ProAssurance Corporation Q4 FY2023 earnings call

• Ned noted a per share operating loss of $0.05 in the quarter due to significant increases in Workers' Compensation losses, but emphasized commitment to a long-term strategy for sustained profitability despite current headwinds. <br>- Dana discussed an operating loss of $2.5 million or $0.05 per diluted share, with the difference from net income reflecting net investment gains, foreign currency exchange losses, and underwriting results. Consolidated combined ratio increased almost 8 points, with Workers' Compensation being the primary driver. <br>- Specialty P&C had premium reductions due to rate adequacy focus, but new business and renewals met underwriting standards. Workers' Compensation had loss ratio increase and expense ratio impact from lower net premiums earned. <br>- Refinancing of $250 million senior notes was discussed, along with ending participation at Lloyd's starting in 2024, which will impact financial results in Q2 2024. <br>- Ned congratulated Ross Taubman on retiring, recognizing his leadership in the small business unit.

Specialty P&C: Premiums were $15 million less than the fourth quarter of 2022. About $8 million of the reduction was due to focusing on adequate rates and walking away from unprofitable business. New business was $18 million (essentially double the previous year's fourth quarter), renewal pricing was 6% higher, and premium retention was 83%. <br>Workers' Compensation Insurance: Gross written premiums decreased $800,000, primarily from lower renewal and audit premium in the alternative market. New business writings and renewal premiums each increased ~$1 million compared to the prior year, retention was 85% (11 points higher than the fourth quarter of the previous year), renewal rates declined 3%, and the underwriting loss ratio was increased to 81% due to loss trends.

• Commitment to a long-term strategy aimed at sustained profitability. <br>- Refinancing of senior notes and end of Lloyd's participation will affect future financial results. <br>- Focus on driving return on equity, with target of 700 basis points above the 10-year treasury.

• Headwinds from difficult market conditions and challenging litigation climate. <br>- Continued losses in the Workers' Compensation book of business impacting profitability.

Q: Ned, caught comments on workers' comp re feeling ahead of industry on severity. Any other factors playing in? <br>A: Ned said it's a general view across the book, not specific to a business class despite having a health care book. <br>Q: Bob Farnam asked about targeted ROE and needed combined ratio. <br>A: Ned said around 97 combined ratio needed to generate that return. Kevin Shook discussed fee schedules varying by state, with some states up 6% in 2023. <br>Q: Maxwell Fritscher asked about pushing pricing in physician business. <br>A: Ned said they will continue to drive rate, more state specific in physician business with some needing double-digit rate increases. <br>Q: Adam Hirsch asked about corporate OpEx up 14% and closing book value gap. <br>A: Dana said OpEx increase was ~$1 million quarter-over-quarter due to filling open headcount; Ned said driving return on equity will propel book value multiple forward.