33,607 | $71,627 | $65,058 | | Equities | $1,237 | $1,164 | $2,115 | $2,056 | | Short-term investments, including Other | $2,482 | $3,140 | $5,056 | $6,551 | | BOLI | $621 | $534 | $1,239 | $986 | | Investment fees and expenses | $(2,001) | $(1,887) | $(4,154) | $(4,196) | | **Net investment income** | **$38,933** | **$36,558** | **$75,883** | **$70,455** | - Net investment income **increased by $2.38 million (6.5%)** for the three months and **$5.43 million (7.7%)** for the six months ended **June 30, 2025**, **primarily due to higher average book yields** and **increased average investment balances**[101](index=101&type=chunk)[205](index=205&type=chunk) - Equity in earnings of unconsolidated subsidiaries **decreased by $4.07 million (47.0%)** for the three months and **$3.02 million (26.0%)** for the six months ended **June 30, 2025**, reflecting lower market valuations in prior quarters[102](index=102&type=chunk)[205](index=205&type=chunk) Net Investment Gains (Losses) (In thousands) | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net impairment losses recognized in earnings | $882 | $(465) | $625 | $(1,399) | | Other net investment gains (losses) | $(655) | $3,628 | $(2,091) | $4,294 | | **Total net investment gains (losses)** | **$227** | **$3,163** | **$(1,466)** | **$2,895** | - The company recognized a reversal of **$0.9 million** and **$0.6 million** in credit-related impairment losses for the three and six months ended **June 30, 2025**, respectively, **primarily from the sale of corporate bonds**[108](index=108&type=chunk) [Income Taxes](index=28&type=section&id=Income%20Taxes) Income tax provisions are based on the estimated annual effective tax rate, with discrete items impacting the rate - ProAssurance uses the estimated annual effective tax rate method for interim periods, with unusual or infrequent items treated as discrete[112](index=112&type=chunk) - For the three and six months ended **June 30, 2025**, the income tax provision was impacted by executive compensation exceeding statutory limits, non-deductible merger transaction costs, and changes in uncertain tax positions[113](index=113&type=chunk) - As of **June 30, 2025**, the company had a receivable for U.S. federal and U.K. income taxes of **$2.4 million**[114](index=114&type=chunk) [Reserve for Losses and Loss Adjustment Expenses](index=28&type=section&id=Reserve%20for%20Losses%20and%20Loss%20Adjustment%20Expenses) Loss reserves are based on complex estimates, with significant net favorable prior year reserve development noted - Estimating the reserve for losses and loss adjustment expenses is a complex process involving actuarial estimates and judgments, which are regularly reviewed and updated[115](index=115&type=chunk) Activity in the Reserve for Losses and Loss Adjustment Expenses (In thousands) | Item | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--- | :--- | :--- | | Balance, beginning of year | $3,257,696 | $3,401,281 | | Net losses: Current year | $376,405 | $387,630 | | (Favorable) unfavorable development of reserves established in prior years, net | $(26,507) | $(6,936) | | Total Net Losses | $349,898 | $380,694 | | Total paid | $(440,708) | $(414,126) | | Foreign currency exchange rate (gains) losses | $15,809 | $(2,602) | | **Balance, end of period** | **$3,134,904** | **$3,367,540** | - Consolidated net favorable prior year reserve development of **$26.51 million** was recognized for the six months ended **June 30, 2025**, compared to **$6.94 million** in the prior year[117](index=117&type=chunk) - This **favorable development was primarily driven by $22.8 million** in the **Specialty P&C** segment (**MPL** and **Medical Technology Liability**), **$1.0 million** in **Workers' Compensation Insurance**, and **$2.7 million** in **Segregated Portfolio Cell Reinsurance**, partially offset by **$1.2 million unfavorable development** from **Lloyd's Syndicates** operations[118](index=118&type=chunk)[119](index=119&type=chunk) [Commitments and Contingencies](index=30&type=section&id=Commitments%20and%20Contingencies) The company is involved in legal actions and has funding commitments, with no material corporate legal reserves - ProAssurance is involved in legal actions related to insurance policies and claims handling, which are considered part of its loss reserving process[121](index=121&type=chunk) - As of **June 30, 2025**, there were no material reserves established for corporate legal actions[121](index=121&type=chunk) - The company has funding commitments totaling approximately **$213.6 million**, **primarily related to non-public investment entities**[122](index=122&type=chunk) [Debt](index=30&type=section&id=Debt) Outstanding debt includes Contribution Certificates, a Revolving Credit Agreement, and a Term Loan, with covenant compliance Outstanding Debt (In thousands) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contribution Certificates due 2031, interest at 3.0% | $181,820 | $181,163 | | Revolving Credit Agreement | $125,000 | $125,000 | | Term Loan | $117,188 | $120,313 | | **Total principal** | **$424,008** | **$426,476** | | Less unamortized debt issuance costs | $1,375 | $1,603 | | **Debt less unamortized debt issuance costs** | **$422,633** | **$424,873** | - As of **June 30, 2025**, ProAssurance was in compliance with all covenants of its **Revolving Credit Agreement**[124](index=124&type=chunk) - The effective interest rate for the **Revolving Credit Agreement** was **6.27%** and for the **Term Loan** was **6.40%** as of **June 30, 2025**[123](index=123&type=chunk) [Derivatives](index=31&type=section&id=Derivatives) Derivative instruments are used to manage interest rate and foreign exchange risks, with fair value changes recognized - ProAssurance uses two forward-starting interest rate swap agreements to hedge against variability in cash flows from its **Revolving Credit Agreement** and **Term Loan**, effectively fixing the base rates at **3.187%** and **3.207%**, respectively[128](index=128&type=chunk) - Foreign currency forward contracts are utilized as economic hedges to mitigate foreign exchange exposure related to foreign currency denominated loss reserves, with changes in fair value recognized in earnings[130](index=130&type=chunk)[136](index=136&type=chunk) Derivative Instruments Summary (In thousands) | Derivative Type | Aggregate Notional Amount (Jun 30, 2025) | Estimated Fair Value (Jun 30, 2025) | Aggregate Notional Amount (Dec 31, 2024) | Estimated Fair Value (Dec 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | Interest Rate Swaps | $242,188 | $1,214 | $245,313 | $5,801 | | Foreign Currency Forwards | $106,904 | $1,536 | $5,470 | $293 | - For the six months ended **June 30, 2025**, a gain of **$1.09 million** on **Interest Rate Swaps** was reclassified from **AOCI** to earnings, reducing interest expense[134](index=134&type=chunk) [Shareholders' Equity](index=32&type=section&id=Shareholders%27%20Equity) Shareholders' equity details authorized shares, repurchase capacity, and changes in accumulated other comprehensive income - As of **June 30, 2025**, ProAssurance had **100 million** authorized common shares and **50 million** authorized preferred shares[137](index=137&type=chunk) - Board authorizations for common share repurchases or debt retirement totaled **$55.9 million** as of **June 30, 2025**. No common shares were repurchased during the three or six months ended **June 30, 2025** or 2024[138](index=138&type=chunk) Changes in Accumulated Other Comprehensive Income (Loss) (AOCI) (In thousands) | Component | Balance, Dec 31, 2024 | Net OCI, 6 Months Ended Jun 30, 2025 | Balance, Jun 30, 2025 | | :--- | :--- | :--- | :--- | | Unrealized Investment Gains (Losses) | $(176,053) | $59,378 | $(116,675) | | Cash Flow Hedging Gains (Losses) | $4,576 | $(3,624) | $952 | | Non-credit Impairments | $(92) | $81 | $(11) | | Change in Defined Benefit Plan Liabilities | $(822) | $0 | $(822) | | **Total AOCI** | **$(172,391)** | **$55,835** | **$(116,556)** | - **AOCI improved by $55.84 million** for the six months ended **June 30, 2025**, **primarily due to an increase** in unrealized investment gains (losses) on available-for-sale securities[141](index=141&type=chunk) [Variable Interest Entities](index=33&type=section&id=Variable%20Interest%20Entities) The company holds passive interests in VIEs and consolidates PPM RRG due to primary beneficiary status - ProAssurance holds passive interests in **VIEs**, mainly investment fund LPs/LLCs, with a carrying value of **$228.3 million** as of **June 30, 2025**. These are not consolidated as ProAssurance is not the primary beneficiary[142](index=142&type=chunk)[144](index=144&type=chunk) - ProAssurance is the primary beneficiary of **PPM RRG**, consolidating its operations due to a management services agreement and effective control over its Board of Directors[145](index=145&type=chunk) - Approximately **$139 million** of ProAssurance's consolidated assets and liabilities are related to **PPM RRG**[145](index=145&type=chunk) [Earnings (Loss) Per Share](index=34&type=section&id=Earnings%20(Loss)%20Per%20Share) Earnings per share calculations include diluted weighted average shares, with no antidilutive equivalents noted Weighted Average Number of Common Shares Outstanding (In thousands, except per share data) | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic | 51,345 | 51,060 | 51,267 | 51,036 | | Dilutive effect of securities: Restricted Share Units | 211 | 128 | 200 | 120 | | Dilutive effect of securities: Performance Share Units | 121 | 37 | 95 | 31 | | **Diluted** | **51,677** | **51,225** | **51,562** | **51,187** | | Basic EPS | $0.43 | $0.30 | $0.31 | $0.39 | | Diluted EPS | $0.42 | $0.30 | $0.31 | $0.39 | - **Diluted EPS** for the three months ended **June 30, 2025**, was **$0.42**, up from **$0.30** in the prior year. For the six months, **diluted EPS** was **$0.31**, down from **$0.39** in the prior year[146](index=146&type=chunk) - There were no antidilutive common share equivalents for the three and six months ended **June 30, 2025**[146](index=146&type=chunk) [Segment Information](index=34&type=section&id=Segment%20Information) ProAssurance operates in four segments, with performance evaluated based on underwriting profit/loss and operating profit/loss - ProAssurance reorganized its segment reporting structure in **Q1 2025**, now operating in four segments: **Specialty P&C**, **Workers' Compensation Insurance**, **Segregated Portfolio Cell Reinsurance**, and **Corporate**[149](index=149&type=chunk)[151](index=151&type=chunk) - The **CODM** evaluates **Specialty P&C** and **Workers' Compensation** segments based on before-tax underwriting profit/loss and net loss/underwriting expense ratios. **Segregated Portfolio Cell Reinsurance** is evaluated on operating profit/loss (including investment results, net of taxes), and **Corporate** on its contribution to consolidated after-tax results[152](index=152&type=chunk) Consolidated Net Premiums Earned by Segment (In thousands) | Segment | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Specialty P&C | $179,308 | $184,546 | $362,564 | $373,433 | | Workers' Compensation Insurance | $41,543 | $41,770 | $83,066 | $82,864 | | Segregated Portfolio Cell Reinsurance | $11,556 | $13,551 | $23,052 | $27,720 | | **Consolidated total** | **$232,407** | **$239,867** | **$468,682** | **$484,017** | - Consolidated net premiums earned **decreased by $7.46 million (3.1%)** for the three months and **$15.34 million (3.2%)** for the six months ended **June 30, 2025**, **primarily due to reduced participation** in **Lloyd's Syndicates** and non-renewals in the **Segregated Portfolio Cell Reinsurance** segment[156](index=156&type=chunk)[204](index=204&type=chunk)[206](index=206&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=40&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes ProAssurance's financial condition and results for Q2 2025, including segment performance [ProAssurance Overview](index=40&type=section&id=ProAssurance%20Overview) ProAssurance is a holding company providing various P&C insurance, with a reorganized four-segment structure - **ProAssurance Corporation** is a holding company for property and casualty insurance companies, providing medical professional liability, medical technology and life sciences liability, and workers' compensation insurance[165](index=165&type=chunk) - The company reorganized its internal management reporting structure in **Q1 2025**, now operating in four segments: **Specialty P&C**, **Workers' Compensation Insurance**, **Segregated Portfolio Cell Reinsurance**, and **Corporate**. This change had no impact on previously reported consolidated financial results[166](index=166&type=chunk) [Critical Accounting Estimates](index=40&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve significant judgment, including loss reserves, reinsurance, investments, and income taxes - **Critical accounting estimates** involve **significant management judgment** and include the reserve for losses and loss adjustment expenses, reinsurance, valuation of investments and impairment of securities, and income taxes[168](index=168&type=chunk)[171](index=171&type=chunk) - The company utilizes the estimated annual effective tax rate method for interim periods, treating unusual or infrequent items as discrete. The OBBBA, signed **July 4, 2025**, will impact tax provisions starting **Q3 2025**[169](index=169&type=chunk)[170](index=170&type=chunk) [Liquidity and Capital Resources and Financial Condition](index=41&type=section&id=Liquidity%20and%20Capital%20Resources%20and%20Financial%20Condition) This section provides an overview of Liquidity and Capital Resources and Financial Condition [Overview (Liquidity)](index=41&type=section&id=Overview%20(Liquidity)) The company's liquidity is supported by investments, dividends from subsidiaries, and available credit facilities - ProAssurance's principal sources of external revenue are investment revenues and dividends from operating subsidiaries[172](index=172&type=chunk) - As of **June 30, 2025**, the company held approximately **$83 million** in cash and liquid investments outside its insurance subsidiaries, available without regulatory approval[172](index=172&type=chunk) - Operating subsidiaries paid approximately **$12 million** in dividends to the holding company in 2025. An additional **$145 million** in dividends is permitted over the remainder of 2025 without prior state insurance regulator approval[172](index=172&type=chunk) [Cash Flows](index=41&type=section&id=Cash%20Flows) Cash flows from operating activities decreased, while investing activities significantly improved for the period Cash Flows (In thousands) | Activity | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $(39,674) | $(24,499) | $(15,175) | | Net cash provided (used) by investing activities | $34,233 | $(1,970) | $36,203 | | Net cash provided (used) by financing activities | $(7,835) | $(2,552) | $(5,283) | | **Increase (decrease) in cash and cash equivalents** | **$(13,276)** | **$(29,021)** | **$15,745** | - Operating cash flows **decreased by $15.18 million**, **primarily due to a $20.2 million increase** in cash paid for operating expenses (incentive compensation, merger-related costs) and an **$11.9 million decrease** in net premium receipts[174](index=174&type=chunk)[175](index=175&type=chunk) - The **decrease in operating cash flows** was partially offset by a **$7.9 million decrease** in paid net losses (due to increased reinsurance recoveries and fewer large indemnity payments) and a **$7.3 million increase** in cash from investment income[175](index=175&type=chunk) [Operating Activities and Related Cash Flows](index=42&type=section&id=Operating%20Activities%20and%20Related%20Cash%20Flows) Operating activities involve reinsurance, tax laws, and a payroll tax refund, with federal NOL carryforwards - Reinsurance is used in **Specialty P&C** and **Workers' Compensation** segments for capacity, loss reimbursement, and risk mitigation[177](index=177&type=chunk) - The traditional workers' compensation treaty renewed on **May 1, 2025**, at a lower contract rate, with other material terms consistent with the previous treaty[178](index=178&type=chunk) - ProAssurance received a **$4.4 million** payroll tax refund (including **$0.6 million** interest) in **April 2025**, related to a **CARES Act** claim for wages paid in 2020[187](index=187&type=chunk)[189](index=189&type=chunk) - As of **June 30, 2025**, the company had approximately **$18.9 million** in U.S. federal **NOL carryforwards**, subject to Section 382 limitations and expiring in 2035[189](index=189&type=chunk) [Investing Activities and Related Cash Flows](index=45&type=section&id=Investing%20Activities%20and%20Related%20Cash%20Flows) The investment portfolio is primarily high-quality fixed income, with anticipated maturities and unfunded commitments Investment Portfolio Composition (In thousands) | Investment Category | June 30, 2025 Carrying Value | % of Total Investment (Jun 30, 2025) | | :--- | :--- | :--- | | Fixed maturities, available-for-sale | $3,659,830 | 83% | | Fixed maturities, trading | $13,048 | 1% | | Equity investments | $108,758 | 2% | | Short-term investments | $257,268 | 6% | | BOLI | $81,418 | 1% | | Investment in unconsolidated subsidiaries | $251,198 | 6% | | Other investments | $7,807 | 1% | | **Total investments** | **$4,379,327** | **100%** | - At **June 30, 2025**, **92%** of fixed maturities were **investment grade**, with an average rating of **A+**. The weighted average **effective duration** of fixed maturity securities was **3.38 years**[192](index=192&type=chunk)[196](index=196&type=chunk) - The company anticipates **$70 million to $180 million** of its portfolio to mature or be paid down quarterly over the next twelve months to meet cash flow requirements[194](index=194&type=chunk) - **Funds at Lloyd's (FAL)** had a fair value of **$14.1 million** at **June 30, 2025**, increased in **Q1 2025** to support accumulated losses[195](index=195&type=chunk) - Total funding commitments for investment fund LPs/LLCs were approximately **$213.6 million** as of **June 30, 2025**, with an estimated **$136 million** expected to be drawn[197](index=197&type=chunk) [Financing Activities and Related Cash Flows](index=47&type=section&id=Financing%20Activities%20and%20Related%20Cash%20Flows) Financing activities involve debt instruments and interest rate swaps, with FHLB membership for liquidity Outstanding Debt (In thousands) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contribution Certificates | $181,820 | $181,163 | | Revolving Credit Agreement | $125,000 | $125,000 | | Term Loan | $117,188 | $120,313 | | **Total principal** | **$424,008** | **$426,476** | - Interest rate swaps are used to manage exposure to interest rate risk on borrowings under the **Revolving Credit Agreement** and **Term Loan**[199](index=199&type=chunk) - Two insurance subsidiaries are **FHLB** members, providing access to secured cash advances for liquidity, though not materially utilized for borrowing to date[200](index=200&type=chunk) [Results of Operations – Three and Six Months Ended June 30, 2025 Compared to Three and Six Months Ended June 30, 2024](index=48&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202024) This section compares ProAssurance's Q2 2025 results to Q2 2024, detailing revenues, expenses, and key ratios Selected Consolidated Financial Data (In thousands, except per share data) | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (3M) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (6M) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net premiums earned | $232,407 | $239,867 | $(7,460) | $468,682 | $484,017 | $(15,335) | | Total revenues | $276,753 | $290,355 | $(13,602) | $548,831 | $575,053 | $(26,222) | | Net losses and loss adjustment expenses | $159,937 | $186,000 | $(26,063) | $349,898 | $380,694 | $(30,796) | | Total expenses | $249,318 | $272,426 | $(23,108) | $527,728 | $551,807 | $(24,079) | | Net income (loss) | $21,921 | $15,508 | $6,413 | $16,099 | $20,134 | $(4,035) | | Basic EPS | $0.43 | $0.30 | $0.13 | $0.31 | $0.39 | $(0.08) | | Diluted EPS | $0.42 | $0.30 | $0.12 | $0.31 | $0.39 | $(0.08) | | Net loss ratio | 68.8% | 77.5% | (8.7 pts) | 74.7% | 78.7% | (4.0 pts) | | Underwriting expense ratio | 34.8% | 33.4% | 1.4 pts | 35.0% | 32.6% | 2.4 pts | | Combined ratio | 103.6% | 110.9% | (7.3 pts) | 109.7% | 111.3% | (1.6 pts) | | Operating ratio | 86.8% | 95.7% | (8.9 pts) | 93.5% | 96.7% | (3.2 pts) | | Return on equity | 7.0% | 5.5% | 1.5 pts | 2.6% | 3.6% | (1.0 pts) | [Executive Summary of Operations](index=49&type=section&id=Executive%20Summary%20of%20Operations) This summary highlights key operational trends, including changes in revenues, expenses, taxes, and operating ratios [Revenues](index=49&type=section&id=Revenues) Consolidated net premiums earned decreased, while net investment income increased, and other income saw significant changes Consolidated Net Premiums Earned (In thousands) | Segment | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (%) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Specialty P&C | $179,308 | $184,546 | (2.8%) | $362,564 | $373,433 | (2.9%) | | Workers' Compensation Insurance | $41,543 | $41,770 | (0.5%) | $83,066 | $82,864 | 0.2% | | Segregated Portfolio Cell Reinsurance | $11,556 | $13,551 | (14.7%) | $23,052 | $27,720 | (16.8%) | | **Consolidated total** | **$232,407** | **$239,867** | **(3.1%)** | **$468,682** | **$484,017** | **(3.2%)** | - Net investment income **increased by 6.5%** for the three months and **7.7%** for the six months ended **June 30, 2025**, **driven by higher average book yields** and investment balances[205](index=205&type=chunk) - Equity in earnings of unconsolidated subsidiaries **decreased by 47.0%** for the three months and **26.0%** for the six months, reflecting lower market valuations in prior quarters[205](index=205&type=chunk) Consolidated Net Investment Gains (Losses) (In thousands) | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (%) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net impairment losses recognized in earnings | $882 | $(465) | (289.7%) | $625 | $(1,399) | (144.7%) | | Contingent Consideration remeasurement gain | $0 | $6,500 | (100.0%) | $0 | $6,500 | (100.0%) | | Other net investment gains (losses) | $(655) | $(2,872) | (77.2%) | $(2,091) | $(2,206) | (5.2%) | | **Net investment gains (losses)** | **$227** | **$3,163** | **(92.8%)** | **$(1,466)** | **$2,895** | **(150.6%)** | - Consolidated other income (expense) **decreased by $1.51 million (71.5%)** for the three months and **$8.94 million (147.2%)** for the six months, **primarily due to foreign currency exchange rate losses**, partially offset by a **$2.2 million gain** from the sale of Franklin, TN property and **$1.0 million** from the sale of legal professional liability renewal rights[209](index=209&type=chunk)[50](index=50&type=chunk) [Expenses](index=51&type=section&id=Expenses) The net loss ratio improved due to favorable reserve development, while the underwriting expense ratio increased Consolidated Net Loss Ratios and Prior Accident Year Reserve Development | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (pts) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (pts) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Current accident year net loss ratio | 79.8% | 80.3% | (0.5) | 80.3% | 80.1% | 0.2 | | Calendar year net loss ratio | 68.8% | 77.5% | (8.7) | 74.7% | 78.7% | (4.0) | | Favorable (unfavorable) reserve development, prior accident years (in millions) | $25.6 | $6.5 | $19.1 | $26.5 | $6.9 | $19.6 | - Consolidated net favorable reserve development, excluding purchase accounting amortization, was **largely attributable** to the **MPL** line of business in the **Specialty P&C** segment for accident years 2018-2022[216](index=216&type=chunk) Consolidated Underwriting Expense Ratios | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (pts) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (pts) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Consolidated underwriting expense ratio | 34.8% | 33.4% | 1.4 | 35.0% | 32.6% | 2.4 | | Corporate contribution | 3.8% | 3.6% | 0.2 | 3.6% | 3.5% | 0.1 | - The **increase in consolidated underwriting expense ratios** was **primarily due to transaction-related costs** associated with the proposed merger, which **increased the ratios by 1.7 and 2.5 percentage points** for the three and six months, respectively[217](index=217&type=chunk) [Taxes](index=53&type=section&id=Taxes) The consolidated income tax provision increased, resulting in a higher effective tax rate due to discrete items Consolidated Income Taxes (In thousands) | Item | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Income (loss) before income taxes | $21,103 | $23,246 | (9.2%) | | Income tax expense (benefit) | $5,004 | $3,112 | 60.8% | | Net income (loss) | $16,099 | $20,134 | (20.0%) | | **Effective tax rate** | **23.7%** | **13.4%** | **10.3 pts** | - The **effective tax rate increased by 10.3 percentage points** to **23.7%** for the six months ended **June 30, 2025**, compared to **13.4%** in the prior year[219](index=219&type=chunk) - Discrete items **increased the effective tax rate by 0.9%** for the 2025 six-month period, compared to a **0.7% decrease** in 2024[219](index=219&type=chunk) [Operating Ratio](index=53&type=section&id=Operating%20Ratio) The consolidated operating ratio improved due to favorable reserve development and increased investment income Consolidated Operating Ratios | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (pts) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (pts) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Combined ratio | 103.6% | 110.9% | (7.3) | 109.7% | 111.3% | (1.6) | | Less: investment income ratio | 16.8% | 15.2% | 1.6 | 16.2% | 14.6% | 1.6 | | **Operating ratio** | **86.8%** | **95.7%** | **(8.9)** | **93.5%** | **96.7%** | **(3.2)** | - The **decrease in the operating ratio** was **primarily attributable** to a **(8.2) percentage point impact** from prior accident year reserve development and a **(1.6) percentage point impact** from investment income for the three-month period[220](index=220&type=chunk) - Excluding specific items, the **operating ratios improved by approximately 1.1 and 0.7 percentage points** for the three and six months, respectively, **driven by improved current accident year net loss ratio** in **Workers' Compensation** and a **decrease in estimated ceded premiums** in **Specialty P&C**[221](index=221&type=chunk) [Non-GAAP Financial Measures](index=54&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures provide a clearer view of core operations by excluding non-recurring items, showing improved performance - **Non-GAAP operating income (loss)** excludes items not reflecting normal results, such as net investment gains/losses, transaction-related costs, and foreign currency exchange rate movements, to provide a useful view of core insurance operations[222](index=222&type=chunk)[223](index=223&type=chunk) Reconciliation of Net Income (Loss) to Non-GAAP Operating Income (Loss) (In thousands, except per share data) | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $21,921 | $15,508 | $16,099 | $20,134 | | After-tax effect of exclusions | $4,847 | $(4,569) | $17,478 | $(6,162) | | **Non-GAAP operating income (loss)** | **$26,768** | **$10,939** | **$33,577** | **$13,972** | | Non-GAAP operating income (loss) per diluted common share | $0.52 | $0.21 | $0.65 | $0.27 | - **Non-GAAP operating ROE increased by 4.6 percentage points** for the three months and **2.9 percentage points** for the six months ended **June 30, 2025**, **driven by higher favorable prior accident year reserve development**[232](index=232&type=chunk) Non-GAAP Adjusted Book Value Per Share | Item | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Book Value Per Share | $23.49 | $24.80 | | Less: AOCI Per Share | $(3.37) | $(2.27) | | **Non-GAAP Adjusted Book Value Per Share** | **$26.86** | **$27.07** | - **Non-GAAP adjusted book value per share increased by $0.21** from **December 31, 2024**, to **June 30, 2025**, reflecting net income of **$0.31 per share**, partially offset by share-based compensation and changes in common shares outstanding[236](index=236&type=chunk) [Segment Results - Specialty Property & Casualty](index=58&type=section&id=Segment%20Results%20-%20Specialty%20Property%20%26%20Casualty) The Specialty P&C segment saw decreased net premiums earned but improved results due to favorable loss development [Premiums Written](index=58&type=section&id=Premiums%20Written) Specialty P&C gross and net premiums written decreased due to lower MPL and Medical Technology Liability premiums Specialty P&C Segment Premiums Written (In thousands) | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (%) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross premiums written | $157,610 | $163,176 | (3.4%) | $391,620 | $401,894 | (2.6%) | | Net premiums written | $142,937 | $149,020 | (4.1%) | $356,593 | $367,719 | (3.0%) | - **Gross premiums written decreased by 3.4%** for the three months and **2.6%** for the six months ended **June 30, 2025**, **primarily due to lower Medical Professional Liability (MPL)** and **Medical Technology Liability** premiums[241](index=241&type=chunk)[242](index=242&type=chunk) - **MPL** premium **decreased** for the three-month period due to retention losses and underwriting discipline, partially offset by **increased renewal pricing (11%)** and new business. For the six-month period, **MPL** premium **increased** due to renewal pricing and new business, offset by retention losses[242](index=242&type=chunk) - **Medical Technology Liability** premium **decreased** due to retention losses and reduced renewal pricing. **Lloyd's Syndicates** premium **decreased significantly** due to ceased participation in Syndicate 1729 for the 2024 underwriting year[242](index=242&type=chunk) - The company sold renewal rights for its legal professional liability business for **$1.0 million** on **April 15, 2025**, entering a **100% quota share reinsurance agreement**[242](index=242&type=chunk)[243](index=243&type=chunk) [Ceded Premiums Ratio](index=61&type=section&id=Ceded%20Premiums%20Ratio) The Specialty P&C ceded premiums ratio increased due to higher ceded premiums under reinsurance arrangements Specialty P&C Ceded Premiums Ratio | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (pts) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (pts) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Ceded premiums ratio | 9.3% | 8.7% | 0.6 | 8.9% | 8.5% | 0.4 | | Less the effect of adjustments in premiums owed under reinsurance agreements, prior accident years | (0.7%) | 0.0% | (0.7) | (0.3%) | 0.0% | (0.3) | | **Ratio, current accident year** | **10.0%** | **8.7%** | **1.3** | **9.2%** | **8.5%** | **0.7** | - The current accident year ceded premiums ratio **increased due to higher premiums ceded** under excess of loss reinsurance arrangements, incorporating podiatric and chiropractic policies into the **MPL** treaty, and the **100% quota share reinsurance agreement** for legal professional liability policies[247](index=247&type=chunk) - A **$1.2 million decrease** in the estimate of ceded premiums owed related to prior accident years was recognized during the 2025 three- and six-month periods[246](index=246&type=chunk) [Net Premiums Earned](index=62&type=section&id=Net%20Premiums%20Earned) Specialty P&C net premiums earned decreased due to ceased Syndicate 1729 participation and lower written premium Specialty P&C Net Premiums Earned (In thousands) | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (%) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross premiums earned | $195,172 | $201,693 | (3.2%) | $396,098 | $408,320 | (3.0%) | | Less: Ceded premiums earned | $15,864 | $17,147 | (7.5%) | $33,534 | $34,887 | (3.9%) | | **Net premiums earned** | **$179,308** | **$184,546** | **(2.8%)** | **$362,564** | **$373,433** | **(2.9%)** | - Gross premiums earned **decreased due to ceased participation** in Syndicate 1729 and lower written premium volume from proactive profitability actions[249](index=249&type=chunk) - Ceded premiums earned remained relatively unchanged after removing the **$1.2 million** prior accident year ceded premium adjustment[250](index=250&type=chunk) [Losses and Loss Adjustment Expenses](index=62&type=section&id=Losses%20and%20Loss%20Adjustment%20Expenses) Specialty P&C net loss ratios improved due to significant net favorable prior accident year reserve development Specialty P&C Net Loss Ratios | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (pts) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (pts) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Calendar year net loss ratio | 69.0% | 78.7% | (9.7) | 76.1% | 79.9% | (3.8) | | Current accident year net loss ratio | 82.0% | 82.0% | 0.0 | 82.4% | 81.9% | 0.5 | | Current accident year net loss ratio, excluding prior year ceded premium adjustments | 82.5% | 82.0% | 0.5 | 82.7% | 81.9% | 0.8 | - The calendar year net loss ratio **improved by 9.7 percentage points** for the three months and **3.8 percentage points** for the six months ended **June 30, 2025**[253](index=253&type=chunk) Specialty P&

Core Viewpoint - ProAssurance (PRA) shares have increased by approximately 0.8% since the last earnings report, underperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Earnings Estimates - Analysts have not made any earnings estimate revisions for ProAssurance in the last two months [2] VGM Scores - ProAssurance has a poor Growth Score of F, a Momentum Score of C, and a Value Score of D, placing it in the bottom 40% for the value investment strategy, resulting in an overall aggregate VGM Score of F [3] Outlook - ProAssurance holds a Zacks Rank of 4 (Sell), indicating expectations of below-average returns in the upcoming months [4] Industry Performance - ProAssurance is part of the Zacks Insurance - Property and Casualty industry, where Axis Capital (AXS) has seen a gain of 4.3% over the past month [5] - Axis Capital reported revenues of $1.55 billion for the last quarter, reflecting a year-over-year increase of 8.3%, with EPS rising from $2.57 to $3.17 [5] - For the current quarter, Axis Capital is projected to post earnings of $2.92 per share, showing a slight decline of 0.3% from the previous year, with a Zacks Consensus Estimate change of -0.9% over the last 30 days, resulting in a Zacks Rank of 3 (Hold) and a VGM Score of B [6]

Core Viewpoint - ProAssurance Corporation reported weaker-than-expected first-quarter 2025 results, primarily due to lower premiums in the Specialty P&C segment and Segregated Portfolio Cell Reinsurance unit, although rising investment income and reduced expenses provided some offset [1][2]. Financial Performance - Adjusted operating income for Q1 2025 was 13 cents per share, missing the Zacks Consensus Estimate of 19 cents, but an increase from 6 cents in the prior year [2]. - Operating revenues decreased by 4.3% year over year to $269.8 million, slightly below the consensus mark by 0.3% [2]. - Gross premiums written were $303.8 million, down 2.4% year over year, with net premiums earned falling 3.2% to $236.3 million, missing the consensus estimate of $244.2 million [3]. Investment Income and Expenses - Net investment income rose by 9% year over year to $37 million, exceeding the consensus estimate of $36.9 million [4]. - Total expenses decreased by 0.3% year over year to $278.4 million, although this was higher than the estimate of $265.4 million [4]. Segment Performance - Specialty P&C segment revenues declined by 2.1% year over year to $187 million, but exceeded the Zacks Consensus Estimate of $182.2 million [5]. - Workers' Compensation Insurance segment revenues increased by 0.8% year over year to $41.9 million, surpassing the consensus estimate of $41.8 million [7]. - Segregated Portfolio Cell Reinsurance segment gross premiums written fell by 20% year over year to $12.7 million, missing the estimate of $13.9 million [9]. Financial Position - As of March 31, 2025, ProAssurance had cash and cash equivalents of $43.5 million, down from $54.9 million at the end of 2024 [12]. - Total investments increased by 0.5% to $4.4 billion, while total assets decreased to $5.5 billion from $5.6 billion at the end of 2024 [12]. - Total shareholders' equity rose by 2.6% to $1.2 billion, with book value per share increasing to $24.05 from $23.49 [13]. Share Repurchase Update - No common shares were repurchased in the first quarter of 2025, with a remaining capacity of $55.9 million available for future repurchases or debt retirement [14].

Core Insights - ProAssurance reported quarterly earnings of $0.13 per share, missing the Zacks Consensus Estimate of $0.19 per share, but showing an improvement from $0.08 per share a year ago, resulting in an earnings surprise of -31.58% [1] - The company posted revenues of $269.76 million for the quarter, which was 0.33% below the Zacks Consensus Estimate and down from $282 million year-over-year [2] - ProAssurance shares have increased by approximately 44.4% since the beginning of the year, contrasting with a -3.9% decline in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.20, with expected revenues of $270.08 million, and for the current fiscal year, the EPS estimate is $0.92 on revenues of $1.08 billion [7] - The estimate revisions trend for ProAssurance is currently favorable, leading to a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Insurance - Property and Casualty industry is ranked in the top 17% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Preliminary Information [Cover Page & Filing Information](index=1&type=section&id=Cover%20Page%20%26%20Filing%20Information) Identifies ProAssurance Corporation's Form 10-Q filing for Q1 2025, status as a large accelerated filer on NYSE - The registrant is **ProAssurance Corporation**, filing a **Form 10-Q** for the quarterly period ended **March 31, 2025**[2](index=2&type=chunk)[6](index=6&type=chunk) - The company's common stock is registered on the **New York Stock Exchange** under the trading symbol **PRA**[4](index=4&type=chunk) - ProAssurance Corporation is classified as a **large accelerated filer** and is not a shell company[5](index=5&type=chunk) Common Stock Outstanding as of May 1, 2025 | Shares Outstanding | | :----------------- | | 51,292,333 | [Glossary of Terms and Acronyms](index=2&type=section&id=Glossary%20of%20Terms%20and%20Acronyms) Defines key financial, regulatory, and insurance-specific terms and acronyms used throughout the report for clarity - The glossary defines various terms and acronyms, including financial (e.g., **AOCI, GAAP, ROE**), regulatory (e.g., **SEC, FASB, PCAOB**), and insurance-specific (e.g., **MPL, Specialty P&C, ULAE**) terminology[9](index=9&type=chunk)[10](index=10&type=chunk) [Caution Regarding Forward-Looking Statements](index=4&type=section&id=Caution%20Regarding%20Forward-Looking%20Statements) Disclaims forward-looking statements, outlining risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are based on estimates and anticipation of future events and are subject to **significant risks, assumptions, and uncertainties**[11](index=11&type=chunk) - Key factors that could cause material differences include **changes in economic conditions, regulatory actions, tort reforms, interest/tax rates, financial market performance, and the proposed merger with The Doctors Company**[13](index=13&type=chunk)[16](index=16&type=chunk) - The company cautions readers **not to place undue reliance** on forward-looking statements and does not undertake to publicly release revisions unless required by law[15](index=15&type=chunk) PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) [Condensed Consolidated Balance Sheets (Unaudited)](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS%20(UNAUDITED)%20-%20MARCH%2031%2C%202025%20AND%20DECEMBER%2031%2C%202024) Presents the company's financial position, showing slight asset/liability decreases and increased shareholders' equity in Q1 2025 Consolidated Balance Sheet Highlights (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | Total Assets | $5,526,020 | $5,574,273 | | Total Liabilities | $4,292,400 | $4,372,524 | | Total Shareholders' Equity | $1,233,620 | $1,201,749 | | Reserve for Losses and Loss Adjustment Expenses | $3,180,767 | $3,257,696 | | Unearned Premiums | $463,694 | $418,756 | [Condensed Consolidated Statements of Changes in Capital (Unaudited)](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20CAPITAL%20(UNAUDITED)%20-%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202025%20AND%202024) Outlines changes in shareholders' equity, reflecting a Q1 2025 net loss but an overall increase due to comprehensive income Changes in Capital Highlights (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :------------- | :---------------- | | Balance, Beginning of Period | $1,201,749 | $1,111,980 | | Net Income (Loss) | $(5,822) | $4,626 | | Other Comprehensive Income (Loss) | $37,533 | $(2,472) | | Balance, End of Period | $1,233,620 | $1,113,065 | [Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20AND%20COMPREHENSIVE%20INCOME%20(UNAUDITED)%20-%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202025%20AND%202024) Reports a Q1 2025 net loss, a decline from Q1 2024, driven by lower revenues and higher expenses despite reduced loss costs Consolidated Income Statement Highlights (in thousands, except per share data) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net Premiums Earned | $236,275 | $244,150 | | Net Investment Income | $36,951 | $33,897 | | Total Revenues | $272,079 | $284,697 | | Net Losses and Loss Adjustment Expenses | $189,960 | $194,694 | | Total Expenses | $278,411 | $279,379 | | Net Income (Loss) | $(5,822) | $4,626 | | Basic Earnings (Loss) Per Share | $(0.11) | $0.09 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(UNAUDITED)%20-%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202025%20AND%202024) Details cash flows: stable operations, decreased investing, increased financing usage, leading to lower cash equivalents in Q1 2025 Consolidated Cash Flow Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net Cash Provided (Used) by Operating Activities | $(11,609) | $(11,649) | | Net Cash Provided (Used) by Investing Activities | $4,110 | $12,120 | | Net Cash Provided (Used) by Financing Activities | $(3,841) | $(969) | | Increase (Decrease) in Cash and Cash Equivalents | $(11,340) | $(498) | | Cash and Cash Equivalents at End of Period | $43,541 | $65,400 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=12&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) [Basis of Presentation](index=12&type=section&id=BASIS%20OF%20PRESENTATION) Details GAAP-compliant financial statement preparation, consolidation principles, segment reorganization, proposed merger, and asset disposal - The financial statements are prepared in accordance with **GAAP** for interim information and include ProAssurance Corporation, its wholly-owned subsidiaries, and VIEs where it is the primary beneficiary[30](index=30&type=chunk) - A segment reorganization occurred in Q1 2025, recasting prior period segment information to conform to the current reporting structure, with **no impact on consolidated financial results**[32](index=32&type=chunk)[143](index=143&type=chunk) - ProAssurance entered into a Merger Agreement with The Doctors Company on March 19, 2025, under which ProAssurance will become a wholly-owned subsidiary, with each common stock share converting to **$25.00 cash**. The merger is expected to close in the **first half of 2026**[41](index=41&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk) - Pre-tax transaction-related costs of approximately **$7.1 million** were incurred in Q1 2025 due to the proposed merger[44](index=44&type=chunk) - The company sold its Franklin, TN property in Q1 2025, recognizing a gain of **$2.2 million**[46](index=46&type=chunk) [Fair Value Measurement](index=14&type=section&id=FAIR%20VALUE%20MEASUREMENT) Details fair value measurements for assets/liabilities using a three-level hierarchy, including Level 3 valuations and unfunded commitments - Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction, categorized into **Level 1** (quoted prices), **Level 2** (observable inputs), and **Level 3** (unobservable inputs)[48](index=48&type=chunk)[50](index=50&type=chunk) Total Assets at Fair Value (in thousands) | Period | Total Assets at Fair Value | | :---------------- | :------------------------- | | March 31, 2025 | $4,272,689 | | December 31, 2024 | $4,254,884 | Level 3 Fair Value Measurements - Assets (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :------------- | :---------------- | | Corporate debt, limited observable inputs | $68,947 | $81,062 | | Asset-backed Securities | $4,573 | $3,774 | | Equity investments | $4,817 | $5,506 | | Other investments | $1,021 | $500 | | Total Level 3 Assets | $79,358 | $90,842 | Unfunded Contractual Commitments for Investments Carried at NAV (in thousands) | Investment Type | March 31, 2025 Unfunded Commitment | | :-------------------------------- | :--------------------------------- | | Private debt funds | $3,911 | | Non-public equity funds | $32,074 | | Credit funds | $30,093 | | Strategy focused funds | $65,783 | | Total investments carried at NAV | $223,317 | [Investments](index=20&type=section&id=INVESTMENTS) Breaks down the investment portfolio, highlighting unrealized losses, credit loss allowances, and components of investment income/gains Total Investments (in thousands) | Period | Total Investments | | :---------------- | :---------------- | | March 31, 2025 | $4,388,982 | | December 31, 2024 | $4,367,427 | Available-for-Sale Fixed Maturities (in thousands) as of March 31, 2025 | Item | Amortized Cost | Estimated Fair Value | Gross Unrealized Losses | | :--------------------------------- | :------------- | :------------------- | :---------------------- | | U.S. Treasury obligations | $259,819 | $250,362 | $9,987 | | Corporate debt | $1,846,009 | $1,759,254 | $89,920 | | Total Fixed Maturities, Available-for-Sale | $3,840,973 | $3,663,483 | $190,574 | Net Investment Income (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Fixed maturities | $35,033 | $31,451 | | Short-term investments | $2,574 | $3,411 | | Net Investment Income | $36,951 | $33,897 | Net Investment Gains (Losses) (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net impairment losses recognized in earnings | $(257) | $(934) | | Other net investment gains (losses) | $(1,436) | $666 | | Net Investment Gains (Losses) | $(1,693) | $(268) | - The allowance for expected credit losses on available-for-sale fixed maturities increased to **$3,656 thousand** as of March 31, 2025, from $3,399 thousand at December 31, 2024[94](index=94&type=chunk) - Credit-related impairment losses of **$0.3 million** were recognized in Q1 2025, primarily from four corporate bonds in the real estate sector[102](index=102&type=chunk) [Income Taxes](index=26&type=section&id=INCOME%20TAXES) Explains income tax provision using the effective tax rate method and factors causing deviations from the statutory rate - The company utilizes the estimated annual effective tax rate method for interim periods, considering unusual or infrequent items as discrete[106](index=106&type=chunk) Total Income Tax Expense (Benefit) (in thousands) | Period | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------- | :-------------------------------- | :-------------------------------- | | Income Tax Expense (Benefit) | $(510) | $692 | - The difference from the statutory federal income tax rate in Q1 2025 was primarily due to **executive compensation exceeding statutory limitations**, while in Q1 2024 it was due to the estimated tax rate differential[107](index=107&type=chunk) [Reserve for Losses and Loss Adjustment Expenses](index=26&type=section&id=RESERVE%20FOR%20LOSSES%20AND%20LOSS%20ADJUSTMENT%20EXPENSES) Details loss reserve estimation methodology, claim resolution periods, and reserve activity, including favorable prior year development - Loss reserves are established based on estimates of individual claims and actuarially determined future losses, considering past experience, industry data, and trends[109](index=109&type=chunk) Reserve for Losses and Loss Adjustment Expenses Activity (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Balance, Beginning of Year | $3,257,696 | $3,401,281 | | Net Losses and Loss Adjustment Expenses | $189,960 | $194,694 | | Net Favorable Prior Year Reserve Development | $(892) | $(416) | | Balance, End of Period | $3,180,767 | $3,382,512 | - Consolidated net favorable prior year reserve development of **$1.0 million** in Workers' Compensation and **$0.4 million** in Segregated Portfolio Cell Reinsurance was partially offset by **$0.5 million** unfavorable development in Specialty P&C (Lloyd's Syndicates) in Q1 2025[113](index=113&type=chunk) [Commitments and Contingencies](index=28&type=section&id=COMMITMENTS%20AND%20CONTINGENCIES) Outlines legal actions considered in loss reserving and discloses significant funding commitments for non-public investment entities - ProAssurance is involved in various legal actions related to insurance policies and claims handling, which are considered in the loss reserving process[115](index=115&type=chunk) - As of March 31, 2025, there were **no material reserves** established for corporate legal actions[115](index=115&type=chunk) Funding Commitments (in thousands) | Item | March 31, 2025 | | :------------------------------------ | :------------- | | Funding commitments to non-public investment entities | $222,400 | [Debt](index=28&type=section&id=DEBT) Details outstanding debt (Contribution Certificates, Revolving Credit, Term Loan) and confirms compliance with all debt covenants Outstanding Debt (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Contribution Certificates | $181,488 | $181,163 | | Revolving Credit Agreement| $125,000 | $125,000 | | Term Loan | $118,750 | $120,313 | | Total Principal | $425,238 | $426,476 | - The company was in compliance with all covenants of the Revolving Credit Agreement as of March 31, 2025[118](index=118&type=chunk) [Derivatives](index=28&type=section&id=DERIVATIVES) Describes derivative use: interest rate swaps for debt risk and foreign currency forwards for exchange exposure on loss reserves - ProAssurance uses two forward-starting interest rate swap agreements to fix the base rate on borrowings under its Revolving Credit Agreement (**3.187%**) and Term Loan (**3.207%**)[121](index=121&type=chunk)[123](index=123&type=chunk) - Foreign currency forward contracts are utilized as economic hedges to offset fluctuations in exchange rates related to foreign currency denominated loss reserves[125](index=125&type=chunk) Derivative Instruments Fair Value (in thousands) | Derivative Instrument | March 31, 2025 Estimated Fair Value | December 31, 2024 Estimated Fair Value | | :-------------------- | :---------------------------------- | :----------------------------------- | | Interest Rate Swaps | $3,035 | $5,801 | | Foreign Currency Forwards | $(1,446) | $293 | - A gain of **$548 thousand** on Interest Rate Swaps was reclassified from AOCI to earnings in Q1 2025[127](index=127&type=chunk) [Shareholders' Equity](index=30&type=section&id=SHAREHOLDERS'%20EQUITY) Provides details on common/preferred stock, share repurchase authorizations, and a breakdown of AOCI and its changes - As of March 31, 2025, **$55.9 million** remained available for common share repurchases or debt retirement under Board authorizations; no common shares were repurchased in Q1 2025 or Q1 2024[132](index=132&type=chunk) Accumulated Other Comprehensive Income (Loss) (AOCI) (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | Balance, End of Period | $(134,858) | $(172,391) | | Net OCI, Current Period | $37,533 | $(2,472) | [Variable Interest Entities](index=31&type=section&id=VARIABLE%20INTEREST%20ENTITIES) Discusses passive interests in VIEs and ProAssurance's consolidation of PPM RRG as its primary beneficiary - ProAssurance holds passive interests in VIEs, primarily LPs/LLCs, totaling **$231.8 million** at March 31, 2025, where it is not the primary beneficiary and thus does not consolidate them[137](index=137&type=chunk) - ProAssurance is the primary beneficiary of **PPM RRG**, managing its business operations and controlling its Board, leading to its consolidation[138](index=138&type=chunk) - Approximately **$139 million** of ProAssurance's assets and liabilities on the Condensed Consolidated Balance Sheet were related to PPM RRG as of March 31, 2025[138](index=138&type=chunk) [Earnings (Loss) Per Share](index=31&type=section&id=EARNINGS%20(LOSS)%20PER%20SHARE) Reconciles basic and diluted weighted average common shares, noting antidilutive incremental share equivalents in Q1 2025 Earnings (Loss) Per Share (in thousands, except per share data) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Basic Earnings (Loss) Per Share | $(0.11) | $0.09 | | Diluted Earnings (Loss) Per Share | $(0.11) | $0.09 | | Weighted Average Number of Common Shares Outstanding, Basic | 51,188 | 51,013 | - All incremental common share equivalents were excluded from the computation of diluted loss per share for Q1 2025 because their effect would have been **antidilutive**[141](index=141&type=chunk) [Segment Information](index=32&type=section&id=SEGMENT%20INFORMATION) Describes four reportable segments, details a Q1 2025 reorganization, and explains performance evaluation for each segment - ProAssurance operates in four reportable segments: **Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, and Corporate**[144](index=144&type=chunk) - A segment reorganization in Q1 2025 moved results of coverage processed through IAO, Inc. d/b/a ProAssurance Agency to the **Specialty P&C segment** from Corporate, with prior periods recast[143](index=143&type=chunk) - Performance of Specialty P&C and Workers' Compensation is evaluated based on before-tax underwriting profit/loss and net loss/underwriting expense ratios[145](index=145&type=chunk) Segment Net Premiums Earned (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Specialty P&C | $183,254 | $188,888 | | Workers' Compensation Insurance | $41,524 | $41,094 | | Segregated Portfolio Cell Reinsurance | $11,497 | $14,168 | | Consolidated Total | $236,275 | $244,150 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=35&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) [ProAssurance Overview](index=35&type=section&id=ProAssurance%20Overview) Introduces ProAssurance as a P&C insurance holding company operating in four segments, reiterating the Q1 2025 reorganization - ProAssurance Corporation is a holding company for property and casualty insurance companies, providing **medical professional liability, medical technology liability, and workers' compensation insurance**[154](index=154&type=chunk) - The company operates in four segments: **Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, and Corporate**[155](index=155&type=chunk) - A segment reorganization in Q1 2025 moved IAO, Inc. d/b/a ProAssurance Agency results to the **Specialty P&C segment** from Corporate, with prior periods recast and **no impact on consolidated financial results**[155](index=155&type=chunk) [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) Identifies critical accounting estimates (reserves, reinsurance, investments, income taxes) requiring significant management judgment - Management considers the estimation of **reserves for losses and loss adjustment expenses, reinsurance, valuation of investments and impairment of securities, and income taxes** as critical accounting estimates[159](index=159&type=chunk) - These estimates are evaluated on an ongoing basis, considering current and historical developments, market conditions, and industry trends[157](index=157&type=chunk) [Liquidity and Capital Resources and Financial Condition](index=35&type=section&id=Liquidity%20and%20Capital%20Resources%20and%20Financial%20Condition) [Overview](index=35&type=section&id=Overview) Details liquidity sources (investment revenues, subsidiary dividends), borrowing capacity, and regulatory dividend payment considerations - The company's principal sources of external revenue are **investment revenues and dividends from operating subsidiaries**[159](index=159&type=chunk) Liquidity and Capital Resources (in millions) | Item | March 31, 2025 | | :------------------------------------ | :------------- | | Cash and liquid investments outside insurance subsidiaries | $86 | | Permitted dividends from insurance subsidiaries (remainder of 2025) | $145 | | Available borrowings under Revolving Credit Agreement | $125 | - Payment of dividends from insurance subsidiaries requires prior notice to state insurance regulators, who may reduce or prevent payments if adverse to surplus[160](index=160&type=chunk) [Cash Flows](index=36&type=section&id=Cash%20Flows) Compares cash flows, showing stable operating, decreased investing, and increased financing usage in Q1 2025 Net Cash Provided (Used) by Activities (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------- | | Operating activities | $(11,609) | $(11,649) | $40 | | Investing activities | $4,110 | $12,120 | $(8,010) | | Financing activities | $(3,841) | $(969) | $(2,872) | - Operating cash flows remained relatively unchanged, driven by increased net premium receipts (**$12.2 million**) and investment income (**$4.3 million**), partially offset by higher operating expenses (**$27.9 million**)[162](index=162&type=chunk)[163](index=163&type=chunk) [Operating Activities and Related Cash Flows](index=36&type=section&id=Operating%20Activities%20and%20Related%20Cash%20Flows) Details reinsurance use for risk management and updates on tax matters, including an ERC refund and NOL carryforwards - Reinsurance is used in Specialty P&C and Workers' Compensation segments to provide capacity, reimburse for losses, protect against excess losses, stabilize underwriting results, and increase underwriting capacity[164](index=164&type=chunk) - NORCAL received a **$4.4 million** payroll tax refund (including **$0.6 million** interest) in April 2025, related to the Employee Retention Credit (ERC) for eligible wages paid in 2020[173](index=173&type=chunk) - The company has approximately **$18.9 million** in U.S. federal Net Operating Loss (NOL) carryforwards as of March 31, 2025, subject to Internal Revenue Code Section 382 limitations[175](index=175&type=chunk) [Investing Activities and Related Cash Flows](index=40&type=section&id=Investing%20Activities%20and%20Related%20Cash%20Flows) Outlines investment portfolio composition, credit quality, liquidity strategies, and unfunded commitments for investment funds Investment Portfolio Composition (in thousands) as of March 31, 2025 | Investment Type | Carrying Value | % of Total Investment | | :-------------------------------- | :------------- | :-------------------- | | Fixed maturities, available-for-sale | $3,663,483 | 83% | | Fixed maturities, trading | $16,182 | 1% | | Equity investments | $120,072 | 2% | | Short-term investments | $244,041 | 5% | | Investment in unconsolidated subsidiaries | $256,606 | 6% | | Total Investments | $4,388,982 | 100% | - Approximately **93%** of the company's fixed maturities were investment grade securities as of March 31, 2025, with an average rating of **A+**[177](index=177&type=chunk)[181](index=181&type=chunk) - The weighted average effective duration of fixed maturity securities was **3.35 years** at March 31, 2025[181](index=181&type=chunk) - Funds at Lloyd's (FAL) had a fair value of **$14.3 million** at March 31, 2025, increased in Q1 2025 to support accumulated losses[180](index=180&type=chunk) Unfunded Commitments for Investments (in thousands) as of March 31, 2025 | Investment Type | Unfunded Commitment | | :-------------------------------------------- | :------------------ | | Qualified affordable housing project tax credit partnerships | $67 | | All other investments, primarily investment fund LPs/LLCs | $222,297 | | Total | $222,364 | [Financing Activities and Related Cash Flows](index=42&type=section&id=Financing%20Activities%20and%20Related%20Cash%20Flows) Reviews outstanding debt, interest rate risk management via swaps, and FHLB membership for liquidity access Outstanding Debt Principal (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Contribution Certificates | $181,488 | $181,163 | | Revolving Credit Agreement| $125,000 | $125,000 | | Term Loan | $118,750 | $120,313 | | Total Principal | $425,238 | $426,476 | - The company uses two forward-starting interest rate swap agreements to manage interest rate risk on borrowings under its Revolving Credit Agreement and Term Loan[184](index=184&type=chunk) - Membership in the Federal Home Loan Bank (FHLB) provides access to secured cash advances for liquidity, though not materially utilized for borrowing to date[185](index=185&type=chunk) [Results of Operations – Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024](index=43&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202025%20Compared%20to%20Three%20Months%20Ended%20March%2031%2C%202024) [Executive Summary of Operations](index=44&type=section&id=Executive%20Summary%20of%20Operations) Consolidated overview of Q1 2025 financial performance, highlighting key revenue, expense, and profitability metrics Consolidated Financial Highlights (in thousands, except per share data) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | Net Premiums Earned | $236,275 | $244,150 | $(7,875) | | Net Income (Loss) | $(5,822) | $4,626 | $(10,448) | | Basic Earnings (Loss) Per Share | $(0.11) | $0.09 | $(0.20) | | Combined Ratio | 115.6% | 111.6% | 4.0 pts | | Operating Ratio | 100.0% | 97.7% | 2.3 pts | | Effective Tax Rate | 8.1% | 13.0% | (4.9 pts) | [Revenues](index=44&type=section&id=Revenues) Consolidated revenues decreased in Q1 2025, driven by lower net premiums and foreign currency losses, partially offset by investment income Consolidated Net Premiums Earned (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------- | | Specialty P&C | $183,254 | $188,888 | $(5,634) | | Workers' Compensation Insurance | $41,524 | $41,094 | $430 | | Segregated Portfolio Cell Reinsurance | $11,497 | $14,168 | $(2,671) | | Consolidated total | $236,275 | $244,150 | $(7,875) | - Consolidated net premiums earned decreased by **$7.9 million (3.2%)** in Q1 2025, driven by ceased participation in Lloyd's Syndicate 1729 and non-renewals in the Segregated Portfolio Cell Reinsurance segment[190](index=190&type=chunk)[194](index=194&type=chunk) Consolidated Net Investment Result (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Net Investment Income | $36,951 | $33,897 | $3,054 | | Equity in earnings (loss) of unconsolidated subsidiaries | $4,015 | $2,963 | $1,052 | | Net Investment Result | $40,966 | $36,860 | $4,106 | - Consolidated net investment income increased by **$3.1 million (9.0%)** in Q1 2025, reflecting higher average book yields and increased average investment balances[192](index=192&type=chunk) Consolidated Other Income (Expense) (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | Foreign currency exchange rate gains (losses) | $(7,283) | $1,929 | $(9,212) | | Other | $3,814 | $2,026 | $1,788 | | Other Income (Expense) | $(3,469) | $3,955 | $(7,424) | - Other income (expense) was significantly impacted by foreign currency exchange rate losses of **$7.3 million** in Q1 2025, partially offset by a **$2.2 million** gain from the sale of the Franklin, TN property[197](index=197&type=chunk)[198](index=198&type=chunk) - The company changed its hedging strategy for foreign currency exchange exposures from foreign currency denominated investments to foreign currency forward contracts in Q1 2025[200](index=200&type=chunk) [Expenses](index=46&type=section&id=Expenses) Consolidated expenses increased in Q1 2025, with a higher underwriting expense ratio and slight rise in net loss ratio Consolidated Net Loss Ratios | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------ | | Current accident year net loss ratio | 80.8% | 79.9% | 0.9 pts | | Calendar year net loss ratio | 80.4% | 79.7% | 0.7 pts | Consolidated Favorable (Unfavorable) Reserve Development, Prior Accident Years (in millions) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Consolidated | $0.9 | $0.4 | $0.5 | Consolidated Underwriting Expense Ratio | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------ | | Consolidated | 35.2% | 31.9% | 3.3 pts | - The **3.3 percentage point** increase in the consolidated underwriting expense ratio was primarily driven by **$7.1 million** in transaction-related costs associated with the proposed merger and higher incentive-based compensation[206](index=206&type=chunk) [Taxes](index=48&type=section&id=Taxes) Recognized an income tax benefit in Q1 2025, contrasting with an expense in Q1 2024, impacted by a pre-tax loss Consolidated Income Tax Expense (Benefit) (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | Income (loss) before income taxes | $(6,332) | $5,318 | $(11,650) | | Income tax expense (benefit) | $(510) | $692 | $(1,202) | | Effective tax rate | 8.1% | 13.0% | (4.9 pts) | - The effective tax rate was **8.1%** in Q1 2025, down from **13.0%** in Q1 2024, primarily due to the consolidated pre-tax loss in the current period[207](index=207&type=chunk) - Projected annual effective tax rates were **22.0%** for Q1 2025 and **17.3%** for Q1 2024, before considering discrete items[207](index=207&type=chunk) [Operating Ratio](index=48&type=section&id=Operating%20Ratio) Consolidated operating ratio increased in Q1 2025, reflecting underwriting profitability and investment income, driven by transaction costs Consolidated Operating Ratio | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------ | | Combined ratio | 115.6% | 111.6% | 4.0 pts | | Less: investment income ratio | 15.6% | 13.9% | 1.7 pts | | Operating ratio | 100.0% | 97.7% | 2.3 pts | - The **2.3 percentage point** increase in the operating ratio was primarily attributable to transaction-related costs (**3.0 pts**) and non-core operations (**1.2 pts**), partially offset by investment income (**1.7 pts**)[211](index=211&type=chunk) [Non-GAAP Financial Measures](index=49&type=section&id=Non-GAAP%20Financial%20Measures) Defines Non-GAAP operating income, excluding non-normal items like investment gains/losses and transaction costs, for core operations Reconciliation of Net Income (Loss) to Non-GAAP Operating Income (Loss) (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net Income (Loss) | $(5,822) | $4,626 | | Pre-tax effect of exclusions | $14,711 | $(1,566) | | Non-GAAP Operating Income (Loss) | $6,812 | $3,034 | - Key exclusions from Non-GAAP operating income in Q1 2025 included net investment gains (losses) (**$1.7 million**), transaction-related costs (**$7.1 million**), foreign currency exchange rate losses (**$7.3 million**), and non-operating income (gain on property sale of **$2.2 million**)[213](index=213&type=chunk) [Non-GAAP Adjusted Key Ratios](index=51&type=section&id=Non-GAAP%20Adjusted%20Key%20Ratios) Presents consolidated and Specialty P&C adjusted ratios, offering a clearer view of core insurance operations performance Consolidated Non-GAAP Adjusted Key Ratios | Ratio | Q1 2025 As Reported | Q1 2025 Non-GAAP Adjusted | Q1 2024 As Reported | Q1 2024 Non-GAAP Adjusted | | :------------------------------------ | :------------------ | :------------------------ | :------------------ | :------------------------ | | Combined ratio | 115.6% | 112.2% | 111.6% | 112.5% | | Operating ratio | 100.0% | 96.4% | 97.7% | 98.2% | - Non-core operations, including Lloyd's Syndicates, contributed an underwriting loss of **$1.4 million** in Q1 2025, compared to underwriting income of **$0.9 million** in Q1 2024[215](index=215&type=chunk) [Non-GAAP Operating ROE](index=51&type=section&id=Non-GAAP%20Operating%20ROE) Non-GAAP operating ROE increased in Q1 2025, indicating improved after-tax profitability and capital efficiency of core operations Non-GAAP Operating ROE | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | ROE | (1.9%) | 1.7% | (3.6 pts) | | Non-GAAP Operating ROE | 2.2% | 1.1% | 1.1 pts | - The **1.1 percentage point** increase in Non-GAAP operating ROE was driven by a higher net investment result and an improvement in the current accident year net loss ratio in the Workers' Compensation Insurance segment[219](index=219&type=chunk) [Non-GAAP Adjusted Book Value per Share](index=52&type=section&id=Non-GAAP%20Adjusted%20Book%20Value%20per%20Share) Non-GAAP adjusted book value per share, which excludes AOCI to remove interest rate volatility, decreased slightly in Q1 2025, while GAAP book value per share increased due to unrealized holding gains on fixed income investments Book Value Per Share (GAAP and Non-GAAP) | Item | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | Book Value Per Share | $24.05 | $23.49 | | Non-GAAP Adjusted Book Value Per Share| $26.68 | $26.86 | - Book value per share increased by **$0.56**, primarily due to a **$0.74 per share** change in AOCI from unrealized holding gains on the fixed income investment portfolio[222](index=222&type=chunk) - Non-GAAP adjusted book value per share decreased by **$0.18**, reflecting the net loss recognized in Q1 2025 and the impact of share-based compensation[223](index=223&type=chunk) [Segment Results - Specialty Property & Casualty](index=53&type=section&id=Segment%20Results%20-%20Specialty%20Property%20%26%20Casualty) Specialty P&C saw decreased net premiums and higher net loss ratio in Q1 2025, due to Lloyd's exit and catastrophe losses Specialty P&C Segment Financial Highlights (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------ | | Net Premiums Written | $213,656 | $218,699 | (2.3%) | | Net Premiums Earned | $183,254 | $188,888 | (3.0%) | | Net Loss Ratio | 83.1% | 81.0% | 2.1 pts | | Underwriting Expense Ratio | 26.5% | 27.2% | (0.7 pts) | [Premiums Written](index=53&type=section&id=Premiums%20Written) Gross premiums written decreased due to Lloyd's exit and Medical Technology Liability decline, offset by MPL growth Specialty P&C Gross Premiums Written by Component (in thousands) | Component | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :---------------------------- | :-------------------------------- | :-------------------------------- | :------ | | Medical Professional Liability| $221,533 | $218,966 | 1.2% | | Medical Technology Liability | $8,217 | $9,419 | (12.8%) | | Lloyd's Syndicates | $129 | $3,710 | (96.5%) | | Total Gross Premiums Written | $234,012 | $238,718 | (2.0%) | - The increase in Medical Professional Liability premium was driven by **renewal pricing increases** and **new business**, partially offset by retention losses in a competitive market[229](index=229&type=chunk) - Lloyd's Syndicates premium decreased significantly due to the company's ceased participation in Syndicate 1729 for the 2024 underwriting year[229](index=229&type=chunk) - The company sold the renewal rights related to its legal professional liability book of business in April 2025 for approximately **$1.0 million**[229](index=229&type=chunk) Specialty P&C New Business, Retention, and Renewal Pricing | Item | Q1 2025 MPL | Q1 2025 Med Tech Liability | Q1 2025 Other | Q1 2025 Segment | Q1 2024 MPL | Q1 2024 Med Tech Liability | Q1 2024 Other | Q1 2024 Segment | | :------------------------ | :---------- | :------------------------- | :------------ | :-------------- | :---------- | :------------------------- | :------------ | :-------------- | | New business (in millions)| $6.0 | $0.4 | $0.1 | $6.5 | $9.3 | $0.9 | $0.2 | $10.4 | | Retention rate | 85% | 86% | 58% | 84% | 86% | 94% | 78% | 86% | | Change in renewal pricing | 9% | 5% | 3% | 8% | 8% | 1% | 2% | 7% | [Ceded Premiums Ratio](index=55&type=section&id=Ceded%20Premiums%20Ratio) Ceded premiums ratio increased in Q1 2025, driven by higher premiums ceded under excess of loss reinsurance arrangements Specialty P&C Ceded Premiums Ratio | Period | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------ | :-------------------------------- | :-------------------------------- | :------ | | Ceded premiums ratio | 8.7% | 8.4% | 0.3 pts | - The increase was driven by higher premiums ceded under excess of loss reinsurance arrangements, primarily due to the incorporation of **podiatric and chiropractic policies** into the MPL treaty[233](index=233&type=chunk) [Net Premiums Earned](index=55&type=section&id=Net%20Premiums%20Earned) Net premiums earned decreased in Q1 2025, mainly due to ceased participation in Syndicate 1729 and reduced written premium Specialty P&C Net Premiums Earned (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------ | :-------------------------------- | :-------------------------------- | :------ | | Gross premiums earned | $200,926 | $206,627 | (2.8%) | | Less: Ceded premiums earned | $17,672 | $17,739 | (0.4%) | | Net premiums earned | $183,254 | $188,888 | (3.0%) | - The decrease was driven by ceased participation in Syndicate 1729 for the 2024 underwriting year and a pro rata effect of decreased written premium volume[235](index=235&type=chunk) [Losses and Loss Adjustment Expenses](index=56&type=section&id=Losses%20and%20Loss%20Adjustment%20Expenses) Calendar year net loss ratio increased in Q1 2025 due to Lloyd's operations and recognized net unfavorable prior year development Specialty P&C Net Loss Ratios | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------ | | Calendar year net loss ratio | 83.1% | 81.0% | 2.1 pts | | Current accident year net loss ratio | 82.8% | 81.7% | 1.1 pts | Specialty P&C Net Favorable (Unfavorable) Prior Accident Year Reserve Development (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | Total net favorable (unfavorable) reserve development | $(452) | $1,251 | $(1,703) | - The increase in the current accident year net loss ratio was largely due to losses incurred from **Lloyd's Syndicates operations**, which is in run-off[241](index=241&type=chunk) - Net unfavorable reserve development was driven by higher than expected losses and development on certain large claims, primarily **catastrophe-related losses**, from discontinued Lloyd's Syndicates operations[244](index=244&type=chunk) [Underwriting, Policy Acquisition and Operating Expenses](index=58&type=section&id=Underwriting%2C%20Policy%20Acquisition%20and%20Operating%20Expenses) Underwriting, policy acquisition, and operating expenses for the Specialty P&C segment decreased in Q1 2025, primarily due to lower DPAC amortization and reduced professional fees, partially offset by higher incentive-based compensation Specialty P&C Underwriting, Policy Acquisition and Operating Expenses (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------ | | DPAC amortization | $24,533 | $25,843 | (5.1%) | | Other underwriting and operating expenses | $22,973 | $24,344 | (5.6%) | | Total | $48,635 | $51,332 | (5.3%) | - DPAC amortization decreased primarily due to lower agent commissions, while other underwriting and operating expenses decreased due to lower professional fees and reduced share of Syndicate 1729's operating expenses[245](index=245&type=chunk)[247](index=247&type=chunk) [Underwriting Expense Ratio (the Expense Ratio)](index=58&type=section&id=Underwriting%20Expense%20Ratio%20(the%20Expense%20Ratio)) Underwriting expense ratio decreased slightly in Q1 2025, influenced by tail premium and changes in net premiums earned Specialty P&C Underwriting Expense Ratio | Period | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | Underwriting expense ratio| 26.5% | 27.2% | (0.7 pts) | - The decrease was attributable to the impact of **tail premium (0.7 pts)** and changes in net premiums earned and DPAC amortization (**0.3 pts**)[248](index=248&type=chunk) [Segment Results - Workers' Compensation Insurance](index=59&type=section&id=Segment%20Results%20-%20Workers'%20Compensation%20Insurance) Workers' Comp segment reported increased net premiums written and earned, an improved net loss ratio, and favorable prior year development in Q1 2025 Workers' Compensation Insurance Segment Financial Highlights (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | Net Premiums Written | $51,606 | $50,353 | 2.5% | | Net Premiums Earned | $41,524 | $41,094 | 1.0% | | Net Loss Ratio | 72.6% | 77.0% | (4.4 pts) | | Underwriting Expense Ratio | 37.6% | 35.3% | 2.3 pts | | Segment Results | $(3,842) | $(4,555) | 15.7% | [Premiums Written](index=59&type=section&id=Premiums%20Written) Gross premiums written decreased due to lower new business and alternative market, despite increased renewal premium for traditional business Workers' Compensation Insurance Gross Premiums Written by Product (in thousands) | Product | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :---------------------------- | :-------------------------------- | :-------------------------------- | :------ | | Total traditional business | $53,724 | $53,640 | 0.2% | | Alternative market business | $16,085 | $18,975 | (15.2%) | | Total Gross Premiums Written | $69,809 | $72,615 | (3.9%) | - Gross premiums written remained relatively unchanged, as an increase in renewal premium (including **$1.3 million** from programs previously in Segregated Portfolio Cell Reinsurance) was offset by lower new business[251](index=251&type=chunk) - Two agency-owned alternative market programs were non-renewed and placed in run-off effective January 1, 2025[251](index=251&type=chunk) Workers' Compensation New Business, Audit Premium, Retention, and Renewal Pricing | Item | Q1 2025 Traditional | Q1 2025 Alternative Market | Q1 2024 Traditional | Q1 2024 Alternative Market | | :------------------------------------ | :------------------ | :------------------------- | :------------------ | :------------------------- | | New business (in millions) | $5.1 | $1.0 | $8.2 | $1.3 | | Audit premium (excluding EBUB) (in millions) | $2.0 | $0.7 | $1.9 | $1.4 | | Retention rate | 89% | 86% | 87% | 75% | | Change in renewal pricing | (3%) | —% | (5%) | (2%) | [Ceded Premiums Written](index=60&type=section&id=Ceded%20Premiums%20Written) Ceded premiums written in the Workers' Compensation Insurance segment decreased in Q1 2025, primarily due to lower premiums ceded to SPCs and external reinsurers, reflecting a reduction in reinstatement premium Workers' Compensation Insurance Ceded Premiums Written (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | Premiums ceded to SPCs | $12,714 | $15,997 | (20.5%) | | Premiums ceded to external reinsurers | $2,118 | $3,287 | (35.6%) | | Total ceded premiums written | $18,203 | $22,262 | (18.2%) | - The decrease in premiums ceded to external reinsurers reflected a **$1.4 million** reduction in reinstatement premium related to a large 2021 accident year claim reserve decrease[253](index=253&type=chunk) [Ceded Premiums Ratio](index=60&type=section&id=Ceded%20Premiums%20Ratio) Ceded premiums ratio decreased in Q1 2025, primarily due to a reduction in reinstatement premium, despite a higher average reinsurance rate Workers' Compensation Insurance Ceded Premiums Ratio | Period | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------- | | Ceded premiums ratio, as reported | 28.4% | 33.2% | (4.8 pts) | - The decrease was driven by lower ceded premium related to a **$1.4 million** reduction in reinstatement premium, partially offset by a higher average reinsurance rate[254](index=254&type=chunk) [Net Premiums Earned](index=61&type=section&id=Net%20Premiums%20Earned) Net premiums earned in the Workers' Compensation Insurance segment increased in Q1 2025, primarily due to lower ceded premiums earned, partially offset by a decrease in written premium volume Workers' Compensation Insurance Net Premiums Earned (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------ | :-------------------------------- | :-------------------------------- | :------ | | Gross premiums earned | $57,976 | $61,539 | (5.8%) | | Less: Ceded premiums earned | $16,452 | $20,445 | (19.5%) | | Net premiums earned | $41,524 | $41,094 | 1.0% | - The increase was primarily driven by lower ceded premiums earned related to a **$1.4 million** reduction in reinstatement premium[256](index=256&type=chunk) [Losses and Loss Adjustment Expenses](index=61&type=section&id=Losses%20and%20Loss%20Adjustment%20Expenses) Current accident year net loss ratio improved in Q1 2025, reflecting cost control, and recognized $1.0 million favorable prior year development Workers' Compensation Insurance Net Loss Ratios | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | Calendar year net loss ratio | 72.6% | 77.0% | (4.4 pts) | | Current accident year net loss ratio | 75.0% | 77.0% | (2.0 pts) | - The current accident year net loss ratio improved by **2.0 percentage points**, expected to be favorably impacted by cost control initiatives implemented in Q1 2025[257](index=257&type=chunk) - Net favorable prior accident year reserve development of **$1.0 million** was recognized, reflecting a large claim reserve reduction from the 2021 accident year[258](index=258&type=chunk) [Underwriting, Policy Acquisition and Operating Expenses](index=61&type=section&id=Underwriting%2C%20Policy%20Acquisition%20and%20Operating%20Expenses) Underwriting, policy acquisition, and operating expenses for the Workers' Compensation Insurance segment increased in Q1 2025, primarily due to higher premium write-offs and information technology costs, partially offset by a decrease in SPC ceding commissions Workers' Compensation Insurance Underwriting, Policy Acquisition and Operating Expenses (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | DPAC amortization | $7,387 | $7,380 | 0.1% | | Other underwriting and operating expenses | $10,557 | $10,051 | 5.0% | | SPC ceding commission offset | $(2,865) | $(3,486) | (17.8%) | | Total | $15,603 | $14,490 | 7.7% | - Other underwriting and operating expenses increased due to higher premium write-offs and information technology costs[260](index=260&type=chunk) - SPC ceding commissions earned decreased, reflecting a reduction in alternative market written premium[260](index=260&type=chunk) [Underwriting Expense Ratio (the Expense Ratio)](index=62&type=section&id=Underwriting%20Expense%20Ratio%20(the%20Expense%20Ratio)) The underwriting expense ratio for the Workers' Compensation Insurance segment increased in Q1 2025, primarily reflecting higher other underwriting and operating expenses Workers' Compensation Insurance Underwriting Expense Ratio | Period | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------ | | Underwriting expense ratio, as reported | 37.6% | 35.3% | 2.3 pts | - Excluding the impact of ceding commissions and audit premium, the expense ratio increased by **2.5 percentage points**, reflecting higher other underwriting and operating expenses[262](index=262&type=chunk) [Segment Results - Segregated Portfolio Cell Reinsurance](index=63&type=section&id=Segment%20Results%20-%20Segregated%20Portfolio%20Cell%20Reinsurance) Segment saw decreased net premiums and results in Q1 2025, due to SPC non-renewals and higher lost-time claim frequency/severity Segregated Portfolio Cell Reinsurance Segment Financial Highlights (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------- | | Net Premiums Written | $10,789 | $13,621 | (20.8%) | | Net Premiums Earned | $11,497 | $14,168 | (18.9%) | | Segment Results | $182 | $531 | (65.7%) | | Net Loss Ratio | 65.8% | 71.0% | (5.2 pts) | | Underwriting Expense Ratio | 36.0% | 33.3% | 2.7 pts | - The segment includes results from **26 SPCs** (eight inactive) at Inova Re and Eastern Re, which are segregated pools of assets and liabilities[261](index=261&type=chunk) [Premiums Written](index=63&type=section&id=Premiums%20Written) Gross premiums written decreased significantly due to reduced workers' comp new business, lower audit premium, and the non-renewal of two agency-owned programs Segregated Portfolio Cell Reinsurance Gross Premiums Written by Component (in thousands) | Component | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :---------------------------- | :-------------------------------- | :-------------------------------- | :------ | | Workers' compensation | $12,714 | $15,997 | (20.5%) | | Medical professional liability| $34 | $(63)

Core Viewpoint - ProAssurance (PRA) is positioned as a strong investment opportunity due to its improving earnings outlook and analysts' increasing earnings estimates [1][2]. Earnings Estimate Revisions - The upward trend in earnings estimate revisions indicates growing analyst optimism regarding ProAssurance's earnings prospects, which is expected to positively impact its stock price [2]. - For the current quarter, ProAssurance is projected to earn $0.19 per share, reflecting a significant increase of +137.5% compared to the same period last year [6]. - The Zacks Consensus Estimate for the current quarter has risen by 6.32% over the last 30 days, with one estimate increasing and no negative revisions [6]. - For the full year, the earnings estimate stands at $0.92 per share, which is a decrease of -3.16% from the previous year [7]. - There has been a positive trend in estimate revisions for the current year, with two estimates moving up and no negative revisions [7]. Zacks Rank and Performance - ProAssurance currently holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts in raising earnings estimates [8]. - The Zacks Rank system has a proven track record, with Zacks 1 Ranked stocks averaging an annual return of +25% since 2008 [3]. - Stocks with Zacks Rank 1 and 2 are shown to significantly outperform the S&P 500 [8]. Stock Performance - ProAssurance's stock has increased by 51.1% over the past four weeks, driven by strong estimate revisions and investor interest [9]. - There is potential for further upside in the stock, suggesting it may be a good addition to investment portfolios [9].