Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 30, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 0-16533 | |
Entity Registrant Name | ProAssurance Corporation | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 63-1261433 | |
Entity Address, Address Line One | 100 Brookwood Place, | |
Entity Address, City or Town | Birmingham, | |
Entity Address, State or Province | AL | |
Entity Address, Postal Zip Code | 35209 | |
City Area Code | (205) | |
Local Phone Number | 877-4400 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | PRA | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 53,953,399 | |
Entity Central Index Key | 0001127703 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Investments | ||
Fixed maturities, available-for-sale, at fair value (amortized cost, $2,509,623 and $2,361,575, respectively; allowance for expected credit losses, none as of March 31, 2021 and $552 as of December 31, 2020) | $ 2,563,273 | $ 2,457,531 |
Fixed maturities, trading, at fair value (cost, $44,819 and $47,907, respectively) | 45,151 | 48,456 |
Equity investments, at fair value (cost, $74,083 and $113,709, respectively) | 77,537 | 120,101 |
Short-term investments | 280,993 | 337,813 |
Business owned life insurance | 66,932 | 67,847 |
Investment in unconsolidated subsidiaries | 299,360 | 310,529 |
Other investments (at fair value, $69,251 and $44,116, respectively, otherwise at cost or amortized cost) | 71,621 | 47,068 |
Total Investments | 3,404,867 | 3,389,345 |
Cash and cash equivalents | 214,835 | 215,782 |
Premiums receivable, net | 210,560 | 201,395 |
Receivable from reinsurers on paid losses and loss adjustment expenses | 10,451 | 14,370 |
Receivable from reinsurers on unpaid losses and loss adjustment expenses | 393,420 | 385,087 |
Prepaid reinsurance premiums | 34,802 | 35,885 |
Deferred policy acquisition costs | 47,616 | 47,196 |
Deferred tax asset, net | 67,699 | 57,105 |
Real estate, net | 30,594 | 30,529 |
Operating lease ROU assets | 18,219 | 19,013 |
Intangible assets, net | 64,173 | 65,720 |
Goodwill | 49,610 | 49,610 |
Other assets | 127,692 | 143,766 |
Total Assets | 4,674,538 | 4,654,803 |
Policy liabilities and accruals | ||
Reserve for losses and loss adjustment expenses | 2,438,250 | 2,417,179 |
Unearned premiums | 375,246 | 361,547 |
Reinsurance premiums payable | 31,039 | 39,998 |
Total Policy Liabilities | 2,844,535 | 2,818,725 |
Operating lease liabilities | 19,168 | 20,116 |
Other liabilities | 205,097 | 182,039 |
Debt less unamortized debt issuance costs | 284,422 | 284,713 |
Total Liabilities | 3,353,222 | 3,305,593 |
Shareholders' Equity | ||
Common shares (par value $0.01 per share, 100,000,000 shares authorized, 63,277,721 and 63,217,708 shares issued, respectively) | 633 | 632 |
Additional paid-in capital | 388,924 | 388,150 |
Accumulated other comprehensive income (loss) (net of deferred tax expense (benefit) of $11,065 and $19,386, respectively) | 41,522 | 75,227 |
Retained earnings | 1,306,199 | 1,301,163 |
Treasury shares, at cost (9,325,180 shares as of each respective period end) | (415,962) | (415,962) |
Total Shareholders' Equity | 1,321,316 | 1,349,210 |
Total Liabilities and Shareholders' Equity | $ 4,674,538 | $ 4,654,803 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Available for sale securities, amortized cost | $ 2,509,623 | $ 2,361,575 |
Allowance for expected credit losses | 0 | 552 |
Trading securities, cost | 44,819 | 47,907 |
Equity Investments, fair value, cost | 74,083 | 113,709 |
Other investments, portion carried at fair value | $ 69,251 | $ 44,116 |
Common shares, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common shares, shares issued (in shares) | 63,277,721 | 63,217,708 |
Deferred tax expense (benefit) on accumulated other comprehensive income (loss) | $ 11,065 | $ 19,386 |
Treasury shares, number of shares (in shares) | 9,325,180 | 9,325,180 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Changes in Capital (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2019 | |
Increase (Decrease) in Stockholders' Equity: | |||
Beginning balance | $ 1,349,210 | $ 1,511,913 | |
Common shares issued for compensation and effect of shares reissued to stock purchase plan | 8 | 33 | |
Share-based compensation | 1,024 | 1,017 | |
Net effect of restricted and performance shares issued | (257) | (868) | |
Dividends to shareholders | (2,699) | (16,691) | |
Other comprehensive income (loss) | (33,705) | (41,865) | |
Net income (loss) | 7,735 | (21,954) | |
Ending balance | 1,321,316 | 1,427,509 | $ 1,511,913 |
Accounting standards update [extensible list] | us-gaap:AccountingStandardsUpdate201613Member | ||
Common Stock | |||
Increase (Decrease) in Stockholders' Equity: | |||
Beginning balance | 632 | 631 | |
Net effect of restricted and performance shares issued | 1 | 1 | |
Ending balance | 633 | 632 | $ 631 |
Additional Paid-in Capital | |||
Increase (Decrease) in Stockholders' Equity: | |||
Beginning balance | 388,150 | 384,551 | |
Common shares issued for compensation and effect of shares reissued to stock purchase plan | 8 | 33 | |
Share-based compensation | 1,024 | 1,017 | |
Net effect of restricted and performance shares issued | (258) | (869) | |
Ending balance | 388,924 | 384,732 | 384,551 |
Accumulated Other Comprehensive Income (Loss) | |||
Increase (Decrease) in Stockholders' Equity: | |||
Beginning balance | 75,227 | 36,955 | |
Other comprehensive income (loss) | (33,705) | (41,865) | |
Ending balance | 41,522 | (4,910) | 36,955 |
Retained Earnings | |||
Increase (Decrease) in Stockholders' Equity: | |||
Beginning balance | 1,301,163 | 1,505,738 | |
Dividends to shareholders | (2,699) | (16,691) | |
Net income (loss) | 7,735 | (21,954) | |
Ending balance | 1,306,199 | 1,463,017 | 1,505,738 |
Treasury Stock | |||
Increase (Decrease) in Stockholders' Equity: | |||
Beginning balance | (415,962) | (415,962) | |
Ending balance | $ (415,962) | (415,962) | (415,962) |
Cumulative-effect adjustment, before tax* | |||
Increase (Decrease) in Stockholders' Equity: | |||
Beginning balance | (4,076) | ||
Ending balance | (4,076) | ||
Cumulative-effect adjustment, before tax* | Retained Earnings | |||
Increase (Decrease) in Stockholders' Equity: | |||
Beginning balance | $ (4,076) | ||
Ending balance | $ (4,076) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | ||
Net premiums earned | $ 187,358 | $ 203,855 |
Net investment income | 15,017 | 20,830 |
Equity in earnings (loss) of unconsolidated subsidiaries | 6,788 | (1,562) |
Net realized investment gains (losses): | ||
Impairment losses | 0 | (1,817) |
Portion of impairment losses recognized in other comprehensive income (loss) before taxes | 0 | 654 |
Net impairment losses recognized in earnings | 0 | (1,163) |
Other net realized investment gains (losses) | 8,849 | (27,510) |
Total net realized investment gains (losses) | 8,849 | (28,673) |
Other income | 2,005 | 2,251 |
Total revenues | 220,017 | 196,701 |
Expenses | ||
Net losses and loss adjustment expenses | 149,785 | 164,832 |
Underwriting, policy acquisition and operating expenses: | ||
Operating expense | 31,522 | 34,773 |
DPAC amortization | 24,929 | 27,283 |
SPC U.S. federal income tax expense | 356 | 222 |
SPC dividend expense (income) | 1,742 | (508) |
Interest expense | 3,212 | 4,129 |
Total expenses | 211,546 | 230,731 |
Income (loss) before income taxes | 8,471 | (34,030) |
Provision for income taxes: | ||
Current expense (benefit) | 3,008 | (1,852) |
Deferred expense (benefit) | (2,272) | (10,224) |
Total income tax expense (benefit) | 736 | (12,076) |
Net income (loss) | 7,735 | (21,954) |
Other comprehensive income (loss), after tax, net of reclassification adjustments | (33,705) | (41,865) |
Comprehensive income (loss) | $ (25,970) | $ (63,819) |
Earnings (loss) per share | ||
Basic (in usd per share) | $ 0.14 | $ (0.41) |
Diluted (in usd per share) | $ 0.14 | $ (0.41) |
Weighted average number of common shares outstanding: | ||
Basic (in shares) | 53,918 | 53,808 |
Diluted (in shares) | 53,998 | 53,885 |
Cash dividends declared per common share (in usd per share) | $ 0.05 | $ 0.31 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Operating Activities | ||
Net income (loss) | $ 7,735 | $ (21,954) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization, net of accretion | 6,722 | 4,734 |
(Increase) decrease in cash surrender value of BOLI | 915 | (457) |
Net realized investment (gains) losses | (8,849) | 28,673 |
Share-based compensation | 1,031 | 1,011 |
Deferred income tax expense (benefit) | (2,272) | (10,224) |
Policy acquisition costs, net of amortization (net deferral) | (420) | (599) |
Equity in (earnings) loss of unconsolidated subsidiaries | (6,788) | 1,562 |
Distributed earnings from unconsolidated subsidiaries | 5,658 | 1,585 |
Other | (661) | (703) |
Other changes in assets and liabilities: | ||
Premiums receivable | (9,165) | (22,442) |
Reinsurance related assets and liabilities | (12,290) | (4,623) |
Other assets | 13,151 | 14,268 |
Reserve for losses and loss adjustment expenses | 21,071 | (15,478) |
Unearned premiums | 13,699 | 30,202 |
Other liabilities | (837) | (17,604) |
Net cash provided (used) by operating activities | 28,700 | (12,049) |
Purchases of: | ||
Fixed maturities, available-for-sale | (342,197) | (227,503) |
Equity investments | (38,232) | (23,136) |
Other investments | (33,252) | (6,065) |
Investment in unconsolidated subsidiaries | (5,319) | (17,180) |
Proceeds from sales or maturities of: | ||
Fixed maturities, available-for-sale | 195,266 | 180,698 |
Equity investments | 82,048 | 157,652 |
Other investments | 12,026 | 6,026 |
Net sales or (purchases) of fixed maturities, trading | 3,163 | (407) |
Return of invested capital from unconsolidated subsidiaries | 17,618 | 1,481 |
Net sales or maturities (purchases) of short-term investments | 56,836 | (7,441) |
Unsettled security transactions, net change | 27,025 | 12,656 |
Purchases of capital assets | (1,243) | (2,750) |
Other | 0 | (2,206) |
Net cash provided (used) by investing activities | (26,261) | 71,825 |
Financing Activities | ||
Repayments of Mortgage Loans | (390) | (376) |
Dividends to shareholders | (2,686) | (16,714) |
Capital contribution received from (return of capital to) external segregated portfolio cell participants | (53) | 204 |
Other | (257) | (1,090) |
Net cash provided (used) by financing activities | (3,386) | (17,976) |
Increase (decrease) in cash and cash equivalents | (947) | 41,800 |
Cash and cash equivalents at beginning of period | 215,782 | 175,369 |
Cash and cash equivalents at end of period | 214,835 | 217,169 |
Significant Non-Cash Transactions | ||
Dividends declared and not yet paid | $ 2,699 | $ 16,691 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of ProAssurance Corporation and its wholly owned subsidiaries (ProAssurance, PRA or the Company). The financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting of normal recurring adjustments, have been included. ProAssurance’s results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes contained in ProAssurance’s December 31, 2020 report on Form 10-K. In connection with its preparation of the Condensed Consolidated Financial Statements, ProAssurance evaluated events that occurred subsequent to March 31, 2021 for recognition or disclosure in its financial statements and notes to financial statements. Please see Note 15 for additional information. ProAssurance operates in five reportable segments as follows: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, Lloyd's Syndicates and Corporate. For more information on the Company's segment reporting, including the nature of products and services provided and financial information by segment, refer to Note 14. Certain insignificant prior period amounts have been reclassified to conform to the current period presentation. Accounting Policies The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and disclosures related to these amounts at the date of the financial statements. The Company evaluates these estimates and assumptions on an ongoing basis based on current and historical developments, market conditions, industry trends and other information that the Company believes to be reasonable under the circumstances, including the potential impacts of the COVID-19 pandemic (see "Item 1A, Risk Factors" in ProAssurance's December 31, 2020 report on Form 10-K for additional information). The Company can make no assurance that actual results will conform to its estimates and assumptions; reported results of operations may be materially affected by changes in these estimates and assumptions. The significant accounting policies followed by ProAssurance in making estimates that materially affect financial reporting are summarized in Note 1 of the Notes to Consolidated Financial Statements in ProAssurance’s December 31, 2020 report on Form 10-K. Accounting Changes Adopted Clarifying the Interactions between Investments - Equity Securities, Investments - Equity Method and Joint Ventures, and Derivatives and Hedging (ASU 2020-01) Effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, the FASB amended guidance that clarifies the accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. ProAssurance adopted the guidance beginning January 1, 2021, and adoption had no material effect on ProAssurance's results of operations, financial position or cash flows. Accounting Changes Not Yet Adopted ProAssurance is not aware of any accounting changes not yet adopted as of March 31, 2021 that could have a material impact on its results of operations, financial position or cash flows. Credit Losses ProAssurance's premiums receivable and reinsurance receivables are exposed to credit losses but to-date have not experienced any significant amount of credit losses. See Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K for further information on how the Company estimates and measures expected credit losses on its premiums receivable and reinsurance receivables. ProAssurance's available-for-sale fixed maturity investments are also exposed to credit losses. See Note 3 for information on ProAssurance's allowance for expected credit losses on it's available-for-sale fixed maturities. ProAssurance’s premiums receivable on its Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 is reported net of the related allowance for expected credit losses of $6.1 million in each period. The following tables present a roll forward of the allowance for expected credit losses related to the Company's premiums receivable for the three months ended March 31, 2021 and 2020. (In thousands) Premiums Receivable, Net Allowance for Expected Credit Losses Balance, December 31, 2020 $ 201,395 $ 6,131 Provision for expected credit losses 105 Write offs charged against the allowance (232) Recoveries of amounts previously written off 78 Balance, March 31, 2021 $ 210,560 $ 6,082 (In thousands) Premiums Receivable, Net Allowance for Expected Credit Losses Balance, December 31, 2019 $ 249,540 $ 1,590 Cumulative-effect adjustment, before tax* 5,160 Provision for expected credit losses 88 Write offs charged against the allowance (689) Recoveries of amounts previously written off 48 Balance, March 31, 2020 $ 266,822 $ 6,197 *Due to the adoption of ASU 2016-13, ProAssurance recorded a cumulative-effect adjustment to beginning retained earnings as of January 1, 2020 to increase its consolidated allowance for expected credit losses related to its premiums receivable. See Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K. ProAssurance’s expected credit losses associated with its reinsurance receivables (related to both paid and unpaid losses) were nominal in amount as of March 31, 2021 and December 31, 2020. ProAssurance has other financial assets and off-balance-sheet commitments that are exposed to credit losses; however, expected credit losses associated with these assets and commitments were nominal in amount as of March 31, 2021 and December 31, 2020. Other Liabilities Other liabilities consisted of the following: (In thousands) March 31, 2021 December 31, 2020 SPC dividends payable $ 69,732 $ 68,865 Unpaid shareholder dividends 2,699 2,694 All other 132,666 110,480 Total other liabilities $ 205,097 $ 182,039 SPC dividends payable represents the undistributed equity contractually payable to the external cell participants of SPCs operated by ProAssurance's Cayman Islands subsidiaries, Inova Re and Eastern Re. Unpaid shareholder dividends represent common stock dividends declared by ProAssurance's Board that had not yet been paid as of March 31, 2021. |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level hierarchy has been established for valuing assets and liabilities based on how transparent (observable) the inputs are that are used to determine fair value, with the inputs considered most observable categorized as Level 1 and those that are the least observable categorized as Level 3. Hierarchy levels are defined as follows: Level 1: quoted (unadjusted) market prices in active markets for identical assets and liabilities. For ProAssurance, Level 1 inputs are generally quotes for securities actively traded in exchange or over-the-counter markets. Level 2: market data obtained from sources independent of the reporting entity (observable inputs). For ProAssurance, Level 2 inputs generally include quoted prices in markets that are not active, quoted prices for similar assets or liabilities, and results from pricing models that use observable inputs such as interest rates and yield curves that are generally available at commonly quoted intervals. Level 3: the reporting entity’s own assumptions about market participant assumptions based on the best information available in the circumstances (non-observable inputs). For ProAssurance, Level 3 inputs are used in situations where little or no Level 1 or 2 inputs are available or are inappropriate given the particular circumstances. Level 3 inputs include results from pricing models for which some or all of the inputs are not observable, discounted cash flow methodologies, single non-binding broker quotes and adjustments to externally quoted prices that are based on management judgment or estimation. Fair values of assets measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 are shown in the following tables. Where applicable, the tables also indicate the fair value hierarchy of the valuation techniques utilized to determine those fair values. For some assets, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When this is the case, the asset is categorized based on the level of the most significant input to the fair value measurement. Assessments of the significance of a particular input to the fair value measurement require judgment and consideration of factors specific to the assets being valued. March 31, 2021 Fair Value Measurements Using Total (In thousands) Level 1 Level 2 Level 3 Fair Value Assets: Fixed maturities, available-for-sale U.S. Treasury obligations $ — $ 102,877 $ — $ 102,877 U.S. Government-sponsored enterprise obligations — 11,944 — 11,944 State and municipal bonds — 322,465 — 322,465 Corporate debt, multiple observable inputs — 1,421,097 — 1,421,097 Corporate debt, limited observable inputs — — 7,769 7,769 Residential mortgage-backed securities — 270,059 1,489 271,548 Agency commercial mortgage-backed securities — 13,718 — 13,718 Other commercial mortgage-backed securities — 121,319 — 121,319 Other asset-backed securities — 282,712 7,824 290,536 Fixed maturities, trading — 45,151 — 45,151 Equity investments Bond funds 60,264 — — 60,264 All other 17,273 — — 17,273 Short-term investments 259,075 21,918 — 280,993 Other investments 29 67,070 2,152 69,251 Other assets — 836 — 836 Total assets categorized within the fair value hierarchy $ 336,641 $ 2,681,166 $ 19,234 3,037,041 Assets carried at NAV, which approximates fair value and which are not categorized within the fair value hierarchy, reported as a part of: Investment in unconsolidated subsidiaries 226,898 Total assets at fair value $ 3,263,939 December 31, 2020 Fair Value Measurements Using Total (In thousands) Level 1 Level 2 Level 3 Fair Value Assets: Fixed maturities, available-for-sale U.S. Treasury obligations $ — $ 107,059 $ — $ 107,059 U.S. Government-sponsored enterprise obligations — 12,261 — 12,261 State and municipal bonds — 332,920 — 332,920 Corporate debt, multiple observable inputs — 1,326,077 — 1,326,077 Corporate debt, limited observable inputs — — 3,265 3,265 Residential mortgage-backed securities — 274,509 2,032 276,541 Agency commercial mortgage-backed securities — 13,310 — 13,310 Other commercial mortgage-backed securities — 113,092 — 113,092 Other asset-backed securities — 266,345 6,661 273,006 Fixed maturities, trading — 48,456 — 48,456 Equity investments Financial 13,810 — — 13,810 Utilities/Energy 564 — — 564 Consumer oriented 1,262 — — 1,262 Industrial 2,240 — — 2,240 Bond funds 69,475 — — 69,475 All other 20,202 — — 20,202 Short-term investments 307,695 30,118 — 337,813 Other investments 1,509 42,607 — 44,116 Other assets — 329 — 329 Total assets categorized within the fair value hierarchy $ 416,757 $ 2,567,083 $ 11,958 2,995,798 Assets carried at NAV, which approximates fair value and which are not categorized within the fair value hierarchy, reported as a part of: Equity investments 12,548 Investment in unconsolidated subsidiaries 233,711 Total assets at fair value $ 3,242,057 The fair values for securities included in the Level 2 category, with the few exceptions described below, were developed by one of several third party, nationally recognized pricing services, including services that price only certain types of securities. Each service uses complex methodologies to determine values for securities and subject the values they develop to quality control reviews. Management selected a primary source for each type of security in the portfolio and reviewed the values provided for reasonableness by comparing data to alternate pricing services and to available market and trade data. Values that appeared inconsistent were further reviewed for appropriateness. Any value that did not appear reasonable was discussed with the service that provided the value and adjusted, if necessary. There were no material changes to the values supplied by the pricing services as of March 31, 2021 and December 31, 2020. Level 2 Valuations Below is a summary description of the valuation methodologies primarily used by the pricing services for securities in the Level 2 category, by security type: U.S. Treasury obligations were valued based on quoted prices for identical assets, or, in markets that are not active, quotes for similar assets, taking into consideration adjustments for variations in contractual cash flows and yields to maturity. U.S. Government-sponsored enterprise obligations were valued using pricing models that consider current and historical market data, normal trading conventions, credit ratings and the particular structure and characteristics of the security being valued, such as yield to maturity, redemption options, and contractual cash flows. Adjustments to model inputs or model results were included in the valuation process when necessary to reflect recent regulatory, government or corporate actions or significant economic, industry or geographic events affecting the security’s fair value. State and municipal bonds were valued using a series of matrices that considered credit ratings, the structure of the security, the sector in which the security falls, yields and contractual cash flows. Valuations were further adjusted, when necessary, to reflect the expected effect on fair value of recent significant economic or geographic events or ratings changes. Corporate debt, multiple observable inputs consisted primarily of corporate bonds, but also included a small number of bank loans. The methodology used to value Level 2 corporate bonds was the same as the methodology previously described for U.S. Government-sponsored enterprise obligations. Bank loans were valued based on an average of broker quotes for the loans in question, if available. If quotes were not available, the loans were valued based on quoted prices for comparable loans or, if the loan was newly issued, by comparison to similar seasoned issues. Broker quotes were compared to actual trade prices to permit assessment of the reliability of the quotes; unreliable quotes were not considered in quoted averages. Residential and commercial mortgage-backed securities were valued using a pricing matrix which considers the issuer type, coupon rate and longest cash flows outstanding. The matrix used was based on the most recently available market information. Agency and non-agency collateralized mortgage obligations were both valued using models that consider the structure of the security, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Other asset-backed securities were valued using models that consider the structure of the security, monthly payment information, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Spreads and prepayment speeds consider collateral type. Fixed maturities, trading , are held by the Lloyd's Syndicates segment and include U.S. Treasury obligations, corporate debt with multiple observable inputs and other asset-backed securities. These securities were valued using the respective valuation methodologies discussed above for each security type. Short-term investments were securities maturing within one year, carried at fair value which approximated the cost of the securities due to their short-term nature. Other investments consisted primarily of convertible bonds valued using a pricing model that incorporated selected dealer quotes as well as current market data regarding equity prices and risk free rates. If dealer quotes were unavailable for the security being valued, quotes for securities with similar terms and credit status were used in the pricing model. Dealer quotes selected for use were those considered most accurate based on parameters such as underwriter status and historical reliability. Other assets consisted of an interest rate cap derivative instrument, valued using a model which considers the volatilities from other instruments with similar maturities, strike prices, durations and forward yield curves. Under the terms of the interest rate cap agreement, ProAssurance paid a premium of $2 million for the right to receive cash payments based upon a notional amount of $35 million if and when the three-month LIBOR rises above 2.35%. The Company's variable-rate Mortgage Loans bear an interest rate of three-month LIBOR plus 1.325%. Level 3 Valuations Below is a summary description of the valuation methodologies used as well as quantitative information regarding securities in the Level 3 category, by security type: Level 3 Valuation Methodologies Corporate debt, limited observable inputs consisted of corporate bonds valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were determined by management if not available. At March 31, 2021, 61% of the securities were rated and the average rating was BB+. At December 31, 2020, 100% of the securities were rated and the average rating was BB+. Residential mortgage-backed and other asset-backed securities consisted of securitizations of receivables valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were subjectively determined by management if not available. At March 31, 2021, 83% of the securities were rated and the average rating was AA+. At December 31, 2020, 51% of the securities were rated and the average rating was AA-. Other investments consisted of convertible securities for which limited observable inputs were available at March 31, 2021. The securities were valued internally based on expected cash flows, including the expected final recovery, discounted at a yield that considered the lack of liquidity and the financial status of the issuer. Quantitative Information Regarding Level 3 Valuations Fair Value at ($ in thousands) March 31, 2021 December 31, 2020 Valuation Technique Unobservable Input Range Assets: Corporate debt, limited observable inputs $7,769 $3,265 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Residential mortgage-backed securities $1,489 $2,032 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Other asset-backed securities $7,824 $6,661 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Other investments $2,152 $— Discounted Cash Flows Comparability Adjustment 0% - 10% (5%) The significant unobservable inputs used in the fair value measurement of the above listed securities were the valuations of comparable securities with similar issuers, credit quality and maturity. Changes in the availability of comparable securities could result in changes in the fair value measurements. Fair Value Measurements - Level 3 Assets The following tables (the Level 3 Tables) present summary information regarding changes in the fair value of assets measured at fair value using Level 3 inputs. March 31, 2021 Level 3 Fair Value Measurements – Assets (In thousands) Corporate Debt Asset-backed Securities Other Investments Total Balance December 31, 2020 $ 3,265 $ 8,693 $ — $ 11,958 Total gains (losses) realized and unrealized: Included in earnings, as a part of: Net investment income 1 (2) — (1) Net realized investment gains (losses) — (11) — (11) Included in other comprehensive income 20 (179) — (159) Purchases 4,875 7,357 — 12,232 Sales (17) (304) — (321) Transfers in 858 — 2,152 3,010 Transfers out (1,233) (6,241) — (7,474) Balance March 31, 2021 $ 7,769 $ 9,313 $ 2,152 $ 19,234 Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end $ — $ — $ — $ — March 31, 2020 Level 3 Fair Value Measurements – Assets (In thousands) Corporate Debt Asset-backed Securities Other Investments Total Balance December 31, 2019 $ 5,079 $ 2,992 $ 3,086 $ 11,157 Total gains (losses) realized and unrealized: Included in earnings, as a part of: Net realized investment gains (losses) — — (222) (222) Included in other comprehensive income (83) (122) — (205) Purchases — 3,422 — 3,422 Sales (1,707) — — (1,707) Transfers in 945 605 — 1,550 Transfers out (794) — (1,526) (2,320) Balance March 31, 2020 $ 3,440 $ 6,897 $ 1,338 $ 11,675 Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end $ — $ — $ (222) $ (222) Transfers Transfers shown in the preceding Level 3 tables were as of the end of the period in which the transfer occurred. All transfers were to or from Level 2. All transfers in and out of Level 3 during the three months ended March 31, 2021 and 2020 related to securities held for which the level of market activity for identical or nearly identical securities varies from period to period. The securities were valued using multiple observable inputs when those inputs were available; otherwise the securities were valued using limited observable inputs. Fair Values Not Categorized At March 31, 2021 and December 31, 2020, certain LPs/LLCs and investment funds measure fund assets at fair value on a recurring basis and provide a NAV for ProAssurance's interest. The carrying value of these interests is based on the NAV provided and was considered to approximate the fair value of the interests. For investment in unconsolidated subsidiaries, ProAssurance recognizes any changes in the NAV of its interests in equity in earnings (loss) of unconsolidated subsidiaries during the period of change. In accordance with GAAP, the fair value of these investments was not classified within the fair value hierarchy. The amount of ProAssurance's unfunded commitments related to these investments as of March 31, 2021 and fair values of these investments as of March 31, 2021 and December 31, 2020 were as follows: Unfunded Fair Value (In thousands) March 31, March 31, December 31, Equity investments: Mortgage fund (1) None $ — $ 12,548 Investment in unconsolidated subsidiaries: Private debt funds (2) $11,308 16,317 16,387 Long/short equity funds (3) None 632 596 Non-public equity funds (4) $42,554 137,648 138,357 Credit funds (5) $1,653 26,943 34,848 Strategy focused funds (6) $36,927 45,358 43,523 226,898 233,711 Total investments carried at NAV $ 226,898 $ 246,259 Below is additional information regarding each of the investments listed in the table above as of March 31, 2021. (1) This investment fund was focused on the structured mortgage market. The fund primarily invested in U.S. Agency mortgage-backed securities. Redemptions are allowed at the end of any calendar quarter with a prior notice requirement of 65 days and are paid within 45 days at the end of the redemption dealing day. (2) This investment is comprised of interests in two unrelated LP funds that are structured to provide interest distributions primarily through diversified portfolios of private debt instruments. One LP allows redemption by special consent, while the other does not permit redemption. Income and capital are to be periodically distributed at the discretion of the LPs over an anticipated time frame that spans from three (3) This investment holds primarily long and short North American equities and targets absolute returns using strategies designed to take advantage of market opportunities. Redemptions are permitted; however, redemptions above specified thresholds (lowest threshold is 90%) may be only partially payable until after a fund audit is completed and are then payable within 30 days. (4) This investment is comprised of interests in multiple unrelated LP funds, each structured to provide capital appreciation through diversified investments in private equity, which can include investments in buyout, venture capital, debt including senior, second lien and mezzanine, distressed debt, collateralized loan obligations and other private equity-oriented LPs. Two of the LPs allow redemption by terms set forth in the LP agreements; the others do not permit redemption. Income and capital are to be periodically distributed at the discretion of the LP over time frames that are anticipated to span up to ten years. (5) This investment is comprised of four unrelated LP funds. Two funds seek to obtain superior risk-adjusted absolute returns through a diversified portfolio of debt securities, including bonds, loans and other asset-backed instruments. A third fund focuses on private middle market company mezzanine loans, while the remaining fund seeks event driven opportunities across the corporate credit spectrum. Two funds are allowed redemptions at any quarter-end with a prior notice requirement of 90 days; one fund permits redemption at any quarter-end with a prior notice requirement of 180 days and one fund does not allow redemptions. For the fund that does not allow redemptions, income and capital are to be periodically distributed at the discretion of the LP over time frames that are anticipated to span up to twelve years. (6) This investment is comprised of multiple unrelated LPs/LLCs funds. One fund is a LLC focused on investing in North American consumer products companies, comprised of equity and equity-related securities, as well as debt instruments. A second fund is focused on aircraft investments, along with components and assets related to aircrafts. For both funds, redemptions are not permitted. Another fund is a LP focused on North American energy infrastructure assets that allows redemption with consent of the General Partner. The remaining funds are real estate focused LPs, one of which allows for redemption with prior notice. ProAssurance may not sell, transfer or assign its interest in any of the above LPs/LLCs without special consent from the LPs/LLCs. Nonrecurring Fair Value Measurement ProAssurance did not have any assets or liabilities that were measured at fair value on a nonrecurring basis at March 31, 2021or December 31, 2020. Financial Instruments - Methodologies Other Than Fair Value The following table provides the estimated fair value of the Company's financial instruments that, in accordance with GAAP for the type of investment, are measured using a methodology other than fair value. Fair values provided primarily fall within the Level 3 fair value category. March 31, 2021 December 31, 2020 (In thousands) Carrying Fair Carrying Fair Financial assets: BOLI $ 66,932 $ 66,932 $ 67,847 $ 67,847 Other investments $ 2,370 $ 2,370 $ 2,952 $ 2,952 Other assets $ 33,869 $ 33,885 $ 31,128 $ 31,141 Financial liabilities: Senior notes due 2023* $ 250,000 $ 271,105 $ 250,000 $ 269,160 Mortgage Loans* $ 35,723 $ 35,723 $ 36,113 $ 36,113 Other liabilities $ 32,548 $ 32,548 $ 30,334 $ 30,334 * Carrying value excludes unamortized debt issuance costs. The fair value of the BOLI was equal to the cash surrender value associated with the policies on the valuation date. Other investments listed in the table above include FHLB common stock carried at cost and an annuity investment carried at amortized cost. Two of ProAssurance's insurance subsidiaries are members of an FHLB. The estimated fair value of the FHLB common stock was based on the amount the subsidiaries would receive if their memberships were canceled, as the memberships cannot be sold. The fair value of the annuity represents the present value of the expected future cash flows discounted using a rate available in active markets for similarly structured instruments. Other assets and other liabilities primarily consisted of related investment assets and liabilities associated with funded deferred compensation agreements. The fair value of the funded deferred compensation assets was based upon quoted market prices, which is categorized as a Level 1 valuation, and had a fair value of $32.8 million and $30.6 million at March 31, 2021 and December 31, 2020, respectively. The deferred compensation liabilities are adjusted to match the fair value of the deferred compensation assets. Other assets also included an unsecured note receivable under a separate line of credit agreement. The fair value of the note receivable was based on the present value of expected cash flows from the note receivable, discounted at market rates on the valuation date for receivables with similar credit standings and similar payment structures. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Available-for-sale fixed maturities at March 31, 2021 and December 31, 2020 included the following: March 31, 2021 (In thousands) Amortized Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturities, available-for-sale U.S. Treasury obligations $ 101,045 $ 2,088 $ 256 $ 102,877 U.S. Government-sponsored enterprise obligations 11,959 106 121 11,944 State and municipal bonds 312,809 11,196 1,540 322,465 Corporate debt 1,395,466 42,572 9,172 1,428,866 Residential mortgage-backed securities 268,344 5,727 2,523 271,548 Agency commercial mortgage-backed securities 13,196 537 15 13,718 Other commercial mortgage-backed securities 119,145 3,254 1,080 121,319 Other asset-backed securities 287,659 3,227 350 290,536 $ 2,509,623 $ 68,707 $ 15,057 $ 2,563,273 December 31, 2020 (In thousands) Amortized Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturities, available-for-sale U.S. Treasury obligations $ 104,097 $ — $ 2,985 $ 23 $ 107,059 U.S. Government-sponsored enterprise obligations 12,103 — 158 — 12,261 State and municipal bonds 316,022 — 16,937 39 332,920 Corporate debt 1,267,992 552 63,204 1,302 1,329,342 Residential mortgage-backed securities 269,752 — 7,171 382 276,541 Agency commercial mortgage-backed securities 12,623 — 687 — 13,310 Other commercial mortgage-backed securities 109,244 — 4,788 940 113,092 Other asset-backed securities 269,742 — 4,006 742 273,006 $ 2,361,575 $ 552 $ 99,936 $ 3,428 $ 2,457,531 The recorded cost basis and estimated fair value of available-for-sale fixed maturities at March 31, 2021, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. (In thousands) Amortized Due in one Due after Due after Due after Total Fair Fixed maturities, available-for-sale U.S. Treasury obligations $ 101,045 $ 23,143 $ 70,919 $ 8,815 $ — $ 102,877 U.S. Government-sponsored enterprise obligations 11,959 3,870 5,044 2,887 143 11,944 State and municipal bonds 312,809 6,114 153,779 144,719 17,853 322,465 Corporate debt 1,395,466 140,572 755,625 481,431 51,238 1,428,866 Residential mortgage-backed securities 268,344 271,548 Agency commercial mortgage-backed securities 13,196 13,718 Other commercial mortgage-backed securities 119,145 121,319 Other asset-backed securities 287,659 290,536 $ 2,509,623 $ 2,563,273 Excluding obligations of the U.S. Government, U.S. Government-sponsored enterprises and a U.S. Government obligations money market fund, no investment in any entity or its affiliates exceeded 10% of shareholders’ equity at March 31, 2021. Cash and securities with a carrying value of $41.7 million at March 31, 2021 were on deposit with various state insurance departments to meet regulatory requirements. As a member of Lloyd's, ProAssurance is required to maintain capital at Lloyd's, referred to as FAL, to support underwriting by Syndicate 1729 and Syndicate 6131. At March 31, 2021, ProAssurance's FAL investments were comprised of available-for-sale fixed maturities with a fair value of $102.8 million and cash and cash equivalents of $4.0 million on deposit with Lloyd's in order to satisfy these FAL requirements. Investments Held in a Loss Position The following tables provide summarized information with respect to investments held in an unrealized loss position at March 31, 2021 and December 31, 2020, including the length of time the investment had been held in a continuous unrealized loss position. March 31, 2021 Total Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Loss Value Loss Value Loss Fixed maturities, available-for-sale U.S. Treasury obligations $ 26,250 $ 256 $ 26,250 $ 256 $ — $ — U.S. Government-sponsored enterprise obligations 5,714 121 5,714 121 — — State and municipal bonds 67,604 1,540 67,604 1,540 — — Corporate debt 397,470 9,172 370,642 8,704 26,828 468 Residential mortgage-backed securities 105,643 2,523 99,580 2,253 6,063 270 Agency commercial mortgage-backed securities 1,276 15 1,276 15 — — Other commercial mortgage-backed securities 41,832 1,080 35,400 437 6,432 643 Other asset-backed securities 71,365 350 59,054 280 12,311 70 $ 717,154 $ 15,057 $ 665,520 $ 13,606 $ 51,634 $ 1,451 December 31, 2020 Total Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Loss Value Loss Value Loss Fixed maturities, available-for-sale U.S. Treasury obligations $ 14,390 $ 23 $ 14,390 $ 23 $ — $ — State and municipal bonds 6,416 39 6,416 39 — — Corporate debt 94,695 1,302 79,436 1,020 15,259 282 Residential mortgage-backed securities 34,928 382 34,509 381 419 1 Other commercial mortgage-backed securities 18,766 940 18,480 935 286 5 Other asset-backed securities 43,739 742 37,850 701 5,889 41 $ 212,934 $ 3,428 $ 191,081 $ 3,099 $ 21,853 $ 329 As of March 31, 2021, excluding U.S. Government or U.S. Government-sponsored enterprise obligations, there were 784 debt securities (28.5% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 514 issuers. The greatest and second greatest unrealized loss positions among those securities were each approximately $0.5 million. The securities were evaluated for impairment as of March 31, 2021. As of December 31, 2020, excluding U.S. Government or U.S. Government-sponsored enterprise obligations, there were 292 debt securities (11.1% of all available-for-sale fixed maturity securities held) in an unrealized loss position representing 229 issuers. The greatest and second greatest unrealized loss positions among those securities were approximately $0.4 million and $0.2 million, respectively. The securities were evaluated for impairment as of December 31, 2020. Each quarter, ProAssurance performs a detailed analysis for the purpose of assessing whether any of the securities it holds in an unrealized loss position has suffered an impairment due to credit or non-credit factors. A detailed discussion of the factors considered in the assessment is included in Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K. Fixed maturity securities held in an unrealized loss position at March 31, 2021, excluding asset-backed securities, have paid all scheduled contractual payments and are expected to continue doing so. Expected future cash flows of asset-backed securities, excluding those issued by GNMA, FNMA and FHLMC, held in an unrealized loss position were estimated as part of the March 31, 2021 impairment evaluation using the most recently available six-month historical performance data for the collateral (loans) underlying the security or, if historical data was not available, sector based assumptions, and equaled or exceeded the current amortized cost basis of the security. The following tables present a roll forward of the allowance for expected credit losses on available-for-sale fixed maturities for the three months ended March 31, 2021 and 2020. Three Months Ended March 31, 2021 (In thousands) Corporate Debt Total Balance at December 31, 2020 $ 552 $ 552 Reductions related to: Securities sold during the period (552) (552) Balance at March 31, 2021 $ — $ — Three Months Ended March 31, 2020 (In thousands) Corporate Debt Total Balance at December 31, 2019 $ — $ — Additional credit losses related to securities for which: No allowance for credit losses has been previously recognized 1,163 1,163 Balance at March 31, 2020 $ 1,163 $ 1,163 Other information regarding sales and purchases of fixed maturity available-for-sale securities is as follows: Three Months Ended March 31 (In millions) 2021 2020 Proceeds from sales (exclusive of maturities and paydowns) $ 61.9 $ 64.9 Purchases $ 342.2 $ 227.5 Equity Investments ProAssurance's equity investments are carried at fair value with changes in fair value recognized in income as a component of net realized investment gains (losses) during the period of change. Equity investments on the Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 primarily included stocks, bond funds and investment funds. Short-term Investments ProAssurance's short-term investments, which have a maturity at purchase of one year or less, are primarily comprised of investments in U.S. treasury obligations, commercial paper and money market funds. Short-term investments are carried at fair value which approximates the cost of the securities due to their short-term nature. BOLI ProAssurance holds BOLI policies that are carried at the current cash surrender value of the policies (original cost $33 million). All insured individuals were members of ProAssurance management at the time the policies were acquired. The primary purpose of the program is to offset future employee benefit expenses through earnings on the cash value of the policies. ProAssurance is the owner and beneficiary of these policies. Net Investment Income Net investment income by investment category was as follows: Three Months Ended (In thousands) 2021 2020 Fixed maturities $ 15,692 $ 18,285 Equities 694 1,909 Short-term investments, including Other 273 1,472 BOLI 444 456 Investment fees and expenses (2,086) (1,292) Net investment income $ 15,017 $ 20,830 Investment in Unconsolidated Subsidiaries ProAssurance's investment in unconsolidated subsidiaries were as follows: March 31, 2021 Carrying Value (In thousands) Percentage March 31, December 31, Qualified affordable housing project tax credit partnerships See below $ 24,351 $ 27,719 All other investments, primarily investment fund LPs/LLCs See below 275,009 282,810 $ 299,360 $ 310,529 Qualified affordable housing project tax credit partnership interests held by ProAssurance generate investment returns by providing tax benefits to fund investors in the form of tax credits and project operating losses. The carrying value of these investments reflects ProAssurance's total commitments (both funded and unfunded) to the partnerships, less any amortization. ProAssurance's ownership percentage relative to two of the tax credit partnership interests is almost 100%; these interests had a carrying value of $8.1 million at March 31, 2021 and $9.4 million at December 31, 2020. ProAssurance's ownership percentage relative to the remaining tax credit partnership interests is less than 20%; these interests had a carrying value of $16.3 million at March 31, 2021 and $18.3 million at December 31, 2020. Since ProAssurance has the ability to exert influence over the partnerships but does not control them, all are accounted for using the equity method. See further discussion of the entities in which ProAssurance holds passive interests in Note 12. ProAssurance holds interests in investment fund LPs/LLCs and other equity method investments and LPs/LLCs which are not considered to be investment funds. ProAssurance's ownership percentage relative to four of the LPs/LLCs is greater than 25%, which is expected to be reduced as the funds mature and other investors participate in the funds; these investments had a carrying value of $47.0 million at March 31, 2021 and $46.2 million at December 31, 2020. ProAssurance's ownership percentage relative to the remaining investments and LPs/LLCs is less than 25%; these interests had a carrying value of $228.0 million at March 31, 2021 and $236.6 million at December 31, 2020. ProAssurance does not have the ability to exert control over any of these funds. Equity in Earnings (Loss) of Unconsolidated Subsidiaries Equity in earnings (loss) of unconsolidated subsidiaries included losses from qualified affordable housing project tax credit partnerships and a historic tax credit partnership. Investment results recorded reflect ProAssurance's allocable portion of partnership operating results. Tax credits reduce income tax expense in the period they are recognized. The results recorded and tax credits recognized related to ProAssurance's tax credit partnership investments were as follows: Three Months Ended (In thousands) 2021 2020 Qualified affordable housing project tax credit partnerships Losses recorded $ 3,368 $ 4,342 Tax credits recognized $ 3,324 $ 4,369 Historic tax credit partnership* Losses (gains) recorded $ (182) $ 323 Tax credits recognized $ 50 $ 103 * ProAssurance holds a historic tax credit partnership which was fully amortized in 2020. ProAssurance received a distribution associated with this investment during the three months ended March 31, 2021 as a result of positive cash flows from a project recognizing an operating gain. See further discussion on this investment in Note 3 of the Notes to the Consolidated Financial Statements in ProAssurance’s December 31, 2020 report on Form 10-K. The tax credits generated from the Company's tax credit partnership investments of $3.4 million for the three months ended March 31, 2021 were deferred and are expected to be utilized in future periods. Tax credits provided by the underlying projects of the Company's historic tax credit partnership are typically available in the tax year in which the project is put into active service, whereas the tax credits provided by qualified affordable housing project tax credit partnerships are provided over approximately a ten year period. Significant Equity Method Investee As previously discussed, ProAssurance holds certain investments that are measured using the equity method of accounting, primarily investments in LPs/LLCs, which are carried as a part of Investment in Unconsolidated Subsidiaries on the Condensed Consolidated Balance Sheet. Each quarter, ProAssurance assesses the significance of its equity method investees. As of March 31, 2021, ProAssurance determined one equity method investee, NB Private Equity Credit Opportunities Fund LP, to be significant. This fund invests primarily in senior/junior debt instruments of private equity backed companies, including secured and unsecured loans, bonds and other instruments. The following table presents gross summarized financial information for this fund, including the portion not attributable to ProAssurance, derived from the fund's financial statements which are prepared in accordance with GAAP. As the majority of ProAssurance's equity method investments report their results to the Company on a one quarter lag, the summarized financial information below represents this fund's results for the three months ended December 31, 2020. Three Months Ended March 31, 2021 (In thousands) Net investment income $ 40,636 Net realized investment gains (losses) 14,587 Net change in unrealized appreciation (depreciation) 61,777 Net gain (loss) $ 117,000 Net gain (loss) attributable to ProAssurance* $ 2,056 *Represents ProAssurance's share of the fund's aggregate income or loss, which is included as a component of equity in earnings (loss) of unconsolidated subsidiaries in its Condensed Consolidated Statement of Income and Comprehensive Income for the three months ended March 31, 2021. Net Realized Investment Gains (Losses) Realized investment gains and losses are recognized on the first-in, first-out basis. The following table provides detailed information regarding net realized investment gains (losses): Three Months Ended (In thousands) 2021 2020 Total impairment losses: Corporate debt $ — $ (1,817) Portion of impairment losses recognized in other comprehensive income before taxes: Corporate debt — 654 Net impairment losses recognized in earnings — (1,163) Gross realized gains, available-for-sale fixed maturities 4,294 2,427 Gross realized (losses), available-for-sale fixed maturities (187) (1,403) Net realized gains (losses), trading fixed maturities 72 103 Net realized gains (losses), equity investments 4,189 15,190 Net realized gains (losses), other investments 3,196 48 Change in unrealized holding gains (losses), trading fixed maturities (214) (118) Change in unrealized holding gains (losses), equity investments (2,937) (38,477) Change in unrealized holding gains (losses), convertible securities, carried at fair value (190) (5,273) Other 626 (7) Net realized investment gains (losses) $ 8,849 $ (28,673) For the three months ended March 31, 2021, ProAssurance did not recognize any credit-related impairment losses in earnings or non-credit impairment losses in OCI. For the three months ended March 31, 2020, ProAssurance recognized credit-related impairment losses in earnings of $1.2 million and non-credit impairment losses in OCI of $0.7 million. The credit-related impairment losses related to four corporate bonds in the energy, consumer and entertainment sectors. The non-credit related impairment losses related to three corporate bonds in the energy and consumer sectors. ProAssurance recognized $8.8 million of net realized investment gains during the three months ended March 31, 2021, driven primarily by realized gains on the sale of available-for-sale fixed maturities and equity investments. ProAssurance recognized $28.7 million of net realized investment losses during the three months ended March 31, 2020 driven by the impact of decreases in fair value on its equity portfolio of $38.5 million and convertible securities of $5.3 million attributable to disruptions in the global financial markets related to COVID-19 during the first quarter of 2020. The following table presents a roll forward of cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the impairment was recorded in OCI. Three Months Ended (In thousands) 2021 2020 Balance beginning of period $ 552 $ 470 Additional credit losses recognized during the period, related to securities for which: No impairment has been previously recognized — 1,064 Reductions due to: Securities sold during the period (realized) (552) — Balance March 31 $ — $ 1,534 |
Retroactive Insurance Contracts
Retroactive Insurance Contracts | 3 Months Ended |
Mar. 31, 2021 | |
Insurance [Abstract] | |
Retroactive Insurance Contracts | Retroactive Insurance ContractsProAssurance offers custom alternative risk solutions which includes assumed reinsurance. In the first quarter of 2021, ProAssurance entered into an assumed reinsurance arrangement with a regional hospital group. As the contract included both prospective coverage and retroactive coverage, ProAssurance bifurcated the provisions of the contract and accounted for each component separately. As of the contract effective date, ProAssurance recognized total net premiums written of $4.5 million, comprised of $2.2 million of prospective coverage and $2.3 million of retroactive coverage, total net premiums earned of $3.0 million, comprised of $0.7 million of prospective coverage and $2.3 million of retroactive coverage and total net losses and loss adjustment expenses of $2.9 million in the Condensed Consolidated Statement of Income and Comprehensive Income for the three months ended March 31, 2021. For additional information regarding ProAssurance's accounting policy for retroactive insurance contracts, see Note 1 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K.Reserve for Losses and Loss Adjustment Expenses The reserve for losses is established based on estimates of individual claims and actuarially determined estimates of future losses based on ProAssurance’s past loss experience, available industry data and projections as to future claims frequency, severity, inflationary trends and settlement patterns. Estimating the reserve, particularly the reserve appropriate for liability exposures, is a complex process. For a high proportion of the risks insured or reinsured by ProAssurance, claims may be resolved over an extended period of time, often five years or more, and may be subject to litigation. Estimating losses requires ProAssurance to make and revise judgments and assessments regarding multiple uncertainties over an extended period of time. As a result, the reserve estimate may vary considerably from the eventual outcome. The assumptions used in establishing ProAssurance’s reserve are regularly reviewed and updated by management as new data becomes available. Changes to estimates of previously established reserves are included in earnings in the period in which the estimate is changed. ProAssurance believes that the methods it uses to establish reserves are reasonable and appropriate. Each year, ProAssurance uses internal actuaries to review the reserve for losses of each insurance subsidiary. ProAssurance also engages consulting actuaries to review ProAssurance claims data and provide observations regarding cost trends, rate adequacy and ultimate loss costs. The statutory filings of each insurance company with the insurance regulators must be accompanied by a consulting actuary's certification as to their respective reserves. ProAssurance considers the views of the actuaries as well as other factors, such as premium rates, historical paid and incurred loss development trends, and an evaluation of the current loss environment including frequency, severity, the expected effect of inflation, general economic and social trends, and the legal and political environment in establishing the amount of its reserve for losses. The Company expects there will be impacts to these factors as well as to the timing of loss emergence and ultimate loss ratios for certain coverages it underwrites as a result of COVID-19 and the related economic shutdown; however, the extent to which COVID-19 impacts these factors is highly uncertain and cannot be predicted (see "Item 1A, Risk Factors" and Note 8 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K for additional information). The industry is experiencing new conditions, including the postponement of court cases, changes in settlement trends and a significant reduction in economic activity and insured exposure in some classes. ProAssurance's booked reserves as of March 31, 2021 include consideration of these factors, but the duration and degree to which these issues persist, along with potential legislative, regulatory or judicial actions, could result in significant changes to the Company's reserve estimates in future periods. ProAssurance partitions its reserve by accident year, which is the year in which the claim becomes its liability. For claims-made policies, the insured event generally becomes a liability when the event is first reported to the Company. For occurrence policies, the insured event becomes a liability when the event takes place. For retroactive coverages, the insured event becomes a liability at inception of the underlying contract. As claims are incurred (reported) and claim payments are made, they are aggregated by accident year for analysis purposes. ProAssurance also partitions its reserve by reserve type: case reserves and IBNR reserves. Case reserves are established by the claims department based upon the particular circumstances of each reported claim and represent ProAssurance’s estimate of the future loss costs (often referred to as expected losses) that will be paid on reported claims. Case reserves are decremented as claim payments are made and are periodically adjusted upward or downward as estimates regarding the amount of future losses are revised; a reported loss for an individual claim equates to the case reserve at any point in time plus the claim payments that have been made to date. IBNR reserves represent an estimate, in the aggregate, of future development on losses that have been reported to ProAssurance plus an estimate of losses that have been incurred but not reported. Development of Prior Accident Years In addition to setting the initial reserve for the current accident year, each period ProAssurance reassesses the amount of reserve required for prior accident years. The foundation of ProAssurance’s reserve re-estimation process is an actuarial analysis that is performed by both the internal and consulting actuaries. This detailed analysis projects ultimate losses based on partitions which include line of business, geography, coverage layer and accident year. The procedure uses the most representative data for each partition, capturing its unique patterns of development and trends. ProAssurance believes that the use of consulting actuaries provides an independent view of the loss data as well as a broader perspective on industry loss trends. Activity in the reserve for losses and loss adjustment expenses is summarized as follows: (In thousands) Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Year Ended December 31, 2020 Balance, beginning of year $ 2,417,179 $ 2,346,526 $ 2,346,526 Less reinsurance recoverables on unpaid losses and loss adjustment expenses 385,087 390,708 390,708 Net balance, beginning of year 2,032,092 1,955,818 1,955,818 Net losses: Current year (1)(2)(3) 154,634 170,874 711,846 Favorable development of reserves established in prior years, net (4,849) (6,042) (50,399) Total 149,785 164,832 661,447 Paid related to: Current year (10,513) (15,876) (83,204) Prior years (126,534) (163,518) (501,969) Total paid (137,047) (179,394) (585,173) Net balance, end of period 2,044,830 1,941,256 2,032,092 Plus reinsurance recoverables on unpaid losses and loss adjustment expenses 393,420 389,792 385,087 Balance, end of period $ 2,438,250 $ 2,331,048 $ 2,417,179 (1) Current year net losses for the year ended December 31, 2020 included $9.2 million of amortization of a PDR which offsets the impact of the losses incurred associated with the premium earned related to a large national healthcare account's claims-made policy in the Specialty P&C segment. For additional information regarding the PDR, see Note 7 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K. (2) During the second quarter of 2020, the aforementioned large national healthcare account did not renew on terms offered by the Company and exercised its contractual option to purchase extended reporting endorsement or "tail" coverage. As a result, ProAssurance recognized total current year losses of $60.0 million (assumes a full limit loss) within the Specialty P&C segment for the year ended December 31, 2020 (see Note 7 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K). (3) Current year net losses for the three months ended March 31, 2021 included incurred losses of $2.9 million related to an assumed reinsurance arrangement entered into during the first quarter of 2021 in the Specialty P&C segment (see Note 4). Estimating liability reserves is complex and requires the use of many assumptions. As time passes and ultimate losses for prior years are either known or become subject to a more precise estimation, ProAssurance increases or decreases the reserve estimates established in prior periods. The consolidated net favorable loss development recognized in the three months ended March 31, 2021 primarily reflected a lower than anticipated claims severity trend (i.e., the average size of a claim) in the Specialty P&C segment, primarily related to the 2017 and 2018 accident years. The net favorable development also reflected overall favorable trends in claim closing patterns in the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance segments. The net favorable loss development recognized in the Workers' Compensation Insurance segment is primarily related to the 2017 accident year and prior. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment is primarily related to the 2018 and 2019 accident years. Consolidated net favorable loss development recognized in the three months ended March 31, 2021 was partially offset by unfavorable reserve development recognized in the Lloyd's Syndicates segment driven by certain property and catastrophe related losses. The net favorable loss development recognized during the three months ended March 31, 2020 primarily reflected overall favorable trends in claim closing patterns in the Segregated Portfolio Cell Reinsurance and Workers' Compensation Insurance segments as well as a reduction in the reserve for potential ECO/XPL claims in the Specialty P&C segment. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment primarily related to the 2016 through 2018 accident years and the net favorable loss development recognized in the Workers' Compensation Insurance segment primarily related to the 2015 and 2016 accident years. The net favorable loss development recognized for the year ended December 31, 2020 primarily reflected a lower than anticipated claims severity trend (i.e., the average size of a claim) in the Specialty P&C segment, primarily related to the 2014 through 2017 accident years. The net favorable development also reflected overall favorable trends in claim closing patterns in the Segregated Portfolio Cell Reinsurance and Workers' Compensation Insurance segments. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment primarily related to the 2014 through 2019 accident years and the net favorable loss development recognized in the Workers' Compensation Insurance segment primarily related to the 2014 through 2017 accident years. For additional information regarding ProAssurance's reserve for losses, see Note 1 and Note 8 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For interim periods, ProAssurance generally utilizes the estimated annual effective tax rate method under which the Company determines its provision (benefit) for income taxes based on the current estimate of its annual effective tax rate. Under the estimated annual effective tax rate method, items which are unusual, infrequent, or that cannot be reliably estimated are considered in the effective tax rate in the period in which the item is included in income, and are referred to as discrete items. The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes primarily because ProAssurance recognizes tax credit benefits transferred from tax credit partnership investments. In calculating the Company's year-to-date income tax expense (benefit), the Company includes the estimated benefit of tax credits for the year-to-date period based on the most recently available information provided by the tax credit partnerships; the actual amounts of credits provided by the tax credit partnerships may prove to be different than the Company's estimates. The effect of such a difference is recognized in the period identified. ProAssurance had a receivable for U.S. federal and U.K. income taxes carried as a part of other assets of $6.6 million at March 31, 2021 and $18.9 million at December 31, 2020. The liability for unrecognized tax benefits, which is included in the total receivable for U.S. federal and U.K. income taxes, was $5.8 million and $5.7 million at March 31, 2021 and December 31, 2020, respectively, which included an accrued liability for interest of approximately $0.6 million and $0.5 million, respectively. Coronavirus Aid, Relief and Economic Security Act In response to COVID-19, the CARES Act was signed into law on March 27, 2020 and contains several provisions for corporations and eases certain deduction limitations originally imposed by the TCJA. See further discussion in Note 5 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K. As a result of the CARES Act, ProAssurance now has the ability to carryback NOLs generated in tax years 2018, 2019 and 2020 for up to five years. The Company has an NOL of approximately $45.3 million from the 2020 tax year that will be carried back to the 2015 tax year and is expected to generate a tax refund of approximately $15.9 million. Additionally, the Company had an NOL of approximately $25.6 million from the 2019 tax year which was carried back to the 2014 tax year and generated a tax refund of approximately $9.0 million which the Company received in February 2021. American Rescue Plan Act of 2021 In response to economic concerns associated with COVID-19, the American Rescue Plan Act of 2021 was signed into law on March 11, 2021 and includes an expansion of the number of employees covered by the limitation on the deductibility of compensation in excess of $1 million. This provision is effective for tax years beginning after December 31, 2026. The Company has evaluated this provision as well as the other provisions of the American Rescue Plan Act of 2021 and concluded that they will not have a material impact on ProAssurance's financial position or results of operations as of March 31, 2021. |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Goodwill is recognized in conjunction with business acquisitions as the excess of the purchase consideration for the business acquisition over the fair value of identifiable assets acquired and liabilities assumed. The fair value of identifiable assets and liabilities, and thus goodwill, is subject to redetermination within a measurement period of up to one year following completion of a business acquisition. Goodwill is tested for impairment annually or more frequently if circumstances indicate an impairment may have occurred. The date of the Company's annual goodwill impairment test is October 1. Impairment of goodwill is tested at the reporting unit level, which is consistent with the Company's reportable segments identified in Note 14. See Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K for further information on how the Company tests goodwill for impairment. Of the Company's five reporting units, two have net goodwill: Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance. The table below presents the carrying amount of goodwill and accumulated impairment losses by reporting unit at March 31, 2021 and December 31, 2020: Reporting Unit (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Total Goodwill, gross as of January 1, 2020 $ 161,115 $ 44,110 $ 5,500 $ 210,725 Accumulated impairment losses* (161,115) — — (161,115) Goodwill, net as of December 31, 2020 — 44,110 5,500 49,610 Accumulated impairment losses — — — — Goodwill, net as of March 31, 2021 $ — $ 44,110 $ 5,500 $ 49,610 * Accumulated impairment losses in 2020 represent the pre-tax impairment loss of $161.1 million recognized during the third quarter of 2020 in relation to the Specialty P&C reporting unit. There were no other impairment losses taken prior to 2020. For additional information regarding ProAssurance's goodwill impairment in 2020, see Note 1 and Note 6 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K. |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 3 Months Ended |
Mar. 31, 2021 | |
Insurance [Abstract] | |
Reserve for Losses and Loss Adjustment Expenses | Retroactive Insurance ContractsProAssurance offers custom alternative risk solutions which includes assumed reinsurance. In the first quarter of 2021, ProAssurance entered into an assumed reinsurance arrangement with a regional hospital group. As the contract included both prospective coverage and retroactive coverage, ProAssurance bifurcated the provisions of the contract and accounted for each component separately. As of the contract effective date, ProAssurance recognized total net premiums written of $4.5 million, comprised of $2.2 million of prospective coverage and $2.3 million of retroactive coverage, total net premiums earned of $3.0 million, comprised of $0.7 million of prospective coverage and $2.3 million of retroactive coverage and total net losses and loss adjustment expenses of $2.9 million in the Condensed Consolidated Statement of Income and Comprehensive Income for the three months ended March 31, 2021. For additional information regarding ProAssurance's accounting policy for retroactive insurance contracts, see Note 1 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K.Reserve for Losses and Loss Adjustment Expenses The reserve for losses is established based on estimates of individual claims and actuarially determined estimates of future losses based on ProAssurance’s past loss experience, available industry data and projections as to future claims frequency, severity, inflationary trends and settlement patterns. Estimating the reserve, particularly the reserve appropriate for liability exposures, is a complex process. For a high proportion of the risks insured or reinsured by ProAssurance, claims may be resolved over an extended period of time, often five years or more, and may be subject to litigation. Estimating losses requires ProAssurance to make and revise judgments and assessments regarding multiple uncertainties over an extended period of time. As a result, the reserve estimate may vary considerably from the eventual outcome. The assumptions used in establishing ProAssurance’s reserve are regularly reviewed and updated by management as new data becomes available. Changes to estimates of previously established reserves are included in earnings in the period in which the estimate is changed. ProAssurance believes that the methods it uses to establish reserves are reasonable and appropriate. Each year, ProAssurance uses internal actuaries to review the reserve for losses of each insurance subsidiary. ProAssurance also engages consulting actuaries to review ProAssurance claims data and provide observations regarding cost trends, rate adequacy and ultimate loss costs. The statutory filings of each insurance company with the insurance regulators must be accompanied by a consulting actuary's certification as to their respective reserves. ProAssurance considers the views of the actuaries as well as other factors, such as premium rates, historical paid and incurred loss development trends, and an evaluation of the current loss environment including frequency, severity, the expected effect of inflation, general economic and social trends, and the legal and political environment in establishing the amount of its reserve for losses. The Company expects there will be impacts to these factors as well as to the timing of loss emergence and ultimate loss ratios for certain coverages it underwrites as a result of COVID-19 and the related economic shutdown; however, the extent to which COVID-19 impacts these factors is highly uncertain and cannot be predicted (see "Item 1A, Risk Factors" and Note 8 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K for additional information). The industry is experiencing new conditions, including the postponement of court cases, changes in settlement trends and a significant reduction in economic activity and insured exposure in some classes. ProAssurance's booked reserves as of March 31, 2021 include consideration of these factors, but the duration and degree to which these issues persist, along with potential legislative, regulatory or judicial actions, could result in significant changes to the Company's reserve estimates in future periods. ProAssurance partitions its reserve by accident year, which is the year in which the claim becomes its liability. For claims-made policies, the insured event generally becomes a liability when the event is first reported to the Company. For occurrence policies, the insured event becomes a liability when the event takes place. For retroactive coverages, the insured event becomes a liability at inception of the underlying contract. As claims are incurred (reported) and claim payments are made, they are aggregated by accident year for analysis purposes. ProAssurance also partitions its reserve by reserve type: case reserves and IBNR reserves. Case reserves are established by the claims department based upon the particular circumstances of each reported claim and represent ProAssurance’s estimate of the future loss costs (often referred to as expected losses) that will be paid on reported claims. Case reserves are decremented as claim payments are made and are periodically adjusted upward or downward as estimates regarding the amount of future losses are revised; a reported loss for an individual claim equates to the case reserve at any point in time plus the claim payments that have been made to date. IBNR reserves represent an estimate, in the aggregate, of future development on losses that have been reported to ProAssurance plus an estimate of losses that have been incurred but not reported. Development of Prior Accident Years In addition to setting the initial reserve for the current accident year, each period ProAssurance reassesses the amount of reserve required for prior accident years. The foundation of ProAssurance’s reserve re-estimation process is an actuarial analysis that is performed by both the internal and consulting actuaries. This detailed analysis projects ultimate losses based on partitions which include line of business, geography, coverage layer and accident year. The procedure uses the most representative data for each partition, capturing its unique patterns of development and trends. ProAssurance believes that the use of consulting actuaries provides an independent view of the loss data as well as a broader perspective on industry loss trends. Activity in the reserve for losses and loss adjustment expenses is summarized as follows: (In thousands) Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Year Ended December 31, 2020 Balance, beginning of year $ 2,417,179 $ 2,346,526 $ 2,346,526 Less reinsurance recoverables on unpaid losses and loss adjustment expenses 385,087 390,708 390,708 Net balance, beginning of year 2,032,092 1,955,818 1,955,818 Net losses: Current year (1)(2)(3) 154,634 170,874 711,846 Favorable development of reserves established in prior years, net (4,849) (6,042) (50,399) Total 149,785 164,832 661,447 Paid related to: Current year (10,513) (15,876) (83,204) Prior years (126,534) (163,518) (501,969) Total paid (137,047) (179,394) (585,173) Net balance, end of period 2,044,830 1,941,256 2,032,092 Plus reinsurance recoverables on unpaid losses and loss adjustment expenses 393,420 389,792 385,087 Balance, end of period $ 2,438,250 $ 2,331,048 $ 2,417,179 (1) Current year net losses for the year ended December 31, 2020 included $9.2 million of amortization of a PDR which offsets the impact of the losses incurred associated with the premium earned related to a large national healthcare account's claims-made policy in the Specialty P&C segment. For additional information regarding the PDR, see Note 7 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K. (2) During the second quarter of 2020, the aforementioned large national healthcare account did not renew on terms offered by the Company and exercised its contractual option to purchase extended reporting endorsement or "tail" coverage. As a result, ProAssurance recognized total current year losses of $60.0 million (assumes a full limit loss) within the Specialty P&C segment for the year ended December 31, 2020 (see Note 7 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K). (3) Current year net losses for the three months ended March 31, 2021 included incurred losses of $2.9 million related to an assumed reinsurance arrangement entered into during the first quarter of 2021 in the Specialty P&C segment (see Note 4). Estimating liability reserves is complex and requires the use of many assumptions. As time passes and ultimate losses for prior years are either known or become subject to a more precise estimation, ProAssurance increases or decreases the reserve estimates established in prior periods. The consolidated net favorable loss development recognized in the three months ended March 31, 2021 primarily reflected a lower than anticipated claims severity trend (i.e., the average size of a claim) in the Specialty P&C segment, primarily related to the 2017 and 2018 accident years. The net favorable development also reflected overall favorable trends in claim closing patterns in the Workers' Compensation Insurance and Segregated Portfolio Cell Reinsurance segments. The net favorable loss development recognized in the Workers' Compensation Insurance segment is primarily related to the 2017 accident year and prior. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment is primarily related to the 2018 and 2019 accident years. Consolidated net favorable loss development recognized in the three months ended March 31, 2021 was partially offset by unfavorable reserve development recognized in the Lloyd's Syndicates segment driven by certain property and catastrophe related losses. The net favorable loss development recognized during the three months ended March 31, 2020 primarily reflected overall favorable trends in claim closing patterns in the Segregated Portfolio Cell Reinsurance and Workers' Compensation Insurance segments as well as a reduction in the reserve for potential ECO/XPL claims in the Specialty P&C segment. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment primarily related to the 2016 through 2018 accident years and the net favorable loss development recognized in the Workers' Compensation Insurance segment primarily related to the 2015 and 2016 accident years. The net favorable loss development recognized for the year ended December 31, 2020 primarily reflected a lower than anticipated claims severity trend (i.e., the average size of a claim) in the Specialty P&C segment, primarily related to the 2014 through 2017 accident years. The net favorable development also reflected overall favorable trends in claim closing patterns in the Segregated Portfolio Cell Reinsurance and Workers' Compensation Insurance segments. The net favorable loss development recognized in the Segregated Portfolio Cell Reinsurance segment primarily related to the 2014 through 2019 accident years and the net favorable loss development recognized in the Workers' Compensation Insurance segment primarily related to the 2014 through 2017 accident years. For additional information regarding ProAssurance's reserve for losses, see Note 1 and Note 8 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies ProAssurance is involved in various legal actions related to insurance policies and claims handling including, but not limited to, claims asserted by policyholders. These types of legal actions arise in the Company's ordinary course of business and, in accordance with GAAP for insurance entities, are considered as a part of the Company's loss reserving process, which is described in detail under the heading "Losses and Loss Adjustment Expenses" in the Accounting Policies section in Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 Form 10-K. ProAssurance also has other direct actions against the Company unrelated to its claims activity which are evaluated and accounted for as a part of other liabilities. For these corporate legal actions, the Company evaluates each case separately and establishes what it believes is an appropriate reserve based on GAAP guidance related to contingent liabilities. As of March 31, 2021 there were no material reserves established for corporate legal actions. As a member of Lloyd's, ProAssurance has obligations to Syndicate 1729 and Syndicate 6131 including a Syndicate Credit Agreement and FAL requirements. The Syndicate Credit Agreement is an unconditional revolving credit agreement to the Premium Trust Fund of Syndicate 1729 for the purpose of providing working capital with maximum permitted borrowings of £30.0 million (approximately $41.3 million as of March 31, 2021). The Syndicate Credit Agreement has a maturity date of December 31, 2021 and contains an annual auto-renewal feature which allows for ProAssurance to elect to non-renew if notice is given at least 30 days prior to the next auto-renewal date, which is one year prior to the maturity date. Under the Syndicate Credit Agreement, advances bear interest at 3.8% annually and may be repaid at any time but are repayable upon demand after December 31, 2021, subject to extension through the auto-renewal feature. As of March 31, 2021, there were no outstanding borrowings under the Syndicate Credit Agreement. ProAssurance provides FAL to support underwriting by Syndicate 1729 and Syndicate 6131 and is comprised of investment securities and cash and cash equivalents deposited with Lloyd's with a total fair value of approximately $106.8 million at March 31, 2021 (see Note 3). ProAssurance has entered into financial instrument transactions that may present off-balance sheet credit risk or market risk. These transactions include a short-term loan commitment and commitments to provide funding to non-public investment entities. Under the short-term loan commitment, ProAssurance has agreed to advance funds on a 30 day basis to a counterparty provided there is no violation of any condition established in the contract. As of March 31, 2021, ProAssurance had total funding commitments related to non-public investment entities as well as the short-term loan commitment of approximately $190.5 million which included the amount at risk if the full short-term loan is extended and the counterparties default. However, the credit risk associated with the short-term loan commitment is minimal as the counterparties to the contract are highly rated commercial institutions and to-date have been performing in accordance with their contractual obligations. ProAssurance’s expected credit losses associated with this short-term loan commitment were nominal in amount as of March 31, 2021. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Leases | Leases ProAssurance is involved in a number of operating leases primarily for office facilities. Office facility leases have remaining lease terms ranging from one year to eleven years; some of which include options to extend the leases for up to fifteen years, and some of which include an option to terminate the lease within one year. ProAssurance subleases certain office facilities to third parties and classifies these leases as operating leases. The following table provides a summary of the components of net lease expense as well as the reporting location in the Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2021 and 2020. (In thousands) Location in the Condensed Consolidated Statements of Income and Comprehensive Income Three Months Ended March 31 2021 2020 Operating lease expense (1) Operating expense $ 938 $ 1,625 Sublease income (2) Other income (54) (38) Net lease expense $ 884 $ 1,587 (1) Includes short-term lease costs and variable lease costs, if applicable. For the three months ended March 31, 2021 and 2020, no short-term lease costs were recognized and variable lease costs were nominal in amount. (2) Sublease income excludes rental income from owned properties of $0.6 million during each of the three months ended March 31, 2021 and 2020 which is included in other income. See “Item 2. Properties” in ProAssurance's December 31, 2020 report on Form 10-K for a listing of currently owned properties. The following table provides supplemental lease information for operating leases on the Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020. ($ in thousands) March 31, 2021 December 31, 2020 Operating lease ROU assets $ 18,219 $ 19,013 Operating lease liabilities $ 19,168 $ 20,116 Weighted-average remaining lease term 8.26 years 8.31 years Weighted-average discount rate 2.98 % 2.97 % The following table provides supplemental lease information for the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020. Three Months Ended March 31 (In thousands) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,089 $ 1,017 The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of March 31, 2021. (In thousands) 2021 $ 3,057 2022 3,306 2023 2,608 2024 2,026 2025 1,783 Thereafter 8,875 Total future minimum lease payments 21,655 Less: Imputed interest 2,487 Total operating lease liabilities $ 19,168 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt ProAssurance’s outstanding debt consisted of the following: ($ in thousands) March 31, December 31, Senior Notes due 2023, unsecured, interest at 5.3% annually $ 250,000 $ 250,000 Mortgage Loans, outstanding borrowings are secured by first priority liens on two office buildings, and bear an interest rate of three-month LIBOR plus 1.325% (1.51% and 1.58%, respectively) determined on a quarterly basis 35,723 36,113 Total principal 285,723 286,113 Less unamortized debt issuance costs 1,301 1,400 Debt less unamortized debt issuance costs $ 284,422 $ 284,713 Revolving Credit Agreement ProAssurance has a Revolving Credit Agreement, which expires November 2024, that may be used for general corporate purposes, including, but not limited to, short-term working capital, share repurchases as authorized by the Board and support for other activities. ProAssurance's Revolving Credit Agreement permits borrowings up to $250 million, and has available a $50 million accordion feature which, if successfully subscribed, would expand the permitted borrowings to a maximum of $300 million. As of March 31, 2021 and December 31, 2020, there were no outstanding borrowings on the Revolving Credit Agreement. Covenant Compliance There are no financial covenants associated with the Senior Notes due 2023. The Revolving Credit Agreement contains customary representations, covenants and events constituting default, and remedies for default. The Revolving Credit Agreement also defines financial covenants regarding permitted leverage ratios. ProAssurance is currently in compliance with all covenants of the Revolving Credit Agreement. On April 19, 2021, ProAssurance amended and restated its Revolving Credit Agreement to allow for additional indebtedness of a subsidiary in preparation of the close of the NORCAL acquisition. This amendment to the Revolving Credit Agreement is included as Exhibit 10.1 of this report. The Mortgage Loans contain customary representations, covenants and events constituting default, and remedies for default. The Mortgage Loans also define a financial covenant regarding a permitted leverage ratio for each of the two ProAssurance subsidiaries that entered into the Mortgage Loans. ProAssurance's subsidiaries are currently in compliance with the financial covenant of the Mortgage Loans. Additional Information For additional information regarding ProAssurance's debt, see Note 11 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity At March 31, 2021 and December 31, 2020, ProAssurance had 100 million shares of authorized common stock and 50 million shares of authorized preferred stock. The Board has the authority to determine provisions for the issuance of preferred shares, including the number of shares to be issued, the designations, powers, preferences and rights, and the qualifications, limitations or restrictions of such shares. ProAssurance declared cash dividends of $0.05 and $0.31 per share during the first quarter of 2021 and 2020, respectively. Dividends declared during the 2021 and 2020 three-month periods totaled $2.7 million and $16.7 million, respectively. Any decision to pay future cash dividends is subject to the Board’s final determination after a comprehensive review of financial performance, future expectations and other factors deemed relevant by the Board. See Note 12 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K for additional information. At March 31, 2021, Board authorizations for the repurchase of common shares or the retirement of outstanding debt of $110 million remained available for use. ProAssurance did not repurchase any common shares during the three months ended March 31, 2021 or 2020. Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) The following tables provide a detailed breakout of the components of AOCI and the amounts reclassified from AOCI to net income (loss). The tax effects of all amounts in the tables below, except for an immaterial amount of unrealized gains and losses on available-for-sale securities held at the Company's U.K. subsidiary, were computed using the enacted U.S. federal corporate tax rate of 21%. For the three months ended March 31, 2021 and 2020, OCI included a deferred tax benefit of $8.3 million and $11.0 million, respectively. The changes in the balance of each component of AOCI for the three months ended March 31, 2021 and 2020 were as follows: (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities* Accumulated Other Comprehensive Income (Loss) Balance December 31, 2020 $ 75,388 $ (57) $ (104) $ 75,227 OCI, before reclassifications, net of tax (30,415) — — (30,415) Amounts reclassified from AOCI, net of tax (3,347) 57 — (3,290) Net OCI, current period (33,762) 57 — (33,705) Balance March 31, 2021 $ 41,626 $ — $ (104) $ 41,522 (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities* Accumulated Other Comprehensive Income (Loss) Balance December 31, 2019 $ 36,577 $ 300 $ 78 $ 36,955 OCI, before reclassifications, net of tax (42,497) 517 — (41,980) Amounts reclassified from AOCI, net of tax 115 — — 115 Net OCI, current period (42,382) 517 — (41,865) Balance March 31, 2020 $ (5,805) $ 817 $ 78 $ (4,910) * Represents the re-estimation of the defined benefit plan liability assumed in the Eastern acquisition. The defined benefit plan is frozen as to the earnings of additional benefits and the benefit plan liability is re-estimated annually. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2021 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | Variable Interest Entities ProAssurance holds passive interests in a number of entities that are considered to be VIEs under GAAP guidance. ProAssurance's VIE interests principally consist of interests in LPs/LLCs formed for the purpose of achieving diversified equity and debt returns. ProAssurance's VIE interests, carried as a part of investment in unconsolidated subsidiaries, totaled $270.8 million at March 31, 2021 and $282.2 million at December 31, 2020. ProAssurance does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the primary beneficiary. Investments in entities where ProAssurance holds a greater than minor interest but does not hold a controlling interest are accounted for using the equity method. Therefore, ProAssurance has not consolidated these VIEs. ProAssurance’s involvement with each VIE is limited to its direct ownership interest in the VIE. Except for the funding commitments disclosed in Note 8, ProAssurance has no arrangements with any of the VIEs to provide other financial support to or on behalf of the VIE. At March 31, 2021, ProAssurance’s maximum loss exposure relative to these investments was limited to the carrying value of ProAssurance’s investment in the VIE. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Diluted weighted average shares is calculated as basic weighted average shares plus the effect, calculated using the treasury stock method, of assuming that restricted share units and performance share units have vested. The following table provides a reconciliation between the Company's basic weighted average number of common shares outstanding to its diluted weighted average number of common shares outstanding: (In thousands, except per share data) Three Months Ended 2021 2020 Weighted average number of common shares outstanding, basic 53,918 53,808 Dilutive effect of securities: Restricted Share Units 76 74 Performance Share Units 4 3 Weighted average number of common shares outstanding, diluted 53,998 53,885 Effect of dilutive shares on earnings (loss) per share $ — $ — Dilutive common share equivalents are reflected in the earnings (loss) per share calculation while antidilutive common share equivalents are not reflected in the earnings (loss) per share calculation. There were no antidilutive common share equivalents for the three months ended March 31, 2021. For the three months ended March 31, 2020, all incremental common share equivalents were not included in the computation of diluted earnings (loss) per share because to do so would have been antidilutive for the period. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information ProAssurance's segments are based on the Company's internal management reporting structure for which financial results are regularly evaluated by the Company's CODM to determine resource allocation and assess operating performance. The Company continually assesses its internal management reporting structure and information evaluated by its CODM to determine whether any changes have occurred that would impact its segment reporting structure. The Company operates in five segments that are organized around the nature of the products and services provided: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, Lloyd's Syndicates and Corporate. A description of each of ProAssurance's five operating and reportable segments follows. Specialty P&C includes professional liability insurance and medical technology liability insurance. Professional liability insurance is primarily comprised of medical professional liability products offered to healthcare providers and institutions. The Company also offers, to a lesser extent, professional liability insurance to attorneys and their firms. Medical technology liability insurance is offered to medical technology and life sciences companies that manufacture or distribute products including entities conducting human clinical trials. In addition, the Company also offers custom alternative risk solutions including loss portfolio transfers, assumed reinsurance and captive cell programs for healthcare professional liability insureds. For the alternative market captive cell programs, the Specialty P&C segment cedes either all or a portion of the premium to certain SPCs in the Company's Segregated Portfolio Cell Reinsurance segment. Workers' Compensation Insurance includes workers' compensation insurance products which are provided primarily to employers with 1,000 or fewer employees. The segment's products include guaranteed cost policies, policyholder dividend policies, retrospectively-rated policies, deductible policies and alternative market solutions. Alternative market program premiums include program design, fronting, claims administration, risk management, SPC rental, asset management and SPC management services. Alternative market program premiums are 100% ceded to either SPCs in the Company's Segregated Portfolio Cell Reinsurance segment or, to a limited extent, to a captive insurer unaffiliated with ProAssurance. Segregated Portfolio Cell Reinsurance includes the results (underwriting profit or loss, plus investment results, net of U.S. federal income taxes) of SPCs at Inova Re and Eastern Re, the Company's Cayman Islands SPC operations. Each SPC is owned, fully or in part, by an agency, group or association, and the results of the SPCs are attributable to the participants of that cell. ProAssurance participates to a varying degree in the results of selected SPCs. SPC results attributable to external cell participants are reflected as SPC dividend expense (income) in the Segregated Portfolio Cell Reinsurance segment and in ProAssurance's Condensed Consolidated Statements of Income and Comprehensive Income. In addition, the Segregated Portfolio Cell Reinsurance segment includes the investment results of the SPCs as the investments are solely for the benefit of the cell participants, and investment results attributable to external cell participants are reflected in SPC dividend expense (income). The SPCs assume workers' compensation insurance, healthcare professional liability insurance or a combination of the two from the Company's Workers' Compensation Insurance and Specialty P&C segments. Lloyd's Syndicates includes the results from ProAssurance's participation in Lloyd's of London Syndicate 1729 and Syndicate 6131. The results of this segment are normally reported on a quarter lag, except when information is available that is material to the current period. Furthermore, investment results associated with the majority of investment assets solely allocated to Lloyd's Syndicate operations and certain U.S. paid administrative expenses are reported concurrently as that information is available on an earlier time frame. Syndicate 1729 underwrites risks over a wide range of property and casualty insurance and reinsurance lines in both the U.S. and international markets while Syndicate 6131 focuses on contingency and specialty property business, also within the U.S. and international markets. To support and grow the Company's core insurance operations, ProAssurance decreased its participation in the results of Syndicate 1729 for the 2021 underwriting year to 5% from 29%. Syndicate 6131 is an SPA that underwrites on a quota share basis with Syndicate 1729. Effective July 1, 2020, Syndicate 6131 entered into a six-month quota share reinsurance agreement with an unaffiliated insurer. Under this agreement, Syndicate 6131 ceded essentially half of the premium assumed from Syndicate 1729 to the unaffiliated insurer; the agreement was non-renewed on January 1, 2021 and the Company decreased its participation in the results of Syndicate 6131 to 50% from 100% for the 2021 underwriting year. Due to the quarter lag, the change in the Company's participation in the results of Syndicates 1729 and 6131 will not be reflected in its results until the second quarter of 2021. Corporate includes ProAssurance's investment operations, other than those reported in the Company's Segregated Portfolio Cell Reinsurance and Lloyd's Syndicates segments, interest expense and U.S. income taxes. The segment also includes non-premium revenues generated outside of the Company's insurance entities and corporate expenses. The accounting policies of the segments are described in Note 1 of the Notes to Consolidated Financial Statements in ProAssurance’s December 31, 2020 report on Form 10-K. ProAssurance evaluates the performance of its Specialty P&C and Workers' Compensation Insurance segments based on before tax underwriting profit or loss. ProAssurance evaluates the performance of its Segregated Portfolio Cell Reinsurance segment based on operating profit or loss, which includes investment results of investment assets solely allocated to SPC operations, net of U.S. federal income taxes. Performance of the Lloyd's Syndicates segment is evaluated based on operating profit or loss, which includes investment results of investment assets solely allocated to Lloyd's Syndicate operations, net of U.K. income tax expense. Performance of the Corporate segment is evaluated based on the contribution made to consolidated after-tax results. ProAssurance accounts for inter-segment transactions as if the transactions were to third parties at current market prices. Assets are not allocated to segments because investments, other than the investments discussed above that are solely allocated to the Segregated Portfolio Cell Reinsurance and Lloyd's Syndicates segments, and other assets are not managed at the segment level. The tabular information that follows shows the financial results of the Company's reportable segments reconciled to results reflected in the Condensed Consolidated Statements of Income and Comprehensive Income. ProAssurance does not consider asset impairments, including goodwill and intangible asset impairments, in assessing the financial performance of its operating and reportable segments, and thus are included in the reconciliation of segment results to consolidated results. Financial results by segment were as follows: Three Months Ended March 31, 2021 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 115,613 $ 40,011 $ 15,884 $ 15,850 $ — $ — $ 187,358 Net investment income — — 221 729 14,067 — 15,017 Equity in earnings (loss) of unconsolidated subsidiaries — — — — 6,788 — 6,788 Net realized gains (losses) — — 987 (115) 7,977 — 8,849 Other income (expense) (1) 469 392 1 221 1,894 (972) 2,005 Net losses and loss adjustment expenses (101,186) (26,207) (9,425) (12,967) — — (149,785) Underwriting, policy acquisition and operating expenses (1) (26,346) (12,286) (5,025) (6,591) (7,175) 972 (56,451) SPC U.S. federal income tax expense (2) — — (356) — — — (356) SPC dividend (expense) income — — (1,742) — — — (1,742) Interest expense — — — — (3,212) — (3,212) Income tax benefit (expense) — — — — (736) — (736) Segment results $ (11,450) $ 1,910 $ 545 $ (2,873) $ 19,603 $ — 7,735 Net income (loss) $ 7,735 Significant non-cash items: Depreciation and amortization, net of accretion $ 2,171 $ 903 $ 316 $ 15 $ 3,317 $ — $ 6,722 Three Months Ended March 31, 2020 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 120,359 $ 44,515 $ 16,980 $ 22,001 $ — $ — $ 203,855 Net investment income — — 254 1,159 19,417 — 20,830 Equity in earnings (loss) of unconsolidated subsidiaries — — — — (1,562) — (1,562) Net realized gains (losses) — — (3,207) 81 (25,547) — (28,673) Other income (expense) (1) 1,698 757 136 (232) 633 (741) 2,251 Net losses and loss adjustment expenses (110,931) (29,769) (9,352) (14,780) — — (164,832) Underwriting, policy acquisition and operating expenses (1) (29,585) (14,164) (5,079) (9,142) (4,827) 741 (62,056) SPC U.S. federal income tax expense (2) — — (222) — — — (222) SPC dividend (expense) income — — 508 — — — 508 Interest expense — — — — (4,129) — (4,129) Income tax benefit (expense) — — — 29 12,047 — 12,076 Segment results $ (18,459) $ 1,339 $ 18 $ (884) $ (3,968) $ — (21,954) Net income (loss) $ (21,954) Significant non-cash items: Depreciation and amortization, net of accretion $ 1,580 $ 926 $ 69 $ 9 $ 2,150 $ — $ 4,734 (1) Certain fees for services provided to the SPCs at Inova Re and Eastern Re are recorded as expenses within the Segregated Portfolio Cell Reinsurance segment and as other income within the Workers' Compensation Insurance segment. These fees are primarily SPC rental fees and are eliminated between segments in consolidation. (2) Represents the provision for U.S. federal income taxes for SPCs at Inova Re, which have elected to be taxed as a U.S. corporation under Section 953(d) of the Internal Revenue Code. U.S. federal income taxes are included in the total SPC net results and are paid by the individual SPCs. The following table provides detailed information regarding ProAssurance's gross premiums earned by product as well as a reconciliation to net premiums earned. All gross premiums earned are from external customers except as noted. ProAssurance's insured risks are primarily within the U.S. Three Months Ended March 31 (In thousands) 2021 2020 Specialty P&C Segment Gross premiums earned: HCPL $ 97,045 $ 103,467 Small Business Unit 25,925 26,650 Medical Technology Liability 8,938 8,529 Other 152 377 Ceded premiums earned (16,447) (18,664) Segment net premiums earned 115,613 120,359 Workers' Compensation Insurance Segment Gross premiums earned: Traditional business 41,743 47,485 Alternative market business 16,889 18,128 Ceded premiums earned (18,621) (21,098) Segment net premiums earned 40,011 44,515 Segregated Portfolio Cell Reinsurance Segment Gross premiums earned: Workers' compensation (1) 16,115 17,513 HCPL (2) 1,852 1,677 Ceded premiums earned (2,083) (2,210) Segment net premiums earned 15,884 16,980 Lloyd's Syndicates Segment Gross premiums earned: Property and casualty 20,385 28,196 Ceded premiums earned (4,535) (6,195) Segment net premiums earned 15,850 22,001 Consolidated net premiums earned $ 187,358 $ 203,855 (1) Premium for all periods is assumed from the Workers' Compensation Insurance segment. (2) Premium for all periods is assumed from the Specialty P&C segment. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Event On May 5, 2021, ProAssurance completed its acquisition of NORCAL by purchasing over 98% of the converted company stock in exchange for base consideration of $441 million, which includes cash from ProAssurance of $248 million. The cash consideration from ProAssurance was funded by cash on hand as of May 5, 2021. On May 6, 2021, ProAssurance borrowed $15 million under its Revolving Credit Agreement to pay certain transaction-related expenses (see Note 10 of the Notes to Condensed Consolidated Financial Statements for further discussion of the terms of the Revolving Credit Agreement). The consideration also includes contribution certificates as well as contingent consideration depending upon the development of NORCAL's ultimate net losses over a three-year period beginning December 31, 2020. The contribution certificates will be issued to certain NORCAL policyholders in the conversion of NORCAL Mutual, and those instruments are an obligation of NORCAL Insurance Company, the successor of NORCAL. The base consideration and maximum contingent consideration are subject to final verification as the equity allocation is reviewed and finalized post close. The determination of the fair value of the contingent consideration, along with the allocation of the final purchase consideration to the assets acquired and liabilities assumed was not complete as of the date of this report. The required disclosures related to this acquisition will be provided in ProAssurance's June 30, 2021 report on Form 10-Q upon completion of the valuation of the assets acquired and liabilities assumed. NORCAL is an underwriter of medical professional liability insurance and this transaction will provide strategic and financial benefits including additional scale and geographic diversification in the physician professional liability market and is expected to be accretive to earnings over time. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of ProAssurance Corporation and its wholly owned subsidiaries (ProAssurance, PRA or the Company). The financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting of normal recurring adjustments, have been included. ProAssurance’s results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes contained in ProAssurance’s December 31, 2020 report on Form 10-K. In connection with its preparation of the Condensed Consolidated Financial Statements, ProAssurance evaluated events that occurred subsequent to March 31, 2021 for recognition or disclosure in its financial statements and notes to financial statements. Please see Note 15 for additional information. ProAssurance operates in five reportable segments as follows: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, Lloyd's Syndicates and Corporate. For more information on the Company's segment reporting, including the nature of products and services provided and financial information by segment, refer to Note 14. Certain insignificant prior period amounts have been reclassified to conform to the current period presentation. |
Accounting Policies | Accounting Policies The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and disclosures related to these amounts at the date of the financial statements. The Company evaluates these estimates and assumptions on an ongoing basis based on current and historical developments, market conditions, industry trends and other information that the Company believes to be reasonable under the circumstances, including the potential impacts of the COVID-19 pandemic (see "Item 1A, Risk Factors" in ProAssurance's December 31, 2020 report on Form 10-K for additional information). The Company can make no assurance that actual results will conform to its estimates and assumptions; reported results of operations may be materially affected by changes in these estimates and assumptions. The significant accounting policies followed by ProAssurance in making estimates that materially affect financial reporting are summarized in Note 1 of the Notes to Consolidated Financial Statements in ProAssurance’s December 31, 2020 report on Form 10-K. |
Accounting Changes Adopted and Not Yet Adopted | Accounting Changes Adopted Clarifying the Interactions between Investments - Equity Securities, Investments - Equity Method and Joint Ventures, and Derivatives and Hedging (ASU 2020-01) Effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, the FASB amended guidance that clarifies the accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. ProAssurance adopted the guidance beginning January 1, 2021, and adoption had no material effect on ProAssurance's results of operations, financial position or cash flows. Accounting Changes Not Yet Adopted ProAssurance is not aware of any accounting changes not yet adopted as of March 31, 2021 that could have a material impact on its results of operations, financial position or cash flows. |
Credit Losses | Credit Losses ProAssurance's premiums receivable and reinsurance receivables are exposed to credit losses but to-date have not experienced any significant amount of credit losses. See Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K for further information on how the Company estimates and measures expected credit losses on its premiums receivable and reinsurance receivables. ProAssurance's available-for-sale fixed maturity investments are also exposed to credit losses. See Note 3 for information on ProAssurance's allowance for expected credit losses on it's available-for-sale fixed maturities. ProAssurance’s premiums receivable on its Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 is reported net of the related allowance for expected credit losses of $6.1 million in each period. The following tables present a roll forward of the allowance for expected credit losses related to the Company's premiums receivable for the three months ended March 31, 2021 and 2020. (In thousands) Premiums Receivable, Net Allowance for Expected Credit Losses Balance, December 31, 2020 $ 201,395 $ 6,131 Provision for expected credit losses 105 Write offs charged against the allowance (232) Recoveries of amounts previously written off 78 Balance, March 31, 2021 $ 210,560 $ 6,082 (In thousands) Premiums Receivable, Net Allowance for Expected Credit Losses Balance, December 31, 2019 $ 249,540 $ 1,590 Cumulative-effect adjustment, before tax* 5,160 Provision for expected credit losses 88 Write offs charged against the allowance (689) Recoveries of amounts previously written off 48 Balance, March 31, 2020 $ 266,822 $ 6,197 *Due to the adoption of ASU 2016-13, ProAssurance recorded a cumulative-effect adjustment to beginning retained earnings as of January 1, 2020 to increase its consolidated allowance for expected credit losses related to its premiums receivable. See Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K. ProAssurance’s expected credit losses associated with its reinsurance receivables (related to both paid and unpaid losses) were nominal in amount as of March 31, 2021 and December 31, 2020. ProAssurance has other financial assets and off-balance-sheet commitments that are exposed to credit losses; however, expected credit losses associated with these assets and commitments were nominal in amount as of March 31, 2021 and December 31, 2020. |
Fair Value Measurement | The fair values for securities included in the Level 2 category, with the few exceptions described below, were developed by one of several third party, nationally recognized pricing services, including services that price only certain types of securities. Each service uses complex methodologies to determine values for securities and subject the values they develop to quality control reviews. Management selected a primary source for each type of security in the portfolio and reviewed the values provided for reasonableness by comparing data to alternate pricing services and to available market and trade data. Values that appeared inconsistent were further reviewed for appropriateness. Any value that did not appear reasonable was discussed with the service that provided the value and adjusted, if necessary. There were no material changes to the values supplied by the pricing services as of March 31, 2021 and December 31, 2020. Level 2 Valuations Below is a summary description of the valuation methodologies primarily used by the pricing services for securities in the Level 2 category, by security type: U.S. Treasury obligations were valued based on quoted prices for identical assets, or, in markets that are not active, quotes for similar assets, taking into consideration adjustments for variations in contractual cash flows and yields to maturity. U.S. Government-sponsored enterprise obligations were valued using pricing models that consider current and historical market data, normal trading conventions, credit ratings and the particular structure and characteristics of the security being valued, such as yield to maturity, redemption options, and contractual cash flows. Adjustments to model inputs or model results were included in the valuation process when necessary to reflect recent regulatory, government or corporate actions or significant economic, industry or geographic events affecting the security’s fair value. State and municipal bonds were valued using a series of matrices that considered credit ratings, the structure of the security, the sector in which the security falls, yields and contractual cash flows. Valuations were further adjusted, when necessary, to reflect the expected effect on fair value of recent significant economic or geographic events or ratings changes. Corporate debt, multiple observable inputs consisted primarily of corporate bonds, but also included a small number of bank loans. The methodology used to value Level 2 corporate bonds was the same as the methodology previously described for U.S. Government-sponsored enterprise obligations. Bank loans were valued based on an average of broker quotes for the loans in question, if available. If quotes were not available, the loans were valued based on quoted prices for comparable loans or, if the loan was newly issued, by comparison to similar seasoned issues. Broker quotes were compared to actual trade prices to permit assessment of the reliability of the quotes; unreliable quotes were not considered in quoted averages. Residential and commercial mortgage-backed securities were valued using a pricing matrix which considers the issuer type, coupon rate and longest cash flows outstanding. The matrix used was based on the most recently available market information. Agency and non-agency collateralized mortgage obligations were both valued using models that consider the structure of the security, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Other asset-backed securities were valued using models that consider the structure of the security, monthly payment information, current and historical information regarding prepayment speeds, ratings and ratings updates, and current and historical interest rate and interest rate spread data. Spreads and prepayment speeds consider collateral type. Fixed maturities, trading , are held by the Lloyd's Syndicates segment and include U.S. Treasury obligations, corporate debt with multiple observable inputs and other asset-backed securities. These securities were valued using the respective valuation methodologies discussed above for each security type. Short-term investments were securities maturing within one year, carried at fair value which approximated the cost of the securities due to their short-term nature. Other investments consisted primarily of convertible bonds valued using a pricing model that incorporated selected dealer quotes as well as current market data regarding equity prices and risk free rates. If dealer quotes were unavailable for the security being valued, quotes for securities with similar terms and credit status were used in the pricing model. Dealer quotes selected for use were those considered most accurate based on parameters such as underwriter status and historical reliability. Other assets consisted of an interest rate cap derivative instrument, valued using a model which considers the volatilities from other instruments with similar maturities, strike prices, durations and forward yield curves. Under the terms of the interest rate cap agreement, ProAssurance paid a premium of $2 million for the right to receive cash payments based upon a notional amount of $35 million if and when the three-month LIBOR rises above 2.35%. The Company's variable-rate Mortgage Loans bear an interest rate of three-month LIBOR plus 1.325%. Level 3 Valuations Below is a summary description of the valuation methodologies used as well as quantitative information regarding securities in the Level 3 category, by security type: Level 3 Valuation Methodologies Corporate debt, limited observable inputs consisted of corporate bonds valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were determined by management if not available. At March 31, 2021, 61% of the securities were rated and the average rating was BB+. At December 31, 2020, 100% of the securities were rated and the average rating was BB+. Residential mortgage-backed and other asset-backed securities consisted of securitizations of receivables valued using dealer quotes for similar securities or discounted cash flow models using yields currently available for similar securities. Similar securities are defined as securities of comparable credit quality that have like terms and payment features. Assessments of credit quality were based on NRSRO ratings, if available, or were subjectively determined by management if not available. At March 31, 2021, 83% of the securities were rated and the average rating was AA+. At December 31, 2020, 51% of the securities were rated and the average rating was AA-. Other investments consisted of convertible securities for which limited observable inputs were available at March 31, 2021. The securities were valued internally based on expected cash flows, including the expected final recovery, discounted at a yield that considered the lack of liquidity and the financial status of the issuer. |
Goodwill | Goodwill is recognized in conjunction with business acquisitions as the excess of the purchase consideration for the business acquisition over the fair value of identifiable assets acquired and liabilities assumed. The fair value of identifiable assets and liabilities, and thus goodwill, is subject to redetermination within a measurement period of up to one year following completion of a business acquisition. Goodwill is tested for impairment annually or more frequently if circumstances indicate an impairment may have occurred. The date of the Company's annual goodwill impairment test is October 1. Impairment of goodwill is tested at the reporting unit level, which is consistent with the Company's reportable segments identified in Note 14. See Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K for further information on how the Company tests goodwill for impairment. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Rollforward of the Allowance for Expected Credit Losses Related to Premiums Receivable | The following tables present a roll forward of the allowance for expected credit losses related to the Company's premiums receivable for the three months ended March 31, 2021 and 2020. (In thousands) Premiums Receivable, Net Allowance for Expected Credit Losses Balance, December 31, 2020 $ 201,395 $ 6,131 Provision for expected credit losses 105 Write offs charged against the allowance (232) Recoveries of amounts previously written off 78 Balance, March 31, 2021 $ 210,560 $ 6,082 (In thousands) Premiums Receivable, Net Allowance for Expected Credit Losses Balance, December 31, 2019 $ 249,540 $ 1,590 Cumulative-effect adjustment, before tax* 5,160 Provision for expected credit losses 88 Write offs charged against the allowance (689) Recoveries of amounts previously written off 48 Balance, March 31, 2020 $ 266,822 $ 6,197 *Due to the adoption of ASU 2016-13, ProAssurance recorded a cumulative-effect adjustment to beginning retained earnings as of January 1, 2020 to increase its consolidated allowance for expected credit losses related to its premiums receivable. See Note 1 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2020 report on Form 10-K. |
Schedule of Other Liabilities | Other liabilities consisted of the following: (In thousands) March 31, 2021 December 31, 2020 SPC dividends payable $ 69,732 $ 68,865 Unpaid shareholder dividends 2,699 2,694 All other 132,666 110,480 Total other liabilities $ 205,097 $ 182,039 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Assets | Fair values of assets measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 are shown in the following tables. Where applicable, the tables also indicate the fair value hierarchy of the valuation techniques utilized to determine those fair values. For some assets, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When this is the case, the asset is categorized based on the level of the most significant input to the fair value measurement. Assessments of the significance of a particular input to the fair value measurement require judgment and consideration of factors specific to the assets being valued. March 31, 2021 Fair Value Measurements Using Total (In thousands) Level 1 Level 2 Level 3 Fair Value Assets: Fixed maturities, available-for-sale U.S. Treasury obligations $ — $ 102,877 $ — $ 102,877 U.S. Government-sponsored enterprise obligations — 11,944 — 11,944 State and municipal bonds — 322,465 — 322,465 Corporate debt, multiple observable inputs — 1,421,097 — 1,421,097 Corporate debt, limited observable inputs — — 7,769 7,769 Residential mortgage-backed securities — 270,059 1,489 271,548 Agency commercial mortgage-backed securities — 13,718 — 13,718 Other commercial mortgage-backed securities — 121,319 — 121,319 Other asset-backed securities — 282,712 7,824 290,536 Fixed maturities, trading — 45,151 — 45,151 Equity investments Bond funds 60,264 — — 60,264 All other 17,273 — — 17,273 Short-term investments 259,075 21,918 — 280,993 Other investments 29 67,070 2,152 69,251 Other assets — 836 — 836 Total assets categorized within the fair value hierarchy $ 336,641 $ 2,681,166 $ 19,234 3,037,041 Assets carried at NAV, which approximates fair value and which are not categorized within the fair value hierarchy, reported as a part of: Investment in unconsolidated subsidiaries 226,898 Total assets at fair value $ 3,263,939 December 31, 2020 Fair Value Measurements Using Total (In thousands) Level 1 Level 2 Level 3 Fair Value Assets: Fixed maturities, available-for-sale U.S. Treasury obligations $ — $ 107,059 $ — $ 107,059 U.S. Government-sponsored enterprise obligations — 12,261 — 12,261 State and municipal bonds — 332,920 — 332,920 Corporate debt, multiple observable inputs — 1,326,077 — 1,326,077 Corporate debt, limited observable inputs — — 3,265 3,265 Residential mortgage-backed securities — 274,509 2,032 276,541 Agency commercial mortgage-backed securities — 13,310 — 13,310 Other commercial mortgage-backed securities — 113,092 — 113,092 Other asset-backed securities — 266,345 6,661 273,006 Fixed maturities, trading — 48,456 — 48,456 Equity investments Financial 13,810 — — 13,810 Utilities/Energy 564 — — 564 Consumer oriented 1,262 — — 1,262 Industrial 2,240 — — 2,240 Bond funds 69,475 — — 69,475 All other 20,202 — — 20,202 Short-term investments 307,695 30,118 — 337,813 Other investments 1,509 42,607 — 44,116 Other assets — 329 — 329 Total assets categorized within the fair value hierarchy $ 416,757 $ 2,567,083 $ 11,958 2,995,798 Assets carried at NAV, which approximates fair value and which are not categorized within the fair value hierarchy, reported as a part of: Equity investments 12,548 Investment in unconsolidated subsidiaries 233,711 Total assets at fair value $ 3,242,057 |
Schedule of Quantitative Information Regarding Level 3 Valuations | Quantitative Information Regarding Level 3 Valuations Fair Value at ($ in thousands) March 31, 2021 December 31, 2020 Valuation Technique Unobservable Input Range Assets: Corporate debt, limited observable inputs $7,769 $3,265 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Residential mortgage-backed securities $1,489 $2,032 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Other asset-backed securities $7,824 $6,661 Market Comparable Comparability Adjustment 0% - 5% (2.5%) Discounted Cash Flows Comparability Adjustment 0% - 5% (2.5%) Other investments $2,152 $— Discounted Cash Flows Comparability Adjustment 0% - 10% (5%) |
Schedule of Fair Value Measurements - Level 3 Assets | The following tables (the Level 3 Tables) present summary information regarding changes in the fair value of assets measured at fair value using Level 3 inputs. March 31, 2021 Level 3 Fair Value Measurements – Assets (In thousands) Corporate Debt Asset-backed Securities Other Investments Total Balance December 31, 2020 $ 3,265 $ 8,693 $ — $ 11,958 Total gains (losses) realized and unrealized: Included in earnings, as a part of: Net investment income 1 (2) — (1) Net realized investment gains (losses) — (11) — (11) Included in other comprehensive income 20 (179) — (159) Purchases 4,875 7,357 — 12,232 Sales (17) (304) — (321) Transfers in 858 — 2,152 3,010 Transfers out (1,233) (6,241) — (7,474) Balance March 31, 2021 $ 7,769 $ 9,313 $ 2,152 $ 19,234 Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end $ — $ — $ — $ — March 31, 2020 Level 3 Fair Value Measurements – Assets (In thousands) Corporate Debt Asset-backed Securities Other Investments Total Balance December 31, 2019 $ 5,079 $ 2,992 $ 3,086 $ 11,157 Total gains (losses) realized and unrealized: Included in earnings, as a part of: Net realized investment gains (losses) — — (222) (222) Included in other comprehensive income (83) (122) — (205) Purchases — 3,422 — 3,422 Sales (1,707) — — (1,707) Transfers in 945 605 — 1,550 Transfers out (794) — (1,526) (2,320) Balance March 31, 2020 $ 3,440 $ 6,897 $ 1,338 $ 11,675 Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end $ — $ — $ (222) $ (222) |
Schedule of Investments in LLCs and Limited Partnerships | The amount of ProAssurance's unfunded commitments related to these investments as of March 31, 2021 and fair values of these investments as of March 31, 2021 and December 31, 2020 were as follows: Unfunded Fair Value (In thousands) March 31, March 31, December 31, Equity investments: Mortgage fund (1) None $ — $ 12,548 Investment in unconsolidated subsidiaries: Private debt funds (2) $11,308 16,317 16,387 Long/short equity funds (3) None 632 596 Non-public equity funds (4) $42,554 137,648 138,357 Credit funds (5) $1,653 26,943 34,848 Strategy focused funds (6) $36,927 45,358 43,523 226,898 233,711 Total investments carried at NAV $ 226,898 $ 246,259 Below is additional information regarding each of the investments listed in the table above as of March 31, 2021. (1) This investment fund was focused on the structured mortgage market. The fund primarily invested in U.S. Agency mortgage-backed securities. Redemptions are allowed at the end of any calendar quarter with a prior notice requirement of 65 days and are paid within 45 days at the end of the redemption dealing day. (2) This investment is comprised of interests in two unrelated LP funds that are structured to provide interest distributions primarily through diversified portfolios of private debt instruments. One LP allows redemption by special consent, while the other does not permit redemption. Income and capital are to be periodically distributed at the discretion of the LPs over an anticipated time frame that spans from three (3) This investment holds primarily long and short North American equities and targets absolute returns using strategies designed to take advantage of market opportunities. Redemptions are permitted; however, redemptions above specified thresholds (lowest threshold is 90%) may be only partially payable until after a fund audit is completed and are then payable within 30 days. (4) This investment is comprised of interests in multiple unrelated LP funds, each structured to provide capital appreciation through diversified investments in private equity, which can include investments in buyout, venture capital, debt including senior, second lien and mezzanine, distressed debt, collateralized loan obligations and other private equity-oriented LPs. Two of the LPs allow redemption by terms set forth in the LP agreements; the others do not permit redemption. Income and capital are to be periodically distributed at the discretion of the LP over time frames that are anticipated to span up to ten years. (5) This investment is comprised of four unrelated LP funds. Two funds seek to obtain superior risk-adjusted absolute returns through a diversified portfolio of debt securities, including bonds, loans and other asset-backed instruments. A third fund focuses on private middle market company mezzanine loans, while the remaining fund seeks event driven opportunities across the corporate credit spectrum. Two funds are allowed redemptions at any quarter-end with a prior notice requirement of 90 days; one fund permits redemption at any quarter-end with a prior notice requirement of 180 days and one fund does not allow redemptions. For the fund that does not allow redemptions, income and capital are to be periodically distributed at the discretion of the LP over time frames that are anticipated to span up to twelve years. (6) This investment is comprised of multiple unrelated LPs/LLCs funds. One fund is a LLC focused on investing in North American consumer products companies, comprised of equity and equity-related securities, as well as debt instruments. A second fund is focused on aircraft investments, along with components and assets related to aircrafts. For both funds, redemptions are not permitted. Another fund is a LP focused on North American energy infrastructure assets that allows redemption with consent of the General Partner. The remaining funds are real estate focused LPs, one of which allows for redemption with prior notice. |
Schedule of Financial Instruments Not Measured at Fair Value | The following table provides the estimated fair value of the Company's financial instruments that, in accordance with GAAP for the type of investment, are measured using a methodology other than fair value. Fair values provided primarily fall within the Level 3 fair value category. March 31, 2021 December 31, 2020 (In thousands) Carrying Fair Carrying Fair Financial assets: BOLI $ 66,932 $ 66,932 $ 67,847 $ 67,847 Other investments $ 2,370 $ 2,370 $ 2,952 $ 2,952 Other assets $ 33,869 $ 33,885 $ 31,128 $ 31,141 Financial liabilities: Senior notes due 2023* $ 250,000 $ 271,105 $ 250,000 $ 269,160 Mortgage Loans* $ 35,723 $ 35,723 $ 36,113 $ 36,113 Other liabilities $ 32,548 $ 32,548 $ 30,334 $ 30,334 * Carrying value excludes unamortized debt issuance costs. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Available-For-Sale Fixed Maturities | Available-for-sale fixed maturities at March 31, 2021 and December 31, 2020 included the following: March 31, 2021 (In thousands) Amortized Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturities, available-for-sale U.S. Treasury obligations $ 101,045 $ 2,088 $ 256 $ 102,877 U.S. Government-sponsored enterprise obligations 11,959 106 121 11,944 State and municipal bonds 312,809 11,196 1,540 322,465 Corporate debt 1,395,466 42,572 9,172 1,428,866 Residential mortgage-backed securities 268,344 5,727 2,523 271,548 Agency commercial mortgage-backed securities 13,196 537 15 13,718 Other commercial mortgage-backed securities 119,145 3,254 1,080 121,319 Other asset-backed securities 287,659 3,227 350 290,536 $ 2,509,623 $ 68,707 $ 15,057 $ 2,563,273 December 31, 2020 (In thousands) Amortized Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Fixed maturities, available-for-sale U.S. Treasury obligations $ 104,097 $ — $ 2,985 $ 23 $ 107,059 U.S. Government-sponsored enterprise obligations 12,103 — 158 — 12,261 State and municipal bonds 316,022 — 16,937 39 332,920 Corporate debt 1,267,992 552 63,204 1,302 1,329,342 Residential mortgage-backed securities 269,752 — 7,171 382 276,541 Agency commercial mortgage-backed securities 12,623 — 687 — 13,310 Other commercial mortgage-backed securities 109,244 — 4,788 940 113,092 Other asset-backed securities 269,742 — 4,006 742 273,006 $ 2,361,575 $ 552 $ 99,936 $ 3,428 $ 2,457,531 |
Schedule of Available-For-Sale Securities by Contractual Maturity | The recorded cost basis and estimated fair value of available-for-sale fixed maturities at March 31, 2021, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. (In thousands) Amortized Due in one Due after Due after Due after Total Fair Fixed maturities, available-for-sale U.S. Treasury obligations $ 101,045 $ 23,143 $ 70,919 $ 8,815 $ — $ 102,877 U.S. Government-sponsored enterprise obligations 11,959 3,870 5,044 2,887 143 11,944 State and municipal bonds 312,809 6,114 153,779 144,719 17,853 322,465 Corporate debt 1,395,466 140,572 755,625 481,431 51,238 1,428,866 Residential mortgage-backed securities 268,344 271,548 Agency commercial mortgage-backed securities 13,196 13,718 Other commercial mortgage-backed securities 119,145 121,319 Other asset-backed securities 287,659 290,536 $ 2,509,623 $ 2,563,273 |
Schedule of Investments Held in an Unrealized Loss Position | The following tables provide summarized information with respect to investments held in an unrealized loss position at March 31, 2021 and December 31, 2020, including the length of time the investment had been held in a continuous unrealized loss position. March 31, 2021 Total Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Loss Value Loss Value Loss Fixed maturities, available-for-sale U.S. Treasury obligations $ 26,250 $ 256 $ 26,250 $ 256 $ — $ — U.S. Government-sponsored enterprise obligations 5,714 121 5,714 121 — — State and municipal bonds 67,604 1,540 67,604 1,540 — — Corporate debt 397,470 9,172 370,642 8,704 26,828 468 Residential mortgage-backed securities 105,643 2,523 99,580 2,253 6,063 270 Agency commercial mortgage-backed securities 1,276 15 1,276 15 — — Other commercial mortgage-backed securities 41,832 1,080 35,400 437 6,432 643 Other asset-backed securities 71,365 350 59,054 280 12,311 70 $ 717,154 $ 15,057 $ 665,520 $ 13,606 $ 51,634 $ 1,451 December 31, 2020 Total Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Loss Value Loss Value Loss Fixed maturities, available-for-sale U.S. Treasury obligations $ 14,390 $ 23 $ 14,390 $ 23 $ — $ — State and municipal bonds 6,416 39 6,416 39 — — Corporate debt 94,695 1,302 79,436 1,020 15,259 282 Residential mortgage-backed securities 34,928 382 34,509 381 419 1 Other commercial mortgage-backed securities 18,766 940 18,480 935 286 5 Other asset-backed securities 43,739 742 37,850 701 5,889 41 $ 212,934 $ 3,428 $ 191,081 $ 3,099 $ 21,853 $ 329 |
Schedule of a Roll Forward of Cumulative Credit Losses Recorded in Earnings Related to Impaired Debt Securities | The following tables present a roll forward of the allowance for expected credit losses on available-for-sale fixed maturities for the three months ended March 31, 2021 and 2020. Three Months Ended March 31, 2021 (In thousands) Corporate Debt Total Balance at December 31, 2020 $ 552 $ 552 Reductions related to: Securities sold during the period (552) (552) Balance at March 31, 2021 $ — $ — Three Months Ended March 31, 2020 (In thousands) Corporate Debt Total Balance at December 31, 2019 $ — $ — Additional credit losses related to securities for which: No allowance for credit losses has been previously recognized 1,163 1,163 Balance at March 31, 2020 $ 1,163 $ 1,163 |
Schedule of Other Information Regarding Available-For-Sale Securities | Other information regarding sales and purchases of fixed maturity available-for-sale securities is as follows: Three Months Ended March 31 (In millions) 2021 2020 Proceeds from sales (exclusive of maturities and paydowns) $ 61.9 $ 64.9 Purchases $ 342.2 $ 227.5 |
Schedule of Net Investment Income | Net investment income by investment category was as follows: Three Months Ended (In thousands) 2021 2020 Fixed maturities $ 15,692 $ 18,285 Equities 694 1,909 Short-term investments, including Other 273 1,472 BOLI 444 456 Investment fees and expenses (2,086) (1,292) Net investment income $ 15,017 $ 20,830 |
Schedule of Investment in Unconsolidated Subsidiaries | ProAssurance's investment in unconsolidated subsidiaries were as follows: March 31, 2021 Carrying Value (In thousands) Percentage March 31, December 31, Qualified affordable housing project tax credit partnerships See below $ 24,351 $ 27,719 All other investments, primarily investment fund LPs/LLCs See below 275,009 282,810 $ 299,360 $ 310,529 |
Schedule of Equity Method Investments | The results recorded and tax credits recognized related to ProAssurance's tax credit partnership investments were as follows: Three Months Ended (In thousands) 2021 2020 Qualified affordable housing project tax credit partnerships Losses recorded $ 3,368 $ 4,342 Tax credits recognized $ 3,324 $ 4,369 Historic tax credit partnership* Losses (gains) recorded $ (182) $ 323 Tax credits recognized $ 50 $ 103 * ProAssurance holds a historic tax credit partnership which was fully amortized in 2020. ProAssurance received a distribution associated with this investment during the three months ended March 31, 2021 as a result of positive cash flows from a project recognizing an operating gain. See further discussion on this investment in Note 3 of the Notes to the Consolidated Financial Statements in ProAssurance’s December 31, 2020 report on Form 10-K. Three Months Ended March 31, 2021 (In thousands) Net investment income $ 40,636 Net realized investment gains (losses) 14,587 Net change in unrealized appreciation (depreciation) 61,777 Net gain (loss) $ 117,000 Net gain (loss) attributable to ProAssurance* $ 2,056 *Represents ProAssurance's share of the fund's aggregate income or loss, which is included as a component of equity in earnings (loss) of unconsolidated subsidiaries in its Condensed Consolidated Statement of Income and Comprehensive Income for the three months ended March 31, 2021. |
Schedule of Net Realized Investment Gains (Losses) | Realized investment gains and losses are recognized on the first-in, first-out basis. The following table provides detailed information regarding net realized investment gains (losses): Three Months Ended (In thousands) 2021 2020 Total impairment losses: Corporate debt $ — $ (1,817) Portion of impairment losses recognized in other comprehensive income before taxes: Corporate debt — 654 Net impairment losses recognized in earnings — (1,163) Gross realized gains, available-for-sale fixed maturities 4,294 2,427 Gross realized (losses), available-for-sale fixed maturities (187) (1,403) Net realized gains (losses), trading fixed maturities 72 103 Net realized gains (losses), equity investments 4,189 15,190 Net realized gains (losses), other investments 3,196 48 Change in unrealized holding gains (losses), trading fixed maturities (214) (118) Change in unrealized holding gains (losses), equity investments (2,937) (38,477) Change in unrealized holding gains (losses), convertible securities, carried at fair value (190) (5,273) Other 626 (7) Net realized investment gains (losses) $ 8,849 $ (28,673) |
Schedule of Cumulative Credit Losses Recorded in Earnings Related to Impaired Debt Securities for Which a Portion of the OTTI has been Recorded in OCI | The following table presents a roll forward of cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the impairment was recorded in OCI. Three Months Ended (In thousands) 2021 2020 Balance beginning of period $ 552 $ 470 Additional credit losses recognized during the period, related to securities for which: No impairment has been previously recognized — 1,064 Reductions due to: Securities sold during the period (realized) (552) — Balance March 31 $ — $ 1,534 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The table below presents the carrying amount of goodwill and accumulated impairment losses by reporting unit at March 31, 2021 and December 31, 2020: Reporting Unit (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Total Goodwill, gross as of January 1, 2020 $ 161,115 $ 44,110 $ 5,500 $ 210,725 Accumulated impairment losses* (161,115) — — (161,115) Goodwill, net as of December 31, 2020 — 44,110 5,500 49,610 Accumulated impairment losses — — — — Goodwill, net as of March 31, 2021 $ — $ 44,110 $ 5,500 $ 49,610 * Accumulated impairment losses in 2020 represent the pre-tax impairment loss of $161.1 million recognized during the third quarter of 2020 in relation to the Specialty P&C reporting unit. There were no other impairment losses taken prior to 2020. For additional information regarding ProAssurance's goodwill impairment in 2020, see Note 1 and Note 6 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K. |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Insurance [Abstract] | |
Schedule of Reserve for Losses and Loss Adjustment Expenses | Activity in the reserve for losses and loss adjustment expenses is summarized as follows: (In thousands) Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Year Ended December 31, 2020 Balance, beginning of year $ 2,417,179 $ 2,346,526 $ 2,346,526 Less reinsurance recoverables on unpaid losses and loss adjustment expenses 385,087 390,708 390,708 Net balance, beginning of year 2,032,092 1,955,818 1,955,818 Net losses: Current year (1)(2)(3) 154,634 170,874 711,846 Favorable development of reserves established in prior years, net (4,849) (6,042) (50,399) Total 149,785 164,832 661,447 Paid related to: Current year (10,513) (15,876) (83,204) Prior years (126,534) (163,518) (501,969) Total paid (137,047) (179,394) (585,173) Net balance, end of period 2,044,830 1,941,256 2,032,092 Plus reinsurance recoverables on unpaid losses and loss adjustment expenses 393,420 389,792 385,087 Balance, end of period $ 2,438,250 $ 2,331,048 $ 2,417,179 (1) Current year net losses for the year ended December 31, 2020 included $9.2 million of amortization of a PDR which offsets the impact of the losses incurred associated with the premium earned related to a large national healthcare account's claims-made policy in the Specialty P&C segment. For additional information regarding the PDR, see Note 7 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K. (2) During the second quarter of 2020, the aforementioned large national healthcare account did not renew on terms offered by the Company and exercised its contractual option to purchase extended reporting endorsement or "tail" coverage. As a result, ProAssurance recognized total current year losses of $60.0 million (assumes a full limit loss) within the Specialty P&C segment for the year ended December 31, 2020 (see Note 7 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K). (3) Current year net losses for the three months ended March 31, 2021 included incurred losses of $2.9 million related to an assumed reinsurance arrangement entered into during the first quarter of 2021 in the Specialty P&C segment (see Note 4). |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Schedule of Lease Cost | The following table provides a summary of the components of net lease expense as well as the reporting location in the Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2021 and 2020. (In thousands) Location in the Condensed Consolidated Statements of Income and Comprehensive Income Three Months Ended March 31 2021 2020 Operating lease expense (1) Operating expense $ 938 $ 1,625 Sublease income (2) Other income (54) (38) Net lease expense $ 884 $ 1,587 (1) Includes short-term lease costs and variable lease costs, if applicable. For the three months ended March 31, 2021 and 2020, no short-term lease costs were recognized and variable lease costs were nominal in amount. (2) Sublease income excludes rental income from owned properties of $0.6 million during each of the three months ended March 31, 2021 and 2020 which is included in other income. See “Item 2. Properties” in ProAssurance's December 31, 2020 report on Form 10-K for a listing of currently owned properties. The following table provides supplemental lease information for operating leases on the Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020. ($ in thousands) March 31, 2021 December 31, 2020 Operating lease ROU assets $ 18,219 $ 19,013 Operating lease liabilities $ 19,168 $ 20,116 Weighted-average remaining lease term 8.26 years 8.31 years Weighted-average discount rate 2.98 % 2.97 % The following table provides supplemental lease information for the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020. Three Months Ended March 31 (In thousands) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,089 $ 1,017 |
Schedule of Lease Liability | The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of March 31, 2021. (In thousands) 2021 $ 3,057 2022 3,306 2023 2,608 2024 2,026 2025 1,783 Thereafter 8,875 Total future minimum lease payments 21,655 Less: Imputed interest 2,487 Total operating lease liabilities $ 19,168 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | ProAssurance’s outstanding debt consisted of the following: ($ in thousands) March 31, December 31, Senior Notes due 2023, unsecured, interest at 5.3% annually $ 250,000 $ 250,000 Mortgage Loans, outstanding borrowings are secured by first priority liens on two office buildings, and bear an interest rate of three-month LIBOR plus 1.325% (1.51% and 1.58%, respectively) determined on a quarterly basis 35,723 36,113 Total principal 285,723 286,113 Less unamortized debt issuance costs 1,301 1,400 Debt less unamortized debt issuance costs $ 284,422 $ 284,713 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Schedule of Components of AOCI, Net of Tax | The changes in the balance of each component of AOCI for the three months ended March 31, 2021 and 2020 were as follows: (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities* Accumulated Other Comprehensive Income (Loss) Balance December 31, 2020 $ 75,388 $ (57) $ (104) $ 75,227 OCI, before reclassifications, net of tax (30,415) — — (30,415) Amounts reclassified from AOCI, net of tax (3,347) 57 — (3,290) Net OCI, current period (33,762) 57 — (33,705) Balance March 31, 2021 $ 41,626 $ — $ (104) $ 41,522 (In thousands) Unrealized Investment Gains (Losses) Non-credit Impairments Unrecognized Change in Defined Benefit Plan Liabilities* Accumulated Other Comprehensive Income (Loss) Balance December 31, 2019 $ 36,577 $ 300 $ 78 $ 36,955 OCI, before reclassifications, net of tax (42,497) 517 — (41,980) Amounts reclassified from AOCI, net of tax 115 — — 115 Net OCI, current period (42,382) 517 — (41,865) Balance March 31, 2020 $ (5,805) $ 817 $ 78 $ (4,910) * Represents the re-estimation of the defined benefit plan liability assumed in the Eastern acquisition. The defined benefit plan is frozen as to the earnings of additional benefits and the benefit plan liability is re-estimated annually. |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table provides a reconciliation between the Company's basic weighted average number of common shares outstanding to its diluted weighted average number of common shares outstanding: (In thousands, except per share data) Three Months Ended 2021 2020 Weighted average number of common shares outstanding, basic 53,918 53,808 Dilutive effect of securities: Restricted Share Units 76 74 Performance Share Units 4 3 Weighted average number of common shares outstanding, diluted 53,998 53,885 Effect of dilutive shares on earnings (loss) per share $ — $ — |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The tabular information that follows shows the financial results of the Company's reportable segments reconciled to results reflected in the Condensed Consolidated Statements of Income and Comprehensive Income. ProAssurance does not consider asset impairments, including goodwill and intangible asset impairments, in assessing the financial performance of its operating and reportable segments, and thus are included in the reconciliation of segment results to consolidated results. Financial results by segment were as follows: Three Months Ended March 31, 2021 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 115,613 $ 40,011 $ 15,884 $ 15,850 $ — $ — $ 187,358 Net investment income — — 221 729 14,067 — 15,017 Equity in earnings (loss) of unconsolidated subsidiaries — — — — 6,788 — 6,788 Net realized gains (losses) — — 987 (115) 7,977 — 8,849 Other income (expense) (1) 469 392 1 221 1,894 (972) 2,005 Net losses and loss adjustment expenses (101,186) (26,207) (9,425) (12,967) — — (149,785) Underwriting, policy acquisition and operating expenses (1) (26,346) (12,286) (5,025) (6,591) (7,175) 972 (56,451) SPC U.S. federal income tax expense (2) — — (356) — — — (356) SPC dividend (expense) income — — (1,742) — — — (1,742) Interest expense — — — — (3,212) — (3,212) Income tax benefit (expense) — — — — (736) — (736) Segment results $ (11,450) $ 1,910 $ 545 $ (2,873) $ 19,603 $ — 7,735 Net income (loss) $ 7,735 Significant non-cash items: Depreciation and amortization, net of accretion $ 2,171 $ 903 $ 316 $ 15 $ 3,317 $ — $ 6,722 Three Months Ended March 31, 2020 (In thousands) Specialty P&C Workers' Compensation Insurance Segregated Portfolio Cell Reinsurance Lloyd's Syndicates Corporate Inter-segment Eliminations Consolidated Net premiums earned $ 120,359 $ 44,515 $ 16,980 $ 22,001 $ — $ — $ 203,855 Net investment income — — 254 1,159 19,417 — 20,830 Equity in earnings (loss) of unconsolidated subsidiaries — — — — (1,562) — (1,562) Net realized gains (losses) — — (3,207) 81 (25,547) — (28,673) Other income (expense) (1) 1,698 757 136 (232) 633 (741) 2,251 Net losses and loss adjustment expenses (110,931) (29,769) (9,352) (14,780) — — (164,832) Underwriting, policy acquisition and operating expenses (1) (29,585) (14,164) (5,079) (9,142) (4,827) 741 (62,056) SPC U.S. federal income tax expense (2) — — (222) — — — (222) SPC dividend (expense) income — — 508 — — — 508 Interest expense — — — — (4,129) — (4,129) Income tax benefit (expense) — — — 29 12,047 — 12,076 Segment results $ (18,459) $ 1,339 $ 18 $ (884) $ (3,968) $ — (21,954) Net income (loss) $ (21,954) Significant non-cash items: Depreciation and amortization, net of accretion $ 1,580 $ 926 $ 69 $ 9 $ 2,150 $ — $ 4,734 (1) Certain fees for services provided to the SPCs at Inova Re and Eastern Re are recorded as expenses within the Segregated Portfolio Cell Reinsurance segment and as other income within the Workers' Compensation Insurance segment. These fees are primarily SPC rental fees and are eliminated between segments in consolidation. (2) Represents the provision for U.S. federal income taxes for SPCs at Inova Re, which have elected to be taxed as a U.S. corporation under Section 953(d) of the Internal Revenue Code. U.S. federal income taxes are included in the total SPC net results and are paid by the individual SPCs. |
Schedule of Gross Premiums by Product | The following table provides detailed information regarding ProAssurance's gross premiums earned by product as well as a reconciliation to net premiums earned. All gross premiums earned are from external customers except as noted. ProAssurance's insured risks are primarily within the U.S. Three Months Ended March 31 (In thousands) 2021 2020 Specialty P&C Segment Gross premiums earned: HCPL $ 97,045 $ 103,467 Small Business Unit 25,925 26,650 Medical Technology Liability 8,938 8,529 Other 152 377 Ceded premiums earned (16,447) (18,664) Segment net premiums earned 115,613 120,359 Workers' Compensation Insurance Segment Gross premiums earned: Traditional business 41,743 47,485 Alternative market business 16,889 18,128 Ceded premiums earned (18,621) (21,098) Segment net premiums earned 40,011 44,515 Segregated Portfolio Cell Reinsurance Segment Gross premiums earned: Workers' compensation (1) 16,115 17,513 HCPL (2) 1,852 1,677 Ceded premiums earned (2,083) (2,210) Segment net premiums earned 15,884 16,980 Lloyd's Syndicates Segment Gross premiums earned: Property and casualty 20,385 28,196 Ceded premiums earned (4,535) (6,195) Segment net premiums earned 15,850 22,001 Consolidated net premiums earned $ 187,358 $ 203,855 (1) Premium for all periods is assumed from the Workers' Compensation Insurance segment. (2) Premium for all periods is assumed from the Specialty P&C segment. |
Basis of Presentation (Narrativ
Basis of Presentation (Narrative) (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Number of reportable segments (in segments) | segment | 5 | |||
Premium receivable, allowance for credit loss | $ | $ 6,082 | $ 6,131 | $ 6,197 | $ 1,590 |
Basis of Presentation (Premium
Basis of Presentation (Premium Receivable Expected Credit Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Premiums Receivable, Net | $ 210,560 | $ 266,822 | $ 201,395 | $ 249,540 |
Premium Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Premium receivable, allowance for credit loss, beginning balance | 6,131 | 1,590 | ||
Provision for expected credit losses | 105 | 88 | ||
Write offs charged against the allowance | (232) | (689) | ||
Recoveries of amounts previously written off | 78 | 48 | ||
Premium receivable, allowance for credit loss, ending balance | $ 6,082 | 6,197 | ||
Cumulative-effect adjustment, before tax* | ||||
Premium Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Premium receivable, allowance for credit loss, beginning balance | $ 5,160 |
Basis of Presentation (Other Li
Basis of Presentation (Other Liabilities) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
SPC dividends payable | $ 69,732 | $ 68,865 | |
Unpaid shareholder dividends | 2,699 | 2,694 | $ 16,691 |
All other | 132,666 | 110,480 | |
Total other liabilities | $ 205,097 | $ 182,039 |
Fair Value Measurement (Assets
Fair Value Measurement (Assets Measured at Fair Value) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Estimated Fair Value | $ 2,563,273 | $ 2,457,531 |
Fixed maturities, trading | 45,151 | 48,456 |
Equity investments | 77,537 | 120,101 |
U.S. Treasury obligations | ||
Assets: | ||
Estimated Fair Value | 102,877 | 107,059 |
U.S. Government-sponsored enterprise obligations | ||
Assets: | ||
Estimated Fair Value | 11,944 | 12,261 |
State and municipal bonds | ||
Assets: | ||
Estimated Fair Value | 322,465 | 332,920 |
Corporate debt, limited observable inputs | Level 3 | ||
Assets: | ||
Estimated Fair Value | 7,769 | 3,265 |
Residential mortgage-backed securities | ||
Assets: | ||
Estimated Fair Value | 271,548 | 276,541 |
Agency commercial mortgage-backed securities | ||
Assets: | ||
Estimated Fair Value | 13,718 | 13,310 |
Other commercial mortgage-backed securities | ||
Assets: | ||
Estimated Fair Value | 121,319 | 113,092 |
Other asset-backed securities | ||
Assets: | ||
Estimated Fair Value | 290,536 | 273,006 |
Other investments | Level 3 | ||
Assets: | ||
Estimated Fair Value | 2,152 | 0 |
Recurring | ||
Assets: | ||
Total assets categorized within the fair value hierarchy | 3,263,939 | 3,242,057 |
Recurring | Level 1 | ||
Assets: | ||
Fixed maturities, trading | 0 | 0 |
Other assets | 0 | 0 |
Total assets categorized within the fair value hierarchy | 336,641 | 416,757 |
Recurring | Level 2 | ||
Assets: | ||
Fixed maturities, trading | 45,151 | 48,456 |
Other assets | 836 | 329 |
Total assets categorized within the fair value hierarchy | 2,681,166 | 2,567,083 |
Recurring | Level 3 | ||
Assets: | ||
Fixed maturities, trading | 0 | 0 |
Other assets | 0 | 0 |
Total assets categorized within the fair value hierarchy | 19,234 | 11,958 |
Recurring | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Fixed maturities, trading | 45,151 | 48,456 |
Other assets | 836 | 329 |
Total assets categorized within the fair value hierarchy | 3,037,041 | 2,995,798 |
Recurring | U.S. Treasury obligations | Level 1 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | U.S. Treasury obligations | Level 2 | ||
Assets: | ||
Estimated Fair Value | 102,877 | 107,059 |
Recurring | U.S. Treasury obligations | Level 3 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | U.S. Treasury obligations | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Estimated Fair Value | 102,877 | 107,059 |
Recurring | U.S. Government-sponsored enterprise obligations | Level 1 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | U.S. Government-sponsored enterprise obligations | Level 2 | ||
Assets: | ||
Estimated Fair Value | 11,944 | 12,261 |
Recurring | U.S. Government-sponsored enterprise obligations | Level 3 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | U.S. Government-sponsored enterprise obligations | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Estimated Fair Value | 11,944 | 12,261 |
Recurring | State and municipal bonds | Level 1 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | State and municipal bonds | Level 2 | ||
Assets: | ||
Estimated Fair Value | 322,465 | 332,920 |
Recurring | State and municipal bonds | Level 3 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | State and municipal bonds | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Estimated Fair Value | 322,465 | 332,920 |
Recurring | Corporate debt, multiple observable inputs | Level 1 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Corporate debt, multiple observable inputs | Level 2 | ||
Assets: | ||
Estimated Fair Value | 1,421,097 | 1,326,077 |
Recurring | Corporate debt, multiple observable inputs | Level 3 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Corporate debt, multiple observable inputs | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Estimated Fair Value | 1,421,097 | 1,326,077 |
Recurring | Corporate debt, limited observable inputs | Level 1 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Corporate debt, limited observable inputs | Level 2 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Corporate debt, limited observable inputs | Level 3 | ||
Assets: | ||
Estimated Fair Value | 7,769 | 3,265 |
Recurring | Corporate debt, limited observable inputs | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Estimated Fair Value | 7,769 | 3,265 |
Recurring | Residential mortgage-backed securities | Level 1 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Residential mortgage-backed securities | Level 2 | ||
Assets: | ||
Estimated Fair Value | 270,059 | 274,509 |
Recurring | Residential mortgage-backed securities | Level 3 | ||
Assets: | ||
Estimated Fair Value | 1,489 | 2,032 |
Recurring | Residential mortgage-backed securities | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Estimated Fair Value | 271,548 | 276,541 |
Recurring | Agency commercial mortgage-backed securities | Level 1 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Agency commercial mortgage-backed securities | Level 2 | ||
Assets: | ||
Estimated Fair Value | 13,718 | 13,310 |
Recurring | Agency commercial mortgage-backed securities | Level 3 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Agency commercial mortgage-backed securities | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Estimated Fair Value | 13,718 | 13,310 |
Recurring | Other commercial mortgage-backed securities | Level 1 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Other commercial mortgage-backed securities | Level 2 | ||
Assets: | ||
Estimated Fair Value | 121,319 | 113,092 |
Recurring | Other commercial mortgage-backed securities | Level 3 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Other commercial mortgage-backed securities | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Estimated Fair Value | 121,319 | 113,092 |
Recurring | Other asset-backed securities | Level 1 | ||
Assets: | ||
Estimated Fair Value | 0 | 0 |
Recurring | Other asset-backed securities | Level 2 | ||
Assets: | ||
Estimated Fair Value | 282,712 | 266,345 |
Recurring | Other asset-backed securities | Level 3 | ||
Assets: | ||
Estimated Fair Value | 7,824 | 6,661 |
Recurring | Other asset-backed securities | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Estimated Fair Value | 290,536 | 273,006 |
Recurring | Financial | Level 1 | ||
Assets: | ||
Equity investments | 13,810 | |
Recurring | Financial | Level 2 | ||
Assets: | ||
Equity investments | 0 | |
Recurring | Financial | Level 3 | ||
Assets: | ||
Equity investments | 0 | |
Recurring | Financial | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 13,810 | |
Recurring | Utilities/Energy | Level 1 | ||
Assets: | ||
Equity investments | 564 | |
Recurring | Utilities/Energy | Level 2 | ||
Assets: | ||
Equity investments | 0 | |
Recurring | Utilities/Energy | Level 3 | ||
Assets: | ||
Equity investments | 0 | |
Recurring | Utilities/Energy | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 564 | |
Recurring | Consumer oriented | Level 1 | ||
Assets: | ||
Equity investments | 1,262 | |
Recurring | Consumer oriented | Level 2 | ||
Assets: | ||
Equity investments | 0 | |
Recurring | Consumer oriented | Level 3 | ||
Assets: | ||
Equity investments | 0 | |
Recurring | Consumer oriented | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 1,262 | |
Recurring | Industrial | Level 1 | ||
Assets: | ||
Equity investments | 2,240 | |
Recurring | Industrial | Level 2 | ||
Assets: | ||
Equity investments | 0 | |
Recurring | Industrial | Level 3 | ||
Assets: | ||
Equity investments | 0 | |
Recurring | Industrial | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 2,240 | |
Recurring | Bond funds | Level 1 | ||
Assets: | ||
Equity investments | 60,264 | 69,475 |
Recurring | Bond funds | Level 2 | ||
Assets: | ||
Equity investments | 0 | 0 |
Recurring | Bond funds | Level 3 | ||
Assets: | ||
Equity investments | 0 | 0 |
Recurring | Bond funds | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 60,264 | 69,475 |
Recurring | All other | Level 1 | ||
Assets: | ||
Equity investments | 17,273 | 20,202 |
Recurring | All other | Level 2 | ||
Assets: | ||
Equity investments | 0 | 0 |
Recurring | All other | Level 3 | ||
Assets: | ||
Equity investments | 0 | 0 |
Recurring | All other | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Equity investments | 17,273 | 20,202 |
Recurring | Short-term investments | Level 1 | ||
Assets: | ||
Short-term and other investments | 259,075 | 307,695 |
Recurring | Short-term investments | Level 2 | ||
Assets: | ||
Short-term and other investments | 21,918 | 30,118 |
Recurring | Short-term investments | Level 3 | ||
Assets: | ||
Short-term and other investments | 0 | 0 |
Recurring | Short-term investments | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Short-term and other investments | 280,993 | 337,813 |
Recurring | Other investments | Level 1 | ||
Assets: | ||
Short-term and other investments | 29 | 1,509 |
Recurring | Other investments | Level 2 | ||
Assets: | ||
Short-term and other investments | 67,070 | 42,607 |
Recurring | Other investments | Level 3 | ||
Assets: | ||
Short-term and other investments | 2,152 | 0 |
Recurring | Other investments | Fair Value, Inputs, Level 1, 2 and 3 | ||
Assets: | ||
Short-term and other investments | 69,251 | 44,116 |
Recurring | Equity investments | Fair Value Measured at Net Asset Value Per Share | Equity investments | ||
Assets: | ||
Total assets categorized within the fair value hierarchy | 12,548 | |
Recurring | Equity investments | Fair Value Measured at Net Asset Value Per Share | Investment in unconsolidated subsidiaries | ||
Assets: | ||
Total assets categorized within the fair value hierarchy | $ 226,898 | $ 233,711 |
Fair Value Measurement (Narrati
Fair Value Measurement (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Credit Derivatives [Line Items] | ||
Fair value of funded deferred compensation assets | $ 32,800,000 | $ 30,600,000 |
Fair Value, Nonrecurring | ||
Credit Derivatives [Line Items] | ||
Fair value, net asset (liability) | $ 0 | $ 0 |
Corporate debt, limited observable inputs | N R S R O, Rating B Bplus | ||
Credit Derivatives [Line Items] | ||
Credit rating | 61.00% | 100.00% |
Other asset-backed securities | NRSRO, Rating AAplus | ||
Credit Derivatives [Line Items] | ||
Credit rating | 83.00% | |
Other asset-backed securities | NRSRO, Rating AA Minus | ||
Credit Derivatives [Line Items] | ||
Credit rating | 51.00% | |
LIBOR | Mortgages | ||
Credit Derivatives [Line Items] | ||
Basis spread on variable rate for debt | 1.325% | 1.325% |
Interest Rate Cap | ||
Credit Derivatives [Line Items] | ||
Premium paid on derivative for right to receive cash payments | $ 2,000,000 | |
Floor interest rate on derivative | 2.35% | |
Interest Rate Cap | Other assets | ||
Credit Derivatives [Line Items] | ||
Derivative asset, notional amount | $ 35,000,000 |
Fair Value Measurement (Quantit
Fair Value Measurement (Quantitative Information Regarding Level 3 Valuations) (Details) $ in Thousands | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Assets: | ||
Estimated Fair Value | $ 2,563,273 | $ 2,457,531 |
Corporate debt, limited observable inputs | Level 3 | ||
Assets: | ||
Estimated Fair Value | $ 7,769 | 3,265 |
Corporate debt, limited observable inputs | Level 3 | Comparability Adjustment | Market Comparable Securities | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Corporate debt, limited observable inputs | Level 3 | Comparability Adjustment | Market Comparable Securities | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Corporate debt, limited observable inputs | Level 3 | Comparability Adjustment | Market Comparable Securities | Weighted Avg | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Corporate debt, limited observable inputs | Level 3 | Comparability Adjustment | Discounted Cash Flows | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Corporate debt, limited observable inputs | Level 3 | Comparability Adjustment | Discounted Cash Flows | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Corporate debt, limited observable inputs | Level 3 | Comparability Adjustment | Discounted Cash Flows | Weighted Avg | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Residential mortgage-backed securities | Level 3 | ||
Assets: | ||
Estimated Fair Value | $ 1,489 | 2,032 |
Residential mortgage-backed securities | Level 3 | Comparability Adjustment | Market Comparable Securities | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Residential mortgage-backed securities | Level 3 | Comparability Adjustment | Market Comparable Securities | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Residential mortgage-backed securities | Level 3 | Comparability Adjustment | Market Comparable Securities | Weighted Avg | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Residential mortgage-backed securities | Level 3 | Comparability Adjustment | Discounted Cash Flows | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Residential mortgage-backed securities | Level 3 | Comparability Adjustment | Discounted Cash Flows | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Residential mortgage-backed securities | Level 3 | Comparability Adjustment | Discounted Cash Flows | Weighted Avg | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Other asset-backed securities | Level 3 | ||
Assets: | ||
Estimated Fair Value | $ 7,824 | 6,661 |
Other asset-backed securities | Level 3 | Comparability Adjustment | Market Comparable Securities | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Other asset-backed securities | Level 3 | Comparability Adjustment | Market Comparable Securities | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Other asset-backed securities | Level 3 | Comparability Adjustment | Market Comparable Securities | Weighted Avg | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Other asset-backed securities | Level 3 | Comparability Adjustment | Discounted Cash Flows | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Other asset-backed securities | Level 3 | Comparability Adjustment | Discounted Cash Flows | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.05 | |
Other asset-backed securities | Level 3 | Comparability Adjustment | Discounted Cash Flows | Weighted Avg | ||
Assets: | ||
Assets measured at fair value | 0.025 | |
Other investments | Level 3 | ||
Assets: | ||
Estimated Fair Value | $ 2,152 | $ 0 |
Other investments | Level 3 | Comparability Adjustment | Discounted Cash Flows | Minimum | ||
Assets: | ||
Assets measured at fair value | 0 | |
Other investments | Level 3 | Comparability Adjustment | Discounted Cash Flows | Maximum | ||
Assets: | ||
Assets measured at fair value | 0.10 | |
Other investments | Level 3 | Comparability Adjustment | Discounted Cash Flows | Weighted Avg | ||
Assets: | ||
Assets measured at fair value | 0.05 |
Fair Value Measurement (Level 3
Fair Value Measurement (Level 3 Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||
Beginning balance | $ 11,958 | $ 11,157 |
Included in earnings, as a part of: | ||
Included in other comprehensive income | (159) | (205) |
Purchases | 12,232 | 3,422 |
Sales | (321) | (1,707) |
Transfers in | 3,010 | 1,550 |
Transfers out | (7,474) | (2,320) |
Ending balance | 19,234 | 11,675 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | (222) |
Net investment income | ||
Included in earnings, as a part of: | ||
Total gains (losses) realized and unrealized, included in earnings | (1) | |
Net realized investment gains (losses) | ||
Included in earnings, as a part of: | ||
Total gains (losses) realized and unrealized, included in earnings | (11) | (222) |
Corporate Debt | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||
Beginning balance | 3,265 | 5,079 |
Included in earnings, as a part of: | ||
Included in other comprehensive income | 20 | (83) |
Purchases | 4,875 | 0 |
Sales | (17) | (1,707) |
Transfers in | 858 | 945 |
Transfers out | (1,233) | (794) |
Ending balance | 7,769 | 3,440 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | 0 |
Corporate Debt | Net investment income | ||
Included in earnings, as a part of: | ||
Total gains (losses) realized and unrealized, included in earnings | 1 | |
Corporate Debt | Net realized investment gains (losses) | ||
Included in earnings, as a part of: | ||
Total gains (losses) realized and unrealized, included in earnings | 0 | 0 |
Asset-backed Securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||
Beginning balance | 8,693 | 2,992 |
Included in earnings, as a part of: | ||
Included in other comprehensive income | (179) | (122) |
Purchases | 7,357 | 3,422 |
Sales | (304) | 0 |
Transfers in | 0 | 605 |
Transfers out | (6,241) | 0 |
Ending balance | 9,313 | 6,897 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | 0 |
Asset-backed Securities | Net investment income | ||
Included in earnings, as a part of: | ||
Total gains (losses) realized and unrealized, included in earnings | (2) | |
Asset-backed Securities | Net realized investment gains (losses) | ||
Included in earnings, as a part of: | ||
Total gains (losses) realized and unrealized, included in earnings | (11) | 0 |
Other investments | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation: | ||
Beginning balance | 0 | 3,086 |
Included in earnings, as a part of: | ||
Included in other comprehensive income | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Transfers in | 2,152 | 0 |
Transfers out | 0 | (1,526) |
Ending balance | 2,152 | 1,338 |
Change in unrealized gains (losses) included in earnings for the above period for Level 3 assets held at period-end | 0 | (222) |
Other investments | Net investment income | ||
Included in earnings, as a part of: | ||
Total gains (losses) realized and unrealized, included in earnings | 0 | |
Other investments | Net realized investment gains (losses) | ||
Included in earnings, as a part of: | ||
Total gains (losses) realized and unrealized, included in earnings | $ 0 | $ (222) |
Fair Value Measurement (Investm
Fair Value Measurement (Investments in LLCs and Limited Partnerships) (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Fair Value | $ 226,898,000 | $ 246,259,000 |
Equity investments | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Fair Value | 226,898,000 | 233,711,000 |
Mortgage fund | Equities | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 0 | |
Fair Value | 0 | 12,548,000 |
Private debt funds | Equity investments | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 11,308,000 | |
Fair Value | 16,317,000 | 16,387,000 |
Long/short equity funds | Equity investments | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 0 | |
Fair Value | 632,000 | 596,000 |
Non-public equity funds | Equity investments | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 42,554,000 | |
Fair Value | 137,648,000 | 138,357,000 |
Credit funds | Equity investments | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 1,653,000 | |
Fair Value | 26,943,000 | 34,848,000 |
Strategy focused funds | Equity investments | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 36,927,000 | |
Fair Value | $ 45,358,000 | $ 43,523,000 |
Fair Value Measurement (Inves_2
Fair Value Measurement (Investments in LLCs and Limited Partnerships Footnote) (Details) | 3 Months Ended |
Mar. 31, 2021fund | |
Mortgage fund | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Investment redemption notice period | 65 days |
Payment period for redemption of LP valued at NAV | 45 days |
Secured debt fund | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Number of limited partners in investment | 2 |
Number of limited partners to allow redemption by special consent | 1 |
Secured debt fund | Minimum | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Liquidating investments remaining period | 3 years |
Secured debt fund | Maximum | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Liquidating investments remaining period | 8 years |
Long/short equity funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Payment period for redemption of LP valued at NAV | 30 days |
Redemption percentage of LP at NAV for which initial payment is limited | 90.00% |
Non-public equity funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Liquidating investments remaining period | 10 years |
Credit funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Number of limited partners in investment | 4 |
Liquidating investments remaining period | 12 years |
Investment redemption notice period, two funds | 90 days |
Investment redemption notice period, one fund | 180 days |
Fair Value Measurement (Financi
Fair Value Measurement (Financial Instruments Not Measured at Fair Value) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Carrying Value | ||
Financial assets: | ||
Other assets | $ 33,869 | $ 31,128 |
Financial liabilities: | ||
Other liabilities | 32,548 | 30,334 |
Carrying Value | Senior notes due 2023 | ||
Financial liabilities: | ||
Debt instruments | 250,000 | 250,000 |
Carrying Value | Mortgage loans | ||
Financial liabilities: | ||
Debt instruments | 35,723 | 36,113 |
Carrying Value | BOLI | ||
Financial assets: | ||
Short-term and other investments | 66,932 | 67,847 |
Carrying Value | Other investments | ||
Financial assets: | ||
Short-term and other investments | 2,370 | 2,952 |
Fair Value | ||
Financial assets: | ||
Other assets | 33,885 | 31,141 |
Financial liabilities: | ||
Other liabilities | 32,548 | 30,334 |
Fair Value | Senior notes due 2023 | ||
Financial liabilities: | ||
Debt instruments | 271,105 | 269,160 |
Fair Value | Mortgage loans | ||
Financial liabilities: | ||
Debt instruments | 35,723 | 36,113 |
Fair Value | BOLI | ||
Financial assets: | ||
Short-term and other investments | 66,932 | 67,847 |
Fair Value | Other investments | ||
Financial assets: | ||
Short-term and other investments | $ 2,370 | $ 2,952 |
Investments (Available-For-Sale
Investments (Available-For-Sale Fixed Maturities) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Reclassifications from AOCI to net income (loss): | ||||
Amortized Cost | $ 2,509,623 | $ 2,361,575 | ||
Allowance for Expected Credit Losses | 0 | 552 | $ 1,163 | $ 0 |
Gross Unrealized Gains | 68,707 | 99,936 | ||
Gross Unrealized Losses | 15,057 | 3,428 | ||
Estimated Fair Value | 2,563,273 | 2,457,531 | ||
U.S. Treasury obligations | ||||
Reclassifications from AOCI to net income (loss): | ||||
Amortized Cost | 101,045 | 104,097 | ||
Allowance for Expected Credit Losses | 0 | |||
Gross Unrealized Gains | 2,088 | 2,985 | ||
Gross Unrealized Losses | 256 | 23 | ||
Estimated Fair Value | 102,877 | 107,059 | ||
U.S. Government-sponsored enterprise obligations | ||||
Reclassifications from AOCI to net income (loss): | ||||
Amortized Cost | 11,959 | 12,103 | ||
Allowance for Expected Credit Losses | 0 | |||
Gross Unrealized Gains | 106 | 158 | ||
Gross Unrealized Losses | 121 | 0 | ||
Estimated Fair Value | 11,944 | 12,261 | ||
State and municipal bonds | ||||
Reclassifications from AOCI to net income (loss): | ||||
Amortized Cost | 312,809 | 316,022 | ||
Allowance for Expected Credit Losses | 0 | |||
Gross Unrealized Gains | 11,196 | 16,937 | ||
Gross Unrealized Losses | 1,540 | 39 | ||
Estimated Fair Value | 322,465 | 332,920 | ||
Corporate debt | ||||
Reclassifications from AOCI to net income (loss): | ||||
Amortized Cost | 1,395,466 | 1,267,992 | ||
Allowance for Expected Credit Losses | 0 | 552 | $ 1,163 | $ 0 |
Gross Unrealized Gains | 42,572 | 63,204 | ||
Gross Unrealized Losses | 9,172 | 1,302 | ||
Estimated Fair Value | 1,428,866 | 1,329,342 | ||
Residential mortgage-backed securities | ||||
Reclassifications from AOCI to net income (loss): | ||||
Amortized Cost | 268,344 | 269,752 | ||
Allowance for Expected Credit Losses | 0 | |||
Gross Unrealized Gains | 5,727 | 7,171 | ||
Gross Unrealized Losses | 2,523 | 382 | ||
Estimated Fair Value | 271,548 | 276,541 | ||
Agency commercial mortgage-backed securities | ||||
Reclassifications from AOCI to net income (loss): | ||||
Amortized Cost | 13,196 | 12,623 | ||
Allowance for Expected Credit Losses | 0 | |||
Gross Unrealized Gains | 537 | 687 | ||
Gross Unrealized Losses | 15 | |||
Estimated Fair Value | 13,718 | 13,310 | ||
Other commercial mortgage-backed securities | ||||
Reclassifications from AOCI to net income (loss): | ||||
Amortized Cost | 119,145 | 109,244 | ||
Allowance for Expected Credit Losses | 0 | |||
Gross Unrealized Gains | 3,254 | 4,788 | ||
Gross Unrealized Losses | 1,080 | 940 | ||
Estimated Fair Value | 121,319 | 113,092 | ||
Other asset-backed securities | ||||
Reclassifications from AOCI to net income (loss): | ||||
Amortized Cost | 287,659 | 269,742 | ||
Allowance for Expected Credit Losses | 0 | |||
Gross Unrealized Gains | 3,227 | 4,006 | ||
Gross Unrealized Losses | 350 | 742 | ||
Estimated Fair Value | $ 290,536 | $ 273,006 |
Investments (Available-For-Sa_2
Investments (Available-For-Sale Securities by Contractual Maturity) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Reclassifications from AOCI to net income (loss): | ||
Amortized Cost | $ 2,509,623 | $ 2,361,575 |
Total Fair Value | 2,563,273 | 2,457,531 |
U.S. Treasury obligations | ||
Reclassifications from AOCI to net income (loss): | ||
Amortized Cost | 101,045 | 104,097 |
Due in one year or less | 23,143 | |
Due after one year through five years | 70,919 | |
Due after five years through ten years | 8,815 | |
Due after ten years | 0 | |
Total Fair Value | 102,877 | 107,059 |
U.S. Government-sponsored enterprise obligations | ||
Reclassifications from AOCI to net income (loss): | ||
Amortized Cost | 11,959 | 12,103 |
Due in one year or less | 3,870 | |
Due after one year through five years | 5,044 | |
Due after five years through ten years | 2,887 | |
Due after ten years | 143 | |
Total Fair Value | 11,944 | 12,261 |
State and municipal bonds | ||
Reclassifications from AOCI to net income (loss): | ||
Amortized Cost | 312,809 | 316,022 |
Due in one year or less | 6,114 | |
Due after one year through five years | 153,779 | |
Due after five years through ten years | 144,719 | |
Due after ten years | 17,853 | |
Total Fair Value | 322,465 | 332,920 |
Corporate debt | ||
Reclassifications from AOCI to net income (loss): | ||
Amortized Cost | 1,395,466 | 1,267,992 |
Due in one year or less | 140,572 | |
Due after one year through five years | 755,625 | |
Due after five years through ten years | 481,431 | |
Due after ten years | 51,238 | |
Total Fair Value | 1,428,866 | 1,329,342 |
Residential mortgage-backed securities | ||
Reclassifications from AOCI to net income (loss): | ||
Amortized Cost | 268,344 | 269,752 |
Total Fair Value | 271,548 | 276,541 |
Agency commercial mortgage-backed securities | ||
Reclassifications from AOCI to net income (loss): | ||
Amortized Cost | 13,196 | 12,623 |
Total Fair Value | 13,718 | 13,310 |
Other commercial mortgage-backed securities | ||
Reclassifications from AOCI to net income (loss): | ||
Amortized Cost | 119,145 | 109,244 |
Total Fair Value | 121,319 | 113,092 |
Other asset-backed securities | ||
Reclassifications from AOCI to net income (loss): | ||
Amortized Cost | 287,659 | 269,742 |
Total Fair Value | $ 290,536 | $ 273,006 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021USD ($)securitypartnershipinvestmentissuerbusiness | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($)issuersecurity | |
Reclassifications from AOCI to net income (loss): | |||
Number of investment in any entity or affiliates greater than 10% of stockholders' equity | investment | 0 | ||
Threshold limit of investments based on shareholders' equity (percent) | 10.00% | ||
Securities on deposit with state insurance departments | $ 41,700 | ||
Business owned life insurance cost | 33,000 | ||
Investment in unconsolidated subsidiaries | $ 299,360 | $ 310,529 | |
Number of LPs / LLCs with investment ownership percent over 25% (in businesses) | business | 4 | ||
Net impairment losses recognized in earnings | $ 0 | $ 1,163 | |
Portion of impairment losses recognized in other comprehensive income (loss) before taxes | 0 | 654 | |
Net realized investment (losses) gains | 8,849 | (28,673) | |
Change in unrealized holding gains (losses), equity investments | (2,937) | (38,477) | |
Unrealized gain (loss) on hybrid instrument, net | $ (190) | $ (5,273) | |
Tax Credit Partnerships Almost 100% Ownership | |||
Reclassifications from AOCI to net income (loss): | |||
Number of tax credit partnerships almost 100% ownership percentage | partnership | 2 | ||
Investment in unconsolidated subsidiaries | $ 8,100 | 9,400 | |
Tax Credit Partnerships Almost 100% Ownership | Maximum | |||
Reclassifications from AOCI to net income (loss): | |||
Investment ownership percentage | 100.00% | ||
Tax Credit Partnerships Less Than 20% Ownership | |||
Reclassifications from AOCI to net income (loss): | |||
Investment in unconsolidated subsidiaries | $ 16,300 | 18,300 | |
Tax Credit Partnerships Less Than 20% Ownership | Maximum | |||
Reclassifications from AOCI to net income (loss): | |||
Investment ownership percentage | 20.00% | ||
Other Limited Partnerships and Limited Liability Company, Greater Than 25% Ownership | |||
Reclassifications from AOCI to net income (loss): | |||
Investment ownership percentage | 25.00% | ||
Investment in unconsolidated subsidiaries | $ 47,000 | 46,200 | |
Other Limited Partnerships and Limited Liability Company Less than 25% Ownership | |||
Reclassifications from AOCI to net income (loss): | |||
Investment in unconsolidated subsidiaries | 228,000 | $ 236,600 | |
Fixed maturities | |||
Reclassifications from AOCI to net income (loss): | |||
Required FAL deposit | 102,800 | ||
Cash and cash equivalents | |||
Reclassifications from AOCI to net income (loss): | |||
Required FAL deposit | $ 4,000 | ||
Non government-backed | |||
Reclassifications from AOCI to net income (loss): | |||
Debt securities in unrealized loss position (in securities) | security | 784 | 292 | |
Debt securities in unrealized loss position as percentage of total debt securities held | 28.50% | 11.10% | |
Issuers in unrealized loss position (in issuers) | issuer | 514 | 229 | |
Single greatest unrealized loss position | $ 500 | $ 400 | |
Second greatest unrealized loss position | 500 | $ 200 | |
Tax Year 2020 | Tax Credit Partnership Investment Tax Credit Carryforward | |||
Reclassifications from AOCI to net income (loss): | |||
Deferred tax credit for partnership investments | $ 3,400 |
Investments (Investments Held i
Investments (Investments Held in a Loss Position) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Fair value | ||
Fair Value | $ 717,154 | $ 212,934 |
Less than 12 Months, Fair Value | 665,520 | 191,081 |
More than 12 Months, Fair Value | 51,634 | 21,853 |
Unrealized Loss | ||
Unrealized Loss | 15,057 | 3,428 |
Less than 12 Months, Unrealized Loss | 13,606 | 3,099 |
More than 12 Months, Unrealized Loss | 1,451 | 329 |
U.S. Treasury obligations | ||
Fair value | ||
Fair Value | 26,250 | 14,390 |
Less than 12 Months, Fair Value | 26,250 | 14,390 |
More than 12 Months, Fair Value | 0 | 0 |
Unrealized Loss | ||
Unrealized Loss | 256 | 23 |
Less than 12 Months, Unrealized Loss | 256 | 23 |
More than 12 Months, Unrealized Loss | 0 | 0 |
U.S. Government-sponsored enterprise obligations | ||
Fair value | ||
Fair Value | 5,714 | |
Less than 12 Months, Fair Value | 5,714 | |
More than 12 Months, Fair Value | 0 | |
Unrealized Loss | ||
Unrealized Loss | 121 | |
Less than 12 Months, Unrealized Loss | 121 | |
More than 12 Months, Unrealized Loss | 0 | |
State and municipal bonds | ||
Fair value | ||
Fair Value | 67,604 | 6,416 |
Less than 12 Months, Fair Value | 67,604 | 6,416 |
More than 12 Months, Fair Value | 0 | 0 |
Unrealized Loss | ||
Unrealized Loss | 1,540 | 39 |
Less than 12 Months, Unrealized Loss | 1,540 | 39 |
More than 12 Months, Unrealized Loss | 0 | 0 |
Corporate debt | ||
Fair value | ||
Fair Value | 397,470 | 94,695 |
Less than 12 Months, Fair Value | 370,642 | 79,436 |
More than 12 Months, Fair Value | 26,828 | 15,259 |
Unrealized Loss | ||
Unrealized Loss | 9,172 | 1,302 |
Less than 12 Months, Unrealized Loss | 8,704 | 1,020 |
More than 12 Months, Unrealized Loss | 468 | 282 |
Residential mortgage-backed securities | ||
Fair value | ||
Fair Value | 105,643 | 34,928 |
Less than 12 Months, Fair Value | 99,580 | 34,509 |
More than 12 Months, Fair Value | 6,063 | 419 |
Unrealized Loss | ||
Unrealized Loss | 2,523 | 382 |
Less than 12 Months, Unrealized Loss | 2,253 | 381 |
More than 12 Months, Unrealized Loss | 270 | 1 |
Agency commercial mortgage-backed securities | ||
Fair value | ||
Fair Value | 1,276 | |
Less than 12 Months, Fair Value | 1,276 | |
More than 12 Months, Fair Value | 0 | |
Unrealized Loss | ||
Unrealized Loss | 15 | |
Less than 12 Months, Unrealized Loss | 15 | |
More than 12 Months, Unrealized Loss | 0 | |
Other commercial mortgage-backed securities | ||
Fair value | ||
Fair Value | 41,832 | 18,766 |
Less than 12 Months, Fair Value | 35,400 | 18,480 |
More than 12 Months, Fair Value | 6,432 | 286 |
Unrealized Loss | ||
Unrealized Loss | 1,080 | 940 |
Less than 12 Months, Unrealized Loss | 437 | 935 |
More than 12 Months, Unrealized Loss | 643 | 5 |
Other asset-backed securities | ||
Fair value | ||
Fair Value | 71,365 | 43,739 |
Less than 12 Months, Fair Value | 59,054 | 37,850 |
More than 12 Months, Fair Value | 12,311 | 5,889 |
Unrealized Loss | ||
Unrealized Loss | 350 | 742 |
Less than 12 Months, Unrealized Loss | 280 | 701 |
More than 12 Months, Unrealized Loss | $ 70 | $ 41 |
Investments (Credit Losses Rela
Investments (Credit Losses Related to Debt Securities) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit loss beginning balance | $ 552 | $ 0 |
Securities sold during the period | (552) | |
No allowance for credit losses has been previously recognized | 1,163 | |
Allowance for credit loss ending balance | 0 | 1,163 |
Corporate debt | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit loss beginning balance | 552 | 0 |
Securities sold during the period | (552) | |
No allowance for credit losses has been previously recognized | 1,163 | |
Allowance for credit loss ending balance | $ 0 | $ 1,163 |
Investments (Sales and Purchase
Investments (Sales and Purchases of Available-for-Sale Securities) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Information regarding sales and purchases of available-for-sale securities | ||
Proceeds from sales (exclusive of maturities and paydowns) | $ 61,900 | $ 64,900 |
Purchases | $ 342,197 | $ 227,503 |
Investments (Net Investment Inc
Investments (Net Investment Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net Investment Income | ||
Investment fees and expenses | $ (2,086) | $ (1,292) |
Net investment income | 15,017 | 20,830 |
Fixed maturities | ||
Net Investment Income | ||
Investment Income | 15,692 | 18,285 |
Equities | ||
Net Investment Income | ||
Investment Income | 694 | 1,909 |
Short-term investments, including Other | ||
Net Investment Income | ||
Investment Income | 273 | 1,472 |
BOLI | ||
Net Investment Income | ||
Investment Income | $ 444 | $ 456 |
Investments (Unconsolidated Sub
Investments (Unconsolidated Subsidiaries) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Unconsolidated Subsidiaries | ||
Investment in unconsolidated subsidiaries | $ 299,360 | $ 310,529 |
Qualified affordable housing project tax credit partnerships | ||
Unconsolidated Subsidiaries | ||
Investment in unconsolidated subsidiaries | 24,351 | 27,719 |
All other investments, primarily investment fund LPs/LLCs | ||
Unconsolidated Subsidiaries | ||
Investment in unconsolidated subsidiaries | $ 275,009 | $ 282,810 |
Investments (Equity in Earnings
Investments (Equity in Earnings (Loss) of Unconsolidated Subsidiaries) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | ||
Losses recorded | $ 3,368 | $ 4,342 |
Tax credits recognized | 3,324 | 4,369 |
Losses (gains) recorded | (182) | 323 |
Tax credits recognized | $ 50 | $ 103 |
Investments (Summarized Financi
Investments (Summarized Financial Information for Significant Investment) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Schedule of Equity Method Investments [Line Items] | ||
Net investment income | $ 15,017 | $ 20,830 |
Total net realized investment gains (losses) | 8,849 | (28,673) |
Net gain (loss) attributable to proassurance | 7,735 | $ (21,954) |
NB Private Equity Credit Opportunities Fund LP | ||
Schedule of Equity Method Investments [Line Items] | ||
Net investment income | 40,636 | |
Net realized investment gains (losses) | 14,587 | |
Net change in unrealized appreciation (depreciation) | 61,777 | |
Total net realized investment gains (losses) | 117,000 | |
Net gain (loss) attributable to proassurance | $ 2,056 |
Investments (Net Realized Inves
Investments (Net Realized Investment Gains (Losses)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | ||
Impairment losses | $ 0 | $ (1,817) |
Portion of impairment losses recognized in other comprehensive income before taxes: | 0 | 654 |
Net impairment losses recognized in earnings | 0 | (1,163) |
Gross realized gains, available-for-sale fixed maturities | 4,294 | 2,427 |
Gross realized (losses), available-for-sale fixed maturities | (187) | (1,403) |
Net realized gains (losses), trading fixed maturities | 72 | 103 |
Net realized gains (losses), equity investments | 4,189 | 15,190 |
Net realized gains (losses), other investments | 3,196 | 48 |
Change in unrealized holding gains (losses), trading fixed maturities | (214) | (118) |
Change in unrealized holding gains (losses), equity investments | (2,937) | (38,477) |
Change in unrealized holding gains (losses), convertible securities, carried at fair value | (190) | (5,273) |
Other | 626 | (7) |
Total net realized investment gains (losses) | $ 8,849 | $ (28,673) |
Investments (Roll Forward of Cu
Investments (Roll Forward of Cumulative Credit Losses Recorded in Earnings) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||
Balance beginning of period | $ 552 | $ 470 |
No impairment has been previously recognized | 0 | 1,064 |
Securities sold during the period (realized) | (552) | 0 |
Balance March 31 | $ 0 | $ 1,534 |
Retroactive Insurance Contrac_2
Retroactive Insurance Contracts (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | |||
Net premiums earned | $ 187,358 | $ 203,855 | |
Net losses and loss adjustment expenses | 154,634 | $ 170,874 | $ 711,846 |
Retroactive Insurance Contract | |||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | |||
Net premiums written | 4,500 | ||
Net premiums earned | 3,000 | ||
Net losses and loss adjustment expenses | 2,900 | ||
Prospective coverage for retroactive insurance contract | |||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | |||
Net premiums written | 2,200 | ||
Net premiums earned | 700 | ||
Retroactive coverage for retroactive insurance contract | |||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | |||
Net premiums written | 2,300 | ||
Net premiums earned | $ 2,300 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Income Tax Contingency [Line Items] | ||
Income taxes receivable | $ 6.6 | $ 18.9 |
Unrecognized tax benefits | 5.8 | 5.7 |
Accrued liability for interest related to unrecognized tax benefits | 0.6 | $ 0.5 |
Tax Year 2020 | ||
Income Tax Contingency [Line Items] | ||
Operating loss carryforwards | 45.3 | |
Income tax refund, CARES Act | 15.9 | |
Tax Year 2019 | ||
Income Tax Contingency [Line Items] | ||
Operating loss carryforwards | 25.6 | |
Income tax refund, CARES Act | $ 9 |
Goodwill (Narrative) (Details)
Goodwill (Narrative) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021USD ($)reportingUnitsegment | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Goodwill [Line Items] | |||
Number of reportable segments (in segments) | segment | 5 | ||
Number of reporting units | reportingUnit | 2 | ||
Goodwill impairment | $ 0 | $ (161,115) | |
Specialty P&C | |||
Goodwill [Line Items] | |||
Goodwill impairment | $ 0 | $ (161,100) | $ (161,115) |
Goodwill (Schedule of Goodwill)
Goodwill (Schedule of Goodwill) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Goodwill [Roll Forward] | |||
Goodwill | $ 49,610 | $ 210,725 | |
Accumulated impairment losses | 0 | (161,115) | |
Goodwill | 49,610 | 49,610 | |
Specialty P&C | |||
Goodwill [Roll Forward] | |||
Goodwill | 0 | 161,115 | |
Accumulated impairment losses | 0 | $ (161,100) | (161,115) |
Goodwill | 0 | 0 | |
Workers' Compensation Insurance Segment | |||
Goodwill [Roll Forward] | |||
Goodwill | 44,110 | 44,110 | |
Accumulated impairment losses | 0 | 0 | |
Goodwill | 44,110 | 44,110 | |
Segregated Portfolio Cell Reinsurance | |||
Goodwill [Roll Forward] | |||
Goodwill | 5,500 | 5,500 | |
Accumulated impairment losses | 0 | 0 | |
Goodwill | $ 5,500 | $ 5,500 |
Reserve for Losses and Loss A_3
Reserve for Losses and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Minimum period for claims resolution (in years) | 5 years | ||
Summary of reserve for losses and loss adjustment expenses | |||
Balance, beginning of year | $ 2,417,179 | $ 2,346,526 | $ 2,346,526 |
Less reinsurance recoverables on unpaid losses and loss adjustment expenses | 385,087 | 390,708 | 390,708 |
Net balance, beginning of year | 2,032,092 | 1,955,818 | 1,955,818 |
Net losses: | |||
Current year | 154,634 | 170,874 | 711,846 |
Favorable development of reserves established in prior years, net | (4,849) | (6,042) | (50,399) |
Total | 149,785 | 164,832 | 661,447 |
Paid related to: | |||
Current year | (10,513) | (15,876) | (83,204) |
Prior years | (126,534) | (163,518) | (501,969) |
Total paid | (137,047) | (179,394) | (585,173) |
Net balance, end of period | 2,044,830 | 1,941,256 | 2,032,092 |
Plus reinsurance recoverables on unpaid losses and loss adjustment expenses | 393,420 | 389,792 | 385,087 |
Balance, end of period | $ 2,438,250 | $ 2,331,048 | 2,417,179 |
Specialty P&C | |||
Net losses: | |||
Current year | 60,000 | ||
Favorable development of reserves established in prior years, net | $ 9,200 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2021USD ($) | Mar. 31, 2021GBP (£) | |
Funding Commitments | ||
Other Commitments [Line Items] | ||
Commitments total | $ 190.5 | |
Lloyd's Syndicates | ||
Other Commitments [Line Items] | ||
Current lending capacity under revolving credit agreement | £ | £ 30,000,000 | |
Unused commitments to extend credit | $ 41.3 | |
Non-renew notice, period | 30 days | |
Auto-renewal period prior to maturity date | 1 year | |
Interest rate on revolving credit agreement (percent) | 3.80% | 3.80% |
Required FAL deposit | $ 106.8 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) | Mar. 31, 2021 |
Lessee, Lease, Description [Line Items] | |
Renewal term (up to) (in years) | 15 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease term (in years) | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term (in years) | 11 years |
Leases (Lease Cost) (Details)
Leases (Lease Cost) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Leases [Abstract] | ||
Operating lease expense | $ 938 | $ 1,625 |
Sublease income | (54) | (38) |
Net lease expense | 884 | 1,587 |
Rental income from owned properties | $ 600 | $ 600 |
Leases (Supplemental Lease Info
Leases (Supplemental Lease Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Operating lease ROU assets | $ 18,219 | $ 19,013 | |
Operating lease liabilities | $ 19,168 | $ 20,116 | |
Weighted-average remaining lease term | 8 years 3 months 3 days | 8 years 3 months 21 days | |
Weighted-average discount rate | 2.98% | 2.97% | |
Operating cash flows from operating leases | $ 1,089 | $ 1,017 |
Leases (Future Minimum Lease Pa
Leases (Future Minimum Lease Payments) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
2021 | $ 3,057 | |
2022 | 3,306 | |
2023 | 2,608 | |
2024 | 2,026 | |
2025 | 1,783 | |
Thereafter | 8,875 | |
Total future minimum lease payments | 21,655 | |
Less: Imputed interest | 2,487 | |
Total operating lease liabilities | $ 19,168 | $ 20,116 |
Debt (Details)
Debt (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | ||
Gross debt | $ 285,723,000 | $ 286,113,000 |
Less unamortized debt issuance costs | 1,301,000 | 1,400,000 |
Debt less unamortized debt issuance costs | 284,422,000 | 284,713,000 |
Senior notes due 2023 | Senior notes due 2023 | ||
Debt Instrument [Line Items] | ||
Gross debt | $ 250,000,000 | $ 250,000,000 |
Stated interest rate on debt | 5.30% | 5.30% |
Mortgage loans | ||
Debt Instrument [Line Items] | ||
Gross debt | $ 35,723,000 | $ 36,113,000 |
Mortgage loans | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate for debt | 1.325% | 1.325% |
Effective interest rate on debt | 1.51% | 1.58% |
Line of Credit | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Line of credit borrowing capacity | $ 250,000,000 | |
Accordion feature borrowing capacity | 50,000,000 | |
Line of credit, borrowing capacity including accordion feature | 300,000,000 | |
Long-term Line of Credit | $ 0 | $ 0 |
Shareholders' Equity (Narrative
Shareholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Equity [Abstract] | |||
Common shares, shares authorized (in shares) | 100,000,000 | 100,000,000 | |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | |
Cash dividends declared per common share (in usd per share) | $ 0.05 | $ 0.31 | |
Dividend declared | $ 2.7 | $ 16.7 | |
Total authorizations which remain available for use | $ 110 | ||
Common shares acquired (in shares) | 0 | 0 | |
Deferred tax (benefit) expense included in OCI | $ (8.3) | $ (11) |
Shareholders' Equity (Roll Forw
Shareholders' Equity (Roll Forward of AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ 1,349,210 | $ 1,511,913 |
OCI, before reclassifications, net of tax | (30,415) | (41,980) |
Amounts reclassified from AOCI, net of tax | (3,290) | 115 |
Net OCI, current period | (33,705) | (41,865) |
Ending balance | 1,321,316 | 1,427,509 |
Unrealized Investment Gains (Losses) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 75,388 | 36,577 |
OCI, before reclassifications, net of tax | (30,415) | (42,497) |
Amounts reclassified from AOCI, net of tax | (3,347) | 115 |
Net OCI, current period | (33,762) | (42,382) |
Ending balance | 41,626 | (5,805) |
Non-credit Impairments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (57) | 300 |
OCI, before reclassifications, net of tax | 0 | 517 |
Amounts reclassified from AOCI, net of tax | 57 | 0 |
Net OCI, current period | 57 | 517 |
Ending balance | 0 | 817 |
Unrecognized Change in Defined Benefit Plan Liabilities | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (104) | 78 |
OCI, before reclassifications, net of tax | 0 | 0 |
Amounts reclassified from AOCI, net of tax | 0 | 0 |
Net OCI, current period | 0 | 0 |
Ending balance | (104) | 78 |
Accumulated Other Comprehensive Income (Loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 75,227 | 36,955 |
Ending balance | $ 41,522 | $ (4,910) |
Variable Interest Entities (Nar
Variable Interest Entities (Narrative) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Variable Interest Entity [Line Items] | ||
VIEs carrying value | $ 4,674,538 | $ 4,654,803 |
Equity investments | Variable Interest Entity, Not Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
VIEs carrying value | $ 270,800 | $ 282,200 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - $ / shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average number of common shares outstanding, basic (in shares) | 53,918 | 53,808 |
Weighted average number of common shares outstanding, diluted (in shares) | 53,998 | 53,885 |
Effect of dilutive shares on earnings (loss) per share (in usd per share) | $ 0 | $ 0 |
Restricted Share Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dilutive securities (in shares) | 76 | 74 |
Performance Share Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dilutive securities (in shares) | 4 | 3 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) - segment | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments (in segments) | 5 | |
Number of operating segments | 5 | |
Workers' Compensation Insurance Segment | ||
Segment Reporting Information [Line Items] | ||
Worker's compensation SPC percentage ceded | 100.00% | |
Syndicate 1729 | ||
Segment Reporting Information [Line Items] | ||
Proportion of capital provided to support Lloyd's Syndicate 1729 | 5.00% | 29.00% |
Syndicate 6131 | ||
Segment Reporting Information [Line Items] | ||
Proportion of capital provided to support Lloyd's Syndicate 1729 | 50.00% | 100.00% |
Segment Information (Financial
Segment Information (Financial Data by Segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Net premiums earned | $ 187,358 | $ 203,855 |
Net investment income | 15,017 | 20,830 |
Equity in earnings (loss) of unconsolidated subsidiaries | 6,788 | (1,562) |
Net realized gains (losses) | 8,849 | (28,673) |
Other income (expense) | 2,005 | 2,251 |
Net losses and loss adjustment expenses | (149,785) | (164,832) |
Underwriting, policy acquisition and operating expenses | (56,451) | (62,056) |
SPC U.S. federal income taxes expense | (356) | (222) |
SPC dividend (expense) income | (1,742) | 508 |
Interest expense | (3,212) | (4,129) |
Income tax benefit (expense) | (736) | 12,076 |
Segment results | 7,735 | (21,954) |
Net income (loss) | 7,735 | (21,954) |
Depreciation and amortization, net of accretion | 6,722 | 4,734 |
Specialty P&C | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 115,613 | 120,359 |
Workers' Compensation Insurance Segment | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 40,011 | 44,515 |
Segregated Portfolio Cell Reinsurance | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 15,884 | 16,980 |
Lloyd's Syndicates | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 15,850 | 22,001 |
Operating segments | Specialty P&C | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 115,613 | 120,359 |
Net investment income | 0 | 0 |
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 |
Net realized gains (losses) | 0 | 0 |
Other income (expense) | 469 | 1,698 |
Net losses and loss adjustment expenses | (101,186) | (110,931) |
Underwriting, policy acquisition and operating expenses | (26,346) | (29,585) |
SPC U.S. federal income taxes expense | 0 | 0 |
SPC dividend (expense) income | 0 | 0 |
Interest expense | 0 | 0 |
Income tax benefit (expense) | 0 | 0 |
Segment results | (11,450) | (18,459) |
Depreciation and amortization, net of accretion | 2,171 | 1,580 |
Operating segments | Workers' Compensation Insurance Segment | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 40,011 | 44,515 |
Net investment income | 0 | 0 |
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 |
Net realized gains (losses) | 0 | 0 |
Other income (expense) | 392 | 757 |
Net losses and loss adjustment expenses | (26,207) | (29,769) |
Underwriting, policy acquisition and operating expenses | (12,286) | (14,164) |
SPC U.S. federal income taxes expense | 0 | 0 |
SPC dividend (expense) income | 0 | 0 |
Interest expense | 0 | 0 |
Income tax benefit (expense) | 0 | 0 |
Segment results | 1,910 | 1,339 |
Depreciation and amortization, net of accretion | 903 | 926 |
Operating segments | Segregated Portfolio Cell Reinsurance | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 15,884 | 16,980 |
Net investment income | 221 | 254 |
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 |
Net realized gains (losses) | 987 | (3,207) |
Other income (expense) | 1 | 136 |
Net losses and loss adjustment expenses | (9,425) | (9,352) |
Underwriting, policy acquisition and operating expenses | (5,025) | (5,079) |
SPC U.S. federal income taxes expense | (356) | (222) |
SPC dividend (expense) income | (1,742) | 508 |
Interest expense | 0 | 0 |
Income tax benefit (expense) | 0 | 0 |
Segment results | 545 | 18 |
Depreciation and amortization, net of accretion | 316 | 69 |
Operating segments | Lloyd's Syndicates | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 15,850 | 22,001 |
Net investment income | 729 | 1,159 |
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 |
Net realized gains (losses) | (115) | 81 |
Other income (expense) | 221 | (232) |
Net losses and loss adjustment expenses | (12,967) | (14,780) |
Underwriting, policy acquisition and operating expenses | (6,591) | (9,142) |
SPC U.S. federal income taxes expense | 0 | 0 |
SPC dividend (expense) income | 0 | 0 |
Interest expense | 0 | 0 |
Income tax benefit (expense) | 0 | 29 |
Segment results | (2,873) | (884) |
Depreciation and amortization, net of accretion | 15 | 9 |
Operating segments | Corporate | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 0 | 0 |
Net investment income | 14,067 | 19,417 |
Equity in earnings (loss) of unconsolidated subsidiaries | 6,788 | (1,562) |
Net realized gains (losses) | 7,977 | (25,547) |
Other income (expense) | 1,894 | 633 |
Net losses and loss adjustment expenses | 0 | 0 |
Underwriting, policy acquisition and operating expenses | (7,175) | (4,827) |
SPC U.S. federal income taxes expense | 0 | 0 |
SPC dividend (expense) income | 0 | 0 |
Interest expense | (3,212) | (4,129) |
Income tax benefit (expense) | (736) | 12,047 |
Segment results | 19,603 | (3,968) |
Depreciation and amortization, net of accretion | 3,317 | 2,150 |
Inter-segment Eliminations | ||
Segment Reporting Information [Line Items] | ||
Net premiums earned | 0 | 0 |
Net investment income | 0 | 0 |
Equity in earnings (loss) of unconsolidated subsidiaries | 0 | 0 |
Net realized gains (losses) | 0 | 0 |
Other income (expense) | (972) | (741) |
Net losses and loss adjustment expenses | 0 | 0 |
Underwriting, policy acquisition and operating expenses | 972 | 741 |
SPC U.S. federal income taxes expense | 0 | 0 |
SPC dividend (expense) income | 0 | 0 |
Interest expense | 0 | 0 |
Income tax benefit (expense) | 0 | 0 |
Segment results | 0 | 0 |
Depreciation and amortization, net of accretion | $ 0 | $ 0 |
Segment Information (Gross Prem
Segment Information (Gross Premiums Earned and Reconciliation to Net Premiums) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Segment net premiums earned | $ 187,358 | $ 203,855 |
Specialty P&C | ||
Segment Reporting Information [Line Items] | ||
Ceded premiums earned | (16,447) | (18,664) |
Segment net premiums earned | 115,613 | 120,359 |
Specialty P&C | HCPL | ||
Segment Reporting Information [Line Items] | ||
Gross premiums earned | 97,045 | 103,467 |
Specialty P&C | Small Business Unit | ||
Segment Reporting Information [Line Items] | ||
Gross premiums earned | 25,925 | 26,650 |
Specialty P&C | Medical Technology Liability | ||
Segment Reporting Information [Line Items] | ||
Gross premiums earned | 8,938 | 8,529 |
Specialty P&C | Other | ||
Segment Reporting Information [Line Items] | ||
Gross premiums earned | 152 | 377 |
Workers' Compensation Insurance Segment | ||
Segment Reporting Information [Line Items] | ||
Ceded premiums earned | (18,621) | (21,098) |
Segment net premiums earned | 40,011 | 44,515 |
Workers' Compensation Insurance Segment | Traditional business | ||
Segment Reporting Information [Line Items] | ||
Gross premiums earned | 41,743 | 47,485 |
Workers' Compensation Insurance Segment | Alternative market business | ||
Segment Reporting Information [Line Items] | ||
Gross premiums earned | 16,889 | 18,128 |
Segregated Portfolio Cell Reinsurance | ||
Segment Reporting Information [Line Items] | ||
Ceded premiums earned | (2,083) | (2,210) |
Segment net premiums earned | 15,884 | 16,980 |
Segregated Portfolio Cell Reinsurance | HCPL | ||
Segment Reporting Information [Line Items] | ||
Gross premiums earned | 1,852 | 1,677 |
Segregated Portfolio Cell Reinsurance | Workers' compensation | ||
Segment Reporting Information [Line Items] | ||
Gross premiums earned | 16,115 | 17,513 |
Lloyd's Syndicates | ||
Segment Reporting Information [Line Items] | ||
Gross premiums earned | 20,385 | 28,196 |
Ceded premiums earned | (4,535) | (6,195) |
Segment net premiums earned | $ 15,850 | $ 22,001 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - USD ($) $ in Millions | May 06, 2021 | May 05, 2021 |
Revolving Credit Facility | Line of Credit | ||
Subsequent Event [Line Items] | ||
Proceeds from line of credit | $ 15 | |
NORCAL Group | ||
Subsequent Event [Line Items] | ||
Percentage of interest acquired | 98.00% | |
Base consideration | $ 441 | |
Payments to acquire business | $ 248 |