ProAssurance(US:PRA)2025-02-24 21:20Premiums and Revenue - Gross premiums written for 2024 totaled $1,050,867,000, a decrease of 2.1% from $1,082,279,000 in 2023[38] - The Specialty P&C segment accounted for 77% of total gross premiums written in 2024, with $807,463,000 reported[38] - Workers' Compensation Insurance premiums were $243,404,000 in 2024, representing 23% of total gross premiums written[38] - The Segregated Portfolio Cell Reinsurance segment reported premiums of $57,904,000 in 2024, down from $70,259,000 in 2023[38] - Approximately 66% of medical professional liability (MPL) gross premiums written in 2024 were produced through independent insurance agencies or brokers[42] - The top ten largest agents or brokers generated approximately 29% of MPL premium in 2024, with no single agency exceeding 8%[43] - The Medical Technology Liability business generated approximately 45% of its gross written premium from the top ten largest brokers in 2024[47] Risk Management and Compliance - The company plans to enhance coverage offerings to meet the changing risk management needs of larger healthcare entities and telemedicine companies[58] - The company has implemented innovative solutions, including artificial intelligence, to manage escalating medical costs in the Workers' Compensation Insurance segment[52] - The company emphasizes pricing products based on current loss projections to align with long-term profit targets, even if it affects top-line growth[60] - The company filed its internal assessment of solvency under ORSA criteria during 2024, reflecting compliance with regulatory requirements[79] - The Dodd-Frank Act has not materially affected the company's business to date, but future regulatory changes could impact operations and compliance costs[86] - The company is subject to various state statutory and regulatory restrictions that limit the amount of dividends or distributions it can pay to shareholders without prior regulatory approval[75] - The company expects additional states to adopt data security and privacy laws, but compliance is not anticipated to materially impact financial conditions[73] Financial Position and Capital Management - All of the company's insurance subsidiaries received an "A (Excellent)" rating from AM Best, indicating strong claims-paying ability[63] - As of December 31, 2024, the company estimates that all its insurance subsidiaries will exceed the minimum required risk-based capital levels[78] - The company maintains a minimum capital requirement of approximately $200,000 for its subsidiaries in the Cayman Islands[91] - The company's fixed maturities portfolio is exposed to interest rate risk, with a total fair value of $3,815 million as of December 31, 2024, which could decrease to $3,361 million with a 200 basis points increase in interest rates[450] - As of December 31, 2024, the fair value of corporate debt in the fixed maturities portfolio is $1,832 million, which could drop to $1,632 million with a 200 basis points increase in interest rates[450] - The outstanding borrowings under the Revolving Credit Agreement and Term Loan were $125 million and $120 million, with fixed base rates of 3.187% and 3.207% respectively[454] - Premiums receivable amounted to approximately $229 million, net of an allowance for expected credit losses of about $8 million[458] - Receivables from reinsurers approximated $427 million as of December 31, 2024, down from $467 million in 2023[458] Employee Relations and Corporate Culture - The company had 1,036 employees as of December 31, 2024, with no representation by labor unions, indicating good employee relations[95] - The company conducts quarterly "Pulse" surveys to gather real-time feedback from team members on key issues, aiming to enhance employee engagement[94] - The company expanded its health insurance program to include fertility benefits during the 2024 benefits open enrollment process[95] - The company is committed to fostering a diverse and inclusive workplace, supported by a Diversity, Equity and Inclusion Council[95] Investment and Credit Risk - 90% of fixed income securities purchased are emphasized for investment grade credit quality to control credit risk exposure[456] - The company has not experienced significant credit losses related to premiums receivable or reinsurers[458] - The defined benefit pension plan is exposed to economic risks related to changes in discount rates and expected returns on plan assets[455] - As of December 31, 2024, 93% of the fixed maturity securities were rated investment grade, reducing credit risk exposure[457] Market Conditions and Competitive Landscape - The workers' compensation industry is highly competitive, with multi-line insurers underpricing products to gain market access, a trend expected to continue into 2025[59] - The company's claims handling and risk management services provide a competitive advantage, even when pricing is higher than competitors[59] Legislative and Regulatory Environment - The Terrorism Risk Insurance Act (TRIA) was reauthorized in 2019, extending coverage through 2027, with a loss event threshold of $200 million to trigger federal coverage[89] Foreign Currency and Interest Rate Management - The company had one foreign currency forward contract with a notional amount of €5.0 million ($5.5 million) and a fair value of approximately $0.3 million[459] - The company entered into two Interest Rate Swaps to manage interest rate risk, effectively fixing rates on borrowings[454] - Foreign currency exchange rate movements have led to greater volatility in results due to increased participation in international programs[459]