ProAssurance Corporation

Good morning, everyone. We reported on third quarter results in a news release issued November 8, 2023, and on our quarterly report on Form 10-Q, which was also filed on November 8, 2023. Included in those documents were cautionary statements about the significant risks, uncertainties, and other factors that are out of the company's control and could affect Pro Assurance's business and alter expected results. Please review those statements carefully. This morning, our management team will discuss selected aspects of their quarterly results on this call, and investors should review the filing on Form 10-Q and accompanying press release for full and complete information. We expect to make statements on this call dealing with projections, estimates, and expectations, and explicitly identify these as forward-looking statements within the meaning of the U.S. federal securities laws and subject to applicable safe harbor protections. The content of this call is accurate only on November 9, 2023, and is accepted as required by law or regulation. ProAssurance will not undertake and expressly disclaims any obligation to update or alter information disclosed as part of these forward-looking statements. Our management team also expects to reference non-GAAP items during today's call. The company's recent news release provides a reconciliation of these non-GAAP numbers to their GAAP counterparts. On the call with me today will be Ned Rand, President and CEO, Dana Hendricks, our Chief Financial Officer. Also joining are the Executive Leadership Team members, Rob Francis, Kevin Shook, Ross Taubman, and Karen Murphy. Now I'm going to turn the call over to Ned.

Thank you, Frank. It's nice to have you back. Thanks for coming out of retirement briefly while we try to fill a vacancy in our IR role. I really appreciate that. And good morning to everybody. In reporting our results for the third quarter, we note both the realities of current market conditions and our resolve to respond appropriately. Dana and I look forward to providing insights into the evolving market. I want to address the seven cents per share operating loss up front. Unfavorable development in our workers' compensation book of business is the primary reason for the loss. And while disappointing, our actions are consistent with our historical practice of recognizing negative trends as they present themselves. While that reserve development resulted in the headline loss number, it also masked positive trends that I think point to better results ahead. Rich written premiums were up 4% quarter over quarter, and new business was significantly higher, while retention remained strong. This signals not only an appreciation for the quality of the service and strength we provide to our insurers, but as a testament to the dedication and effectiveness of our team members and distribution partners who are helping us earn new business in retaining insureds in these extremely competitive market conditions. I suppose the legitimate question would be why are we growing given current market conditions? Our strategy in both lines of business relies on individual underwriting and pricing, and we strive to only write or retain business we believe will meet our profitability goals. Thus, we believe we can grow our book profitably as long as we remain disciplined in pricing and underwriting. Inflationary trends continue to affect the market conditions in which we operate, and we continue to see higher than anticipated loss severity trends as well. Those trends seem to be affecting insurers active in the specialty P&C lines we write, which we believe will hasten a return to more rational pricing. Within Work Comp, because of our proactive claims handling, we believe we are seeing these inflationary trends earlier than others, And while some work comp writers have begun to talk about it, it's not being universally recognized. But it's coming and should have a profound effect on pricing and capacity in the work comp market. We have been decreasing our participation at Lloyd's over the past several years, and as we look forward to 2024, have made the decision to discontinue any further participation. In addition, we entered into an agreement to sell our remaining ownership interest in the underwriting and operations entity associated with Syndicate 1729. to an unrelated third party, which is contingent upon certain approvals. This decision also led us to reorganize our segment reporting beginning this quarter, which Dana will discuss later. Now, looking at each segment at a high level, I want to highlight two important items in specialty P&C. First, even in this competitive environment, we wrote $24 million in new business that we believe meets our pricing and underwriting standards. This speaks volumes about our ability to write business based on our quality of coverage and our service and defense commitment. A further positive sign was the overall increase in ruinable pricing of 7% in the quarter, amplifying those premium gains with strong retention in the segment of 87%, led by retention of 89% in our standard physician business. Again, being renewed at prices we believe support our return to profitability goals and meet our strict underwriting standards. Overall, a good result given the competitive market conditions we face. We continue to monitor increased severity trends in a handful of our legacy jurisdictions. As I mentioned, we see both social and medical inflation as key drivers here, and we are wary of the increased severity of judgments and settlements in large complex cases and the downstream impact this can have on settlement values for all claims. Total underwriting expenses in the segment were down $4 million. resulting in an underwriting expense ratio of 25%, down just under two points quarter over quarter. The expense ratio decrease compared to last year was driven by a decrease in amounts accrued for performance-related incentive compensation plans in the current quarter, as well as the impact of one-time expenses in the prior year quarter, partially offset by lower levels of earned premium. Moving now to our workers' compensation insurance segment, gross written premium was essentially level with the third quarter 2022. at $63.6 million. During the third quarter, audit premium decreased by approximately $1 million quarter over quarter. To the upside, new business was $5 million, $1.3 million higher than last year's third quarter, and our premium renewal retention was 87%. However, renewal rates were down 3% over the same period, driven by continued rate pressure from prescribed state loss cost adjustments. While workers' compensation rates continue to be pressured, the third quarter rate change was an improvement over the second quarter decrease, which we believe offers some encouragement. As I mentioned, we are seeing the impacts of inflationary trends in our workers' comp book. During the third quarter, we observed higher than anticipated loss trends in our average medical costs per claim as compared to what we observed during the first two quarters of the year. While we continue to experience reductions in claim frequency, Our average medical cost per claim is higher in both the 2023 and 2022 accident years. With medical expenses representing approximately 65% of our total claims costs, we attribute this trend to an increased cost to care for injured workers driven by healthcare wage inflation and medical advancements. In response to these trends, we increased our full year 2023 accident year loss ratio to 76%. and recorded $8 million of unfavorable loss of reserve development, primarily in the 2022 accident year. Our short-tailed claim strategies that we've discussed in the past result in compensable injuries being reported real time with healthcare professionals assessing treatment upfront to get the injured workers appropriate medical treatment and back to productivity quickly. As with specialty PNC, underwriting expenses were down quarter over quarter. The 34% underwriting expense ratio was just slightly higher than the prior quarter as a result of lower earned net earned premiums and the continuation of competitive market conditions. Finally, our segregated portfolio sell reinsurance segment contributed a profit of just under $1 million to operating results driven by strong underwriting results and net investment income for those sells where we take an economic interest. The combined ratio in our segregated portfolio sale reinsurance segment increased approximately 33 points to 128.2%, with 26 points of that increase due to the cancellation of the tail coverage related to a program in which we do not participate in the underwriting results and therefore had no impact on operating results in the quarter. Frank?

Thanks, Ned. Let's go next to Dana, who will review consolidated results and provide highlights from the balance sheet and investment returns. Thanks.