Financial Data and Key Metrics Changes - The consolidated combined ratio increased by about 6 points in Q4 2022 and about 1 point for the full year compared to the same periods in 2021, primarily due to lower prior accident year favorable development and a higher expense ratio [7][38] - Operating income for Q4 2022 was $3.5 million or $0.06 per diluted share, while for the full year it was $24.5 million or $0.45 per share [19] - The consolidated net investment result was $28 million for Q4 and $101 million for the full year, with significant unrealized holding losses of $315 million on the fixed income portfolio for the year [9][35] Business Line Data and Key Metrics Changes - Gross written premium increased to $173 million in Q4 and $807 million for the year, representing a top-line growth of 23% driven primarily by the NORCAL acquisition [11] - The Specialty Property & Casualty segment saw renewal pricing increases of 7% for both the quarter and the full year, with a 9% increase in Q4 and a 10% increase for the year in specialty health care [24] - The Workers' Compensation Insurance segment produced a combined ratio of 99.9% for the year, with gross written premium increasing by 4.5% in Q4 and 2.7% for the full year [47] Market Data and Key Metrics Changes - The medical professional liability loss environment remains challenged due to social inflation and higher-than-anticipated severity trends, although there is below historical frequency in some areas [6] - The company experienced a competitive market environment, particularly in the Specialty P&C segment, which helped maintain premium levels despite challenges [19][41] Company Strategy and Development Direction - The company aims to differentiate itself through outstanding customer service and disciplined underwriting strategies, particularly in the specialty space [6][68] - Management is optimistic about the future, focusing on profitable growth opportunities while navigating challenges such as price decreases and economic inflation [31][68] Management's Comments on Operating Environment and Future Outlook - Management noted that the claims environment is pressured by social inflation and severity trends, with a focus on monitoring these impacts on current loss trends [6] - The company expects net investment income to be significantly higher in 2023 due to reinvestment strategies and higher interest rates [35][39] Other Important Information - The company recognized net favorable prior accident year reserve development of $5 million in Q4 and $37 million for the full year, which was lower than the previous year due to loss severity trends [8][25] - The expense ratio for Q4 was 25.6%, reflecting an increase primarily due to higher policy acquisition costs and lower earned premium [26] Q&A Session Summary Question: Can you discuss your approach to case reserves? - Management emphasized the importance of consistency in establishing initial reserves and adjusting them as more information becomes available, particularly in a heightened claims environment [54] Question: How does the current claims environment compare to previous years? - Management noted that the current environment reflects a continuation of trends observed before COVID, with an increase in large verdicts and heightened jury reactions due to societal tensions [64][66] Question: What is the outlook for growth in the current competitive environment? - Management indicated a focus on maintaining share while navigating cost pressures, with a disciplined approach to underwriting and taking advantage of pricing opportunities as they arise [72]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022, or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . 100 Brookwood Place, Birmingham, AL 35209 (Address of principal executive offices) (Zip Code) (205) 877-4400 (Registrant's telephone number ...

ProAssurance Corporation (NYSE:PRA) Q3 2022 Earnings Conference Call November 10, 2022 10:00 AM ET Company Participants Jason Gingerich - VP, IR Ned Rand - President and CEO Dana Hendricks - CFO Michael Boguski - President, Specialty, Property and Casualty Lines Kevin Shook - President, Worker’s Compensation Insurance Conference Call Participants Paul Newsome - Piper Sandler Operator Ladies and gentlemen, good morning and thank you for attending today ProAssurance Third Quarter 2022 Earnings call. My name i ...

Preliminary Information [Glossary of Terms and Acronyms](index=2&type=section&id=Glossary%20of%20Terms%20and%20Acronyms) This section defines key financial, insurance, and regulatory terms and acronyms for clarity throughout the report - The report includes a comprehensive glossary defining key terms such as **HCPL** (Healthcare professional liability), **IBNR** (Incurred but not reported), and **FAL** (Funds at Lloyd's), which are essential for understanding the company's business[8](index=8&type=chunk)[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) This section warns that forward-looking statements are based on current estimates and actual results may differ due to various risks and uncertainties - Forward-looking statements cover aspects like liquidity, capital requirements, investment performance, premiums, and loss reserves[13](index=13&type=chunk) - Key risk factors that could cause actual results to differ include changes in economic conditions, regulatory actions, tort reforms, interest and tax rate changes, market performance, and uncertainties in loss reserve estimates[14](index=14&type=chunk) - Specific risks related to the company's participation in the Lloyd's market are also highlighted, such as levies by the Council of Lloyd's, rating agency downgrades of Lloyd's, and dependence on a specialized management team[16](index=16&type=chunk) PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents ProAssurance Corporation's unaudited condensed consolidated financial statements for Q3 2022, including balance sheets, income statements, and cash flows, with explanatory notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased from **$6.19 billion** to **$5.78 billion**, primarily due to reduced fixed maturity investments, while shareholders' equity declined significantly Condensed Consolidated Balance Sheet Data (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Investments** | $4,385,507 | $4,828,323 | | **Total Assets** | $5,783,319 | $6,191,477 | | **Total Liabilities** | $4,717,323 | $4,763,090 | | **Total Shareholders' Equity** | $1,065,996 | $1,428,387 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) The company reported a **net loss of $14.3 million** for the nine months ended September 30, 2022, a reversal from prior-year net income, primarily due to net investment losses Income Statement Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net Premiums Earned | $771,337 | $698,598 | | Total Revenues | $811,980 | $811,344 | | Total Expenses | $832,947 | $776,900 | | Gain on Bargain Purchase | $0 | $74,408 | | **Net Income (Loss)** | **($14,344)** | **$111,984** | | **Comprehensive Income (Loss)** | **($354,869)** | **$78,264** | | Diluted EPS | ($0.27) | $2.07 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased to **$6.7 million**, while overall cash and cash equivalents declined by **$102.2 million** for the nine months ended September 30, 2022 Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $6,673 | $69,363 | | Net Cash from Investing Activities | ($91,749) | ($25,531) | | Net Cash from Financing Activities | ($17,154) | ($56,661) | | **Decrease in Cash & Cash Equivalents** | **($102,230)** | **($12,829)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of accounting policies and financial data, covering fair value measurements, investments, loss reserves, and segment information - Beginning in 2022, the company revised its process for estimating Unallocated Loss Adjustment Expenses (ULAE) due to the integration of NORCAL, prospectively increasing operating expenses by **$21.8 million** and decreasing net losses by the same amount, with no impact on total expenses or net income[37](index=37&type=chunk) - The company holds passive interests in various Variable Interest Entities (VIEs), primarily LPs/LLCs, totaling **$276.2 million** at Sep 30, 2022, and has consolidated PPM RRG, acquired with NORCAL, as its primary beneficiary[148](index=148&type=chunk)[149](index=149&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of financial condition and operations, covering critical accounting estimates, liquidity, and detailed results across five business segments [Overview](index=44&type=section&id=MD%26A_Overview) ProAssurance operates across five segments, with critical accounting estimates including loss reserves and investment valuation, and a key 2022 change in ULAE estimation - The company operates in five segments: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Reinsurance, Lloyd's Syndicates, and Corporate[174](index=174&type=chunk) - A change in the estimation of ULAE was implemented in 2022, reclassifying costs from 'net losses and loss adjustment expenses' to 'underwriting, policy acquisition and operating expenses' with no impact on total expenses or net income[179](index=179&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=MD%26A_Liquidity%20and%20Capital%20Resources) ProAssurance's liquidity, primarily from investment revenues, included **$86 million** in cash and liquid investments, while operating cash flow significantly decreased due to higher paid losses and expenses - The holding company held approximately **$86 million** in cash and liquid investments outside of its insurance subsidiaries as of September 30, 2022[181](index=181&type=chunk) - Operating cash flow for the nine months ended Sep 30, 2022, decreased by **$62.7 million** compared to the prior year, mainly due to a **$204.6 million** increase in paid losses and a **$96.9 million** increase in cash paid for operating expenses, largely related to the NORCAL acquisition[195](index=195&type=chunk) - The company has **$250 million** available under its Revolving Credit Agreement, with a potential **$50 million** accordion feature, and no borrowings were outstanding as of November 2, 2022[181](index=181&type=chunk) [Results of Operations](index=54&type=section&id=MD%26A_Results%20of%20Operations) The company reported a **net loss of $14.3 million** for the nine months ended September 30, 2022, with a combined ratio of **105.7%**, influenced by the NORCAL acquisition and investment valuations Consolidated Financial Highlights (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net Premiums Written | $803,055 | $677,527 | | Net Premiums Earned | $771,337 | $698,598 | | Net Losses and LAE | $585,166 | $555,030 | | **Net Income (Loss)** | **($14,344)** | **$111,984** | | Combined Ratio | 105.7% | 108.1% | - Non-GAAP operating income for the nine months ended Sep 30, 2022 was **$21.0 million**, down from **$42.5 million** in the prior year, excluding net investment gains/losses and other non-recurring items like the 2021 gain on bargain purchase[242](index=242&type=chunk) - Book value per share decreased to **$19.75** at Sep 30, 2022 from **$26.46** at year-end 2021, primarily due to a **$6.00 per share** negative impact from Accumulated Other Comprehensive Income (AOCI) driven by unrealized investment losses[247](index=247&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=100&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are interest rate and credit risk, with a **100 bps interest rate increase** projected to decrease fixed maturities fair value from **$3.43 billion** to **$3.31 billion** - The company's primary market risks are identified as **interest rate risk** and **credit risk**[359](index=359&type=chunk) Interest Rate Sensitivity of Available-for-Sale Fixed Maturities (in millions) | Interest Rate Shift | Fair Value at Sep 30, 2022 | | :--- | :--- | | -100 bps | $3,558 | | **Current** | **$3,431** | | +100 bps | $3,309 | | +200 bps | $3,193 | - As of September 30, 2022, **92%** of the company's fixed maturity securities were rated investment grade, which helps mitigate credit risk[369](index=369&type=chunk) [Controls and Procedures](index=103&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no significant changes in internal controls during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[372](index=372&type=chunk) - No significant changes were made to internal controls over financial reporting during the third quarter of 2022[373](index=373&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=103&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 6 for details on legal proceedings, noting that no material reserves were established for corporate legal actions - For information on legal proceedings, the report directs readers to Note 6 of the financial statements[374](index=374&type=chunk) [Risk Factors](index=103&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section states no material changes to risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2021 Form 10-K[375](index=375&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=103&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased **138,980 shares** in July 2022 at **$23.38 per share**, with **$106.4 million** remaining authorized for future repurchases Share Repurchase Activity (Q3 2022) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2022 | 138,980 | $23.38 | | August 2022 | — | N/A | | September 2022 | — | N/A | | **Total** | **138,980** | **$23.38** | - As of September 30, 2022, approximately **$106.4 million** remained authorized for share or debt repurchases under the company's plan, which has no expiration date[376](index=376&type=chunk) [Exhibits](index=104&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including officer certifications and XBRL Interactive Data Files - Filed exhibits include officer certifications pursuant to SEC Rules 13a-14(a) and 13a-14(b), and XBRL data files[378](index=378&type=chunk)

Financial Data and Key Metrics Changes - For Q2 2022, the company reported a net loss of $1.7 million or $0.03 per share, while operating income was $16.3 million or $0.30 per share, with an operating ROE of 5.3%, up about 3 points from Q1 [11][12] - Gross premiums written increased almost 13%, driven by an additional month of NORCAL premium and continued renewal pricing gains [13] - The consolidated combined ratio, excluding transaction-related costs, improved by 2.5 points from Q1 2022 but increased by 3 points compared to Q2 2021 [14] Business Line Data and Key Metrics Changes - The Specialty Property and Casualty segment saw gross written premium increase by 18% to $168 million, primarily due to the NORCAL acquisition and solid renewal price increases [26] - The Workers' Compensation Insurance segment reported a combined ratio of 99.8%, reflecting a decrease in the net loss ratio offset by an increase in the expense ratio [33] - The Lloyd's segment reported a profit in Q2 2022, with participation in Syndicate 1729 continuing at 5% [39] Market Data and Key Metrics Changes - The company noted that the current accident year net loss ratio for the Workers' Compensation segment decreased to 67% in 2022, reflecting a lower current accident year loss ratio [37] - The company recognized $19 million of favorable development in the quarter, primarily from the Specialty P&C segment [17] Company Strategy and Development Direction - The company is focused on integrating the NORCAL acquisition, with significant progress in underwriting and claims areas leading to improved results [7][8] - Management emphasized the importance of continued re-underwriting and prudent expense management across the Specialty P&C segment [25] - The company aims to drive down the expense ratio while improving loss ratios, particularly in the Specialty P&C business [56][58] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding inflation's impact on the business, noting that jury behavior and social inflation have a more significant influence on claim costs than general inflation [9][10] - The company remains optimistic about future earnings due to rising interest rates positively affecting net investment income [22][23] Other Important Information - The company recognized net investment losses of $24 million due to changes in the fair value of convertible securities and bond funds [20] - The company retains the first $2 million of exposure for health care professional liability business and reinsures above that [86] Q&A Session Summary Question: Can you elaborate on the impact of inflation and jury behavior on your business? - Management noted a disconnect between CPI and medical inflation, with jury behavior and social inflation having a more significant impact on claim costs [45][48] Question: What is the expected run rate for the expense ratio in the Specialty P&C segment? - Management indicated that the expense ratio is expected to normalize following the NORCAL acquisition, with minor fluctuations anticipated [50] Question: How do you see the long-term journey towards underwriting profit in the specialty commercial business? - Management acknowledged ongoing integration work and emphasized the need to drive down loss ratios through re-underwriting efforts [56][58] Question: What is the current status of the Segregated Portfolio Cell Reinsurance segment? - This segment reported a loss of $352,000 for the quarter, with underwriting income of $580,000 offset by unrealized investment losses [39] Question: Are there pressures to offer higher than $1 million limits for policies? - Management acknowledged that while there is some pressure for higher limits, it is not yet widespread, but it is expected to increase over time [84]

Preliminary Information [Glossary of Terms and Acronyms](index=2&type=section&id=Glossary%20of%20Terms%20and%20Acronyms) This section provides definitions for various terms and acronyms used throughout the report to ensure clarity and understanding for the reader. It covers financial, regulatory, and company-specific terminology - The glossary defines key acronyms such as GAAP (Generally accepted accounting principles), HCPL (Healthcare professional liability), IBNR (Incurred but not reported), and defines company-specific entities like NORCAL (NORCAL Insurance Company) and Syndicate 1729[9](index=9&type=chunk) [Caution Regarding Forward-Looking Statements](index=4&type=section&id=Caution%20Regarding%20Forward-Looking%20Statements) The company cautions readers that this report contains forward-looking statements based on current estimates and expectations, which are subject to significant risks and uncertainties. These statements are not guarantees of future performance, and actual results could differ materially. The company identifies numerous risk factors, including economic conditions, regulatory changes, market performance, and risks associated with its participation in the Lloyd's market - Forward-looking statements pertain to future liquidity, investment performance, premiums, losses, and market conditions[13](index=13&type=chunk) - Key risks include changes in economic conditions, regulatory actions, performance of financial markets, consolidation of insureds, and uncertainties in estimating loss reserves[14](index=14&type=chunk) - Specific risks related to Lloyd's Syndicates include potential levies by the Council of Lloyd's, dependence on a specialized management team, and potential rating downgrades of Lloyd's as a whole[17](index=17&type=chunk) PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for ProAssurance Corporation as of June 30, 2022, and for the three and six-month periods then ended. It includes the balance sheets, statements of income, changes in capital, and cash flows, along with detailed notes explaining the accounting policies and financial details [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets from $6.19 billion at year-end 2021 to $5.89 billion at June 30, 2022. This was primarily driven by a decline in the fair value of investments. Total shareholders' equity saw a significant reduction from $1.43 billion to $1.17 billion over the same period, largely due to a substantial increase in accumulated other comprehensive loss Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Investments** | $4,548,977 | $4,828,323 | | **Total Assets** | $5,891,190 | $6,191,477 | | **Total Liabilities** | $4,721,301 | $4,763,090 | | **Total Shareholders' Equity** | $1,169,889 | $1,428,387 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) For the six months ended June 30, 2022, the company reported a net loss of $5.2 million, a stark contrast to the $99.8 million net income in the same period of 2021. The 2022 results were impacted by significant net investment losses of $37.4 million, compared to gains of $19.7 million in 2021. The prior year's income was also boosted by a $74.4 million gain on bargain purchase. Comprehensive loss was $255.7 million, driven by a large other comprehensive loss from investment portfolio valuation changes Financial Performance Summary (in thousands, except per share data) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net premiums earned | $512,982 | $426,351 | | Total revenues | $538,897 | $501,644 | | Net investment gains (losses) | ($37,390) | $19,682 | | Gain on bargain purchase | $0 | $74,408 | | **Net income (loss)** | **($5,219)** | **$99,785** | | **Diluted EPS** | **($0.10)** | **$1.85** | | Other comprehensive income (loss) | ($250,472) | ($22,155) | | **Comprehensive income (loss)** | **($255,691)** | **$77,630** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2022, net cash used by operating activities was $3.7 million, a significant downturn from the $31.0 million provided in the same period of 2021. Net cash used in investing activities increased to $91.1 million from $70.9 million. These factors led to a $108.8 million decrease in cash and cash equivalents, ending the period at $34.8 million Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided (used) by operating activities | ($3,671) | $31,015 | | Net cash provided (used) by investing activities | ($91,113) | ($70,929) | | Net cash provided (used) by financing activities | ($13,986) | ($15,072) | | **Increase (decrease) in cash and cash equivalents** | **($108,770)** | **($54,986)** | | Cash and cash equivalents at end of period | $34,832 | $160,796 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide essential context to the financial statements, detailing accounting policies, segment information, and specifics on key accounts like investments, loss reserves, debt, and equity. Notable disclosures include a change in estimating ULAE, details on fair value measurements, significant unrealized losses in the investment portfolio, and the financial impact of the NORCAL acquisition - A change in accounting estimate for Unallocated Loss Adjustment Expenses (ULAE) was made in 2022, reclassifying $13.6 million from 'net losses' to 'operating expenses' for the six months ended June 30, 2022, with no impact on total expenses or net income[37](index=37&type=chunk) - The company holds a $24 million contingent consideration liability related to the NORCAL acquisition, which is measured at fair value using Level 3 inputs[47](index=47&type=chunk)[61](index=61&type=chunk) - The available-for-sale fixed maturities portfolio had gross unrealized losses of $302.4 million as of June 30, 2022, a significant increase from $30.8 million at year-end 2021, primarily due to rising interest rates[79](index=79&type=chunk) - For the six months ended June 30, 2022, the company recognized net favorable prior year loss reserve development of $24.3 million[120](index=120&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management provides a detailed narrative on the company's financial condition and results of operations. The discussion covers liquidity and capital resources, an in-depth analysis of operating results by segment, and an explanation of critical accounting estimates. Key themes include the integration of NORCAL, the impact of rising interest rates on the investment portfolio, and performance trends within the Specialty P&C and other insurance segments [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains liquidity through investment revenues, dividends from subsidiaries, and management fees. As of June 30, 2022, the holding company held $55 million in cash and liquid investments. Operating cash flow decreased by $34.7 million year-over-year for the first six months, primarily due to higher paid losses and operating expenses following the NORCAL acquisition. The investment portfolio is primarily high-quality fixed income, but its value has declined due to interest rate increases. Debt consists mainly of $250 million in senior notes and $176.6 million in Contribution Certificates - Operating cash flow for the six months ended June 30, 2022, was negative $3.7 million, a decrease of $34.7 million from the prior year, mainly due to a $137.4 million increase in paid losses and a $59.1 million increase in cash paid for operating expenses, largely related to the NORCAL acquisition[187](index=187&type=chunk)[188](index=188&type=chunk) - The investment portfolio is 78% in available-for-sale fixed maturities, with an average rating of A+. The weighted average effective duration of the fixed maturity portfolio was 3.74 years at June 30, 2022[193](index=193&type=chunk)[197](index=197&type=chunk) - In July 2022, the company repurchased approximately 139,000 common shares for $3.2 million, with $106.4 million remaining under the Board's authorization as of August 3, 2022[199](index=199&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Consolidated results for the first six months of 2022 show a net loss of $5.2 million compared to a $99.8 million net income in 2021. The decline is primarily due to significant net investment losses and the absence of the prior year's one-time gain on the NORCAL acquisition. Net premiums earned grew 20.3% to $513.0 million, driven by the NORCAL acquisition. The consolidated combined ratio improved to 104.6% from 109.1%. Non-GAAP operating income was $24.0 million, down from $28.7 million in the prior year Consolidated Results Summary (Six Months Ended June 30) | Metric (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Net premiums earned | $512,982 | $426,351 | | Net income (loss) | ($5,219) | $99,785 | | Non-GAAP operating income | $24,008 | $28,688 | - The consolidated combined ratio for the six months ended June 30, 2022, improved to 104.6% from 109.1% in 2021. Excluding transaction-related costs, the ratio was relatively flat at 104.3% vs 104.2%[229](index=229&type=chunk) - The Specialty P&C segment's net premiums earned grew 34.2% year-over-year for the six-month period, driven by the NORCAL acquisition. The Lloyd's Syndicates segment saw a 53.8% decrease due to reduced participation[210](index=210&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=98&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are identified as interest rate risk and credit risk, with limited exposure to foreign currency risk. The fixed maturities portfolio is exposed to interest rate fluctuations, which directly impact its market valuation. Credit risk is managed by focusing on investment-grade securities. As of June 30, 2022, 92% of the fixed maturity portfolio was rated investment grade - The company is principally exposed to interest rate risk and credit risk[352](index=352&type=chunk) Interest Rate Sensitivity of AFS Fixed Maturity Securities (June 30, 2022) | Interest Rate Shift | Estimated Fair Value (in millions) | | :--- | :--- | | -100 bps | $3,664 | | **Current** | **$3,532** | | +100 bps | $3,562 | - Credit risk is controlled by emphasizing high-quality investments; 92% of the fixed maturity portfolio was rated investment grade as of June 30, 2022[361](index=361&type=chunk) [Controls and Procedures](index=101&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the principal executive and financial officers, evaluated the company's disclosure controls and procedures as of June 30, 2022. They concluded that these controls are effective. The report also states that there have been no significant changes in internal controls over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[365](index=365&type=chunk) - No significant changes in internal controls over financial reporting occurred during the quarter ended June 30, 2022[366](index=366&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=101&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers the reader to Note 6 of the Notes to Condensed Consolidated Financial Statements for information regarding legal proceedings. Note 6 states the company is involved in various legal actions in the ordinary course of business, which are considered in the loss reserving process, and that no material reserves were established for corporate legal actions as of June 30, 2022 - For information on legal proceedings, the report refers to Note 6 of the financial statements[367](index=367&type=chunk) [Risk Factors](index=101&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes to the risk factors disclosed in the company's December 31, 2021 Form 10-K[368](index=368&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=101&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU%20RITIES%20AND%20USE%20OF%20PROCEEDS) This section details the company's share repurchase activity. During the second quarter of 2022 (April 1 to June 30), the company did not repurchase any of its common shares. The remaining authorization for share repurchases or debt retirement under the current plan was approximately $109.6 million at the end of the quarter Issuer Purchases of Equity Securities (Q2 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - April 30, 2022 | 0 | N/A | | May 1 - May 31, 2022 | 0 | N/A | | June 1 - June 30, 2022 | 0 | N/A | - As of June 30, 2022, approximately $109.6 million remained available for share repurchases or debt retirement under the Board's authorization[369](index=369&type=chunk) [Exhibits](index=102&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including an amendment to a facility agreement, certifications by the CEO and CFO as required by SEC rules, and XBRL data files - Filed exhibits include officer certifications (31.1, 31.2, 32.1, 32.2) and XBRL interactive data files[371](index=371&type=chunk) Signature [Signature Details](index=103&type=section&id=Signature%20Details) The report is duly signed on August 8, 2022, by Dana S. Hendricks, the Chief Financial Officer of ProAssurance Corporation, acting as the duly authorized officer and principal financial officer - The Form 10-Q was signed on August 8, 2022, by Dana S. Hendricks, Chief Financial Officer[373](index=373&type=chunk)

ProAssurance Corp. (NYSE:PRA) Q1 2022 Results Conference Call May 10, 2022 10:00 AM ET Company Participants Jason Gingerich - VP, IR Ned Rand - President and CEO Dana Hendricks - CFO Michael Boguski - President, Specialty, Property and Casualty Lines Kevin Shook - President, Worker’s Compensation Insurance Conference Call Participants Greg Peters - Raymond James Mark Hughes - Truist Matt Carletti - JMP Securities Gary Ransom - Dowling & Partners Operator Welcome to the ProAssurance First Quarter 2022 Earnin ...

[PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) ProAssurance reported a Q1 2022 net loss of $3.6 million, a significant downturn from prior year income, primarily due to net investment losses and a decline in total assets and shareholders' equity [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2022, ProAssurance's total assets decreased to $6.06 billion from $6.19 billion, mainly due to reduced investment fair value, while shareholders' equity declined to $1.28 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Investments** | $4,693,669 | $4,828,323 | | **Total Assets** | **$6,058,598** | **$6,191,477** | | **Reserve for losses and loss adjustment expenses** | $3,603,246 | $3,579,940 | | **Total Liabilities** | **$4,776,830** | **$4,763,090** | | **Total Shareholders' Equity** | **$1,281,768** | **$1,428,387** | [Condensed Consolidated Statements of Income and Comprehensive Income](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20AND%20COMPREHENSIVE%20INCOME) ProAssurance reported a Q1 2022 net loss of $3.6 million, a reversal from Q1 2021 net income, primarily due to net investment losses, despite increased net premiums earned Q1 2022 vs Q1 2021 Performance (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net premiums earned | $265,711 | $187,358 | | Total revenues | $283,072 | $220,017 | | Net losses and loss adjustment expenses | $209,423 | $149,785 | | Total expenses | $288,649 | $211,546 | | **Net income (loss)** | **($3,560)** | **$7,735** | | **Diluted earnings (loss) per share** | **($0.07)** | **$0.14** | | Comprehensive income (loss) | ($144,410) | ($25,970) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash provided by operating activities decreased to $14.3 million in Q1 2022, with increased cash used in investing activities, resulting in a $71.5 million decrease in cash and equivalents Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,265 | $28,700 | | Net cash used by investing activities | ($77,134) | ($26,261) | | Net cash used by financing activities | ($8,632) | ($3,386) | | **Increase (decrease) in cash and cash equivalents** | **($71,501)** | **($947)** | | Cash and cash equivalents at end of period | $72,101 | $214,835 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail financial statement presentation, accounting policies, and specific items, including a change in ULAE estimate, fair value measurements, and segment performance across five segments - In Q1 2022, the company revised its estimate of Unallocated Loss Adjustment Expenses (ULAE) due to the integration of NORCAL. This change in accounting estimate was applied prospectively, increasing underwriting expenses by **$7.3 million** with an offsetting decrease to net losses and loss adjustment expenses, resulting in no impact on total expenses or net income[31](index=31&type=chunk) - The company operates in five reportable segments: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, Lloyd's Syndicates, and Corporate[30](index=30&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=37&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes the Q1 2022 net loss to significant investment losses, with the NORCAL acquisition impacting premiums and the combined ratio improving to 105.8%, while liquidity remains strong [Critical Accounting Estimates](index=37&type=section&id=Critical%20Accounting%20Estimates) Management identifies critical accounting estimates including loss reserves, reinsurance, investments, goodwill, and income taxes, noting a shift to the discrete effective tax rate method for Q1 2022 due to unreliability - The company's critical accounting estimates involve significant management judgment and include: Reserve for losses and loss adjustment expenses, Reinsurance, Valuation of investments and impairment of securities, Goodwill, Income taxes[163](index=163&type=chunk) - For Q1 2022, the company switched from the estimated annual effective tax rate method to the discrete effective tax rate method for recording income taxes because minor changes in estimated ordinary income would have a significant effect on the annual rate, making it unreliable[163](index=163&type=chunk) [Liquidity and Capital Resources and Financial Condition](index=38&type=section&id=Liquidity%20and%20Capital%20Resources%20and%20Financial%20Condition) ProAssurance maintains strong liquidity with $65 million in cash and $250 million available credit, despite a decrease in Q1 2022 operating cash flow to $14.3 million primarily due to NORCAL acquisition impacts - As a holding company, ProAssurance held approximately **$65 million** in cash and liquid investments outside its insurance subsidiaries at March 31, 2022[166](index=166&type=chunk) - The company has a **$250 million** Revolving Credit Agreement, with a potential **$50 million** accordion feature, and no outstanding borrowings as of May 4, 2022[166](index=166&type=chunk) - Operating cash flow decreased by **$14.4 million** in Q1 2022 compared to Q1 2021, primarily due to a **$67.8 million** increase in paid losses (largely from NORCAL) and a **$51.7 million** increase in cash paid for operating expenses[177](index=177&type=chunk) - The company anticipates receiving an **$11.7 million** tax refund during 2022 related to the carryback of its 2020 Net Operating Loss (NOL) under the CARES Act[182](index=182&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) ProAssurance reported a Q1 2022 net loss of $3.6 million, driven by a negative swing in investment gains, despite 41.8% growth in net premiums earned and an improved combined ratio of 105.8% Consolidated Results Summary (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net premiums earned | $265,711 | $187,358 | | Net investment gains (losses) | ($13,506) | $8,849 | | **Net income (loss)** | **($3,560)** | **$7,735** | | **Non-GAAP operating income (loss)** | **$7,683** | **$2,085** | Key Ratios | Ratio | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net loss ratio | 78.8% | 79.9% | | Underwriting expense ratio | 27.0% | 30.1% | | **Combined ratio** | **105.8%** | **110.0%** | - The acquisition of NORCAL was a primary driver of performance, contributing **$80.8 million** in additional earned premiums in the Specialty P&C segment for Q1 2022[201](index=201&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) ProAssurance's primary market risks are interest rate and credit risk, with a 100 basis point interest rate increase potentially decreasing fixed maturities by $139 million, while credit risk is mitigated by investment-grade securities - The company's principal market risks are interest rate risk and credit risk[338](index=338&type=chunk) Interest Rate Sensitivity of Available-for-Sale Fixed Maturities (Fair Value in millions) | Interest Rate Shift | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | -100 bps | $3,844 | $3,976 | | **Current** | **$3,701** | **$3,834** | | +100 bps | $3,562 | $3,691 | | +200 bps | $3,429 | $3,551 | - As of March 31, 2022, **91%** of the company's fixed maturity securities were rated investment grade, mitigating credit risk exposure[347](index=347&type=chunk) - Receivables from reinsurers totaled approximately **$479 million** at March 31, 2022. The company has not historically experienced material credit losses from reinsurers[349](index=349&type=chunk) [Controls and Procedures](index=84&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were effective as of March 31, 2022, excluding NORCAL as permitted, with no significant changes in internal controls over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of March 31, 2022[351](index=351&type=chunk) - The assessment of internal controls over financial reporting excluded the recently acquired NORCAL, which constituted approximately **30.8%** of total assets. NORCAL will be included in the assessment as of December 31, 2022[352](index=352&type=chunk) [PART II. OTHER INFORMATION](index=84&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=84&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company refers to Note 6 for details on legal proceedings, which are primarily related to insurance policies and claims handling, with no material corporate legal action reserves as of March 31, 2022 - For information on legal proceedings, the report refers to Note 6 of the financial statements[354](index=354&type=chunk) [Risk Factors](index=84&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the company's December 31, 2021, Form 10-K report - There have been no material changes to the risk factors previously disclosed in the company's Form 10-K for the year ended December 31, 2021[355](index=355&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=84&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) ProAssurance did not repurchase common shares in Q1 2022, with approximately $109.6 million remaining available for future repurchases or debt retirement under the Board's authorization plan Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased ($ in thousands) | | :--- | :--- | :--- | :--- | | Jan 1 - 31, 2022 | 0 | N/A | $109,643 | | Feb 1 - 28, 2022 | 0 | N/A | $109,643 | | Mar 1 - 31, 2022 | 0 | N/A | $109,643 | | **Total** | **0** | **N/A** | **$109,643** | - The Board has authorized **$600 million** for the repurchase of common shares or retirement of debt under a plan started in November 2010 with no expiration date[356](index=356&type=chunk) [Exhibits](index=85&type=section&id=ITEM%206.%20EXHIBITS) This section lists filed exhibits, including officer certifications required by SEC rules and XBRL data files for interactive data purposes - Filed exhibits include officer certifications (Rule 13a-14(a) and 18 U.S.C. 1350) and XBRL Instance Documents[357](index=357&type=chunk)

ProAssurance Corp (NYSE:PRA) Q4 2021 Earnings Conference Call February 22, 2022 10:00 AM ET Company Participants Ken McEwen - Manager, IR Dana Hendricks - EVP, Treasurer & CFO Michael Boguski - President, Specialty Property & Casualty Kevin Shook - President, Workers Compensation Insurance, Eastern Alliance Insurance Group Edward Rand - CEO, President & Director Conference Call Participants Charles Peters - Raymond James & Associates Paul Newsome - Piper Sandler & Co. Mark Hughes - Truist Securities Gary Ra ...

or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 001-16533 ProAssurance Corporation Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021, (Exact name of registrant as specified in its charter) Delaware 63-1261433 (Stat ...