ProAssurance Corporation

I'd like to remind you that the call is being recorded, and there will be a time for questions after the conclusion of the prepared remarks. Now I'll turn the call over to Frank O'Neill. Please go ahead.

Good morning, everyone. We reported on fourth quarter results in a news release issued February 27, 2024, and in our report on Form 10-K, which was also filed yesterday on February 27, 2024. Included in those documents were cautionary statements about significant risks, uncertainties, and other factors that are out of the company's control and could affect ProAssurance's business and alter expected results. Please review those statements. This morning, our management team will be discussing selected aspects of the quarterly results on this call, and investors should review the filing on Form 10-K and accompanying press releases for full and complete information. We expect to make statements on this call dealing with projections, estimates, and expectations, and we explicitly identify these as forward-looking statements within the meaning of the U.S. federal securities law and subject to applicable safe harbor protections. The content of this call is accurate only on February 28, 2024. Except as required by law or regulation, pro-assurance will not undertake an expressly disclaimed 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, the Chief Financial Officer, Also joining today are executive leadership team members Rob Francis, Kevin Shook, and Karen Murphy. Now I'm going to turn the call over to Ned.

Thank you, Frank, and good morning, everyone. I want to address the headline number up front. Our per share operating loss was five cents in the quarter, primarily reflecting the continuation of significant increases in losses in our workers' compensation book of business. The results are disappointing. but are a direct result of our commitment to protecting our balance sheet and our insurance. ProAssurance remains committed to a long-term strategy that we believe will ultimately create sustained profitability. At the same time, we have to recognize the headwinds presented by the current difficult market conditions and a very challenging litigation climate. Our experience has shown us that responding with pricing actions and a focus on underwriting discipline while adapting to the evolution of our target markets, will propel us on a positive trajectory. While we remain confident that the strategies we have implemented will return pro assurance to acceptable levels of profitability, we have to acknowledge that it is taking longer than we anticipated. The reality on the ground today is a lost environment that continues to worsen and has prevented us from making as much progress as we would like. Our financial performance, unfortunately, masks the tremendous progress we have made within our organization to streamline operations, refocus our business, and make the organization more cohesive and effective. We remain confident this progress will make a difference over time. The competitive environment in both our specialty P&C and workers' compensation insurance segments continues to present a challenge. However, in both lines of business, we saw gains in new business that we believe to be well-priced. while renewal retention remains strong. Our operating decisions in light of competitive pressures resulted in an overall drop in gross premiums. A substantial amount of lost business was the result of our disciplined underwriting, our pursuit of rate adequacy, and our decisions to walk away from business that could not be written profitably. The new business we do write and the policies we renew are at rates we believe will ultimately perform better than the business we are non-renewing. When we add or retain business at these rates, it confirms our ability to present the market with an option to select high-quality coverage and superior service, both attributes which have been the bedrock of our profitability in the past and we believe will be so in the future. Now I want to make some general comments regarding our operating segments. First, specialty P&C, where social and medical inflation continue to drive judgments and settlements higher, and we're reflecting that in our underwriting, pricing, and reserving. Given the substantial deterioration in the litigation climate in recent years, our drive for additional rate will continue for the foreseeable future. In workers' compensation, we continue to be cautious about claims costs as the trends noted last quarter are unabated. Despite the fact that we are seeing continued reductions in claim frequency, the average medical cost per claim continues to rise as we see the dual effects of wage inflation for healthcare workers and increasing costs tied to the introduction of new medical treatments and technologies. We believe we are ahead of the industry in recognizing these trends because of the short-tailed nature of our book. As a reminder, we close cases approximately 40% faster than the industry, leaving us with fewer open claims at any one time compared to other companies in this line of business. And in our industry, the longer a claim is open, the more costly it becomes. which is why we focus on getting injured workers back to productivity as quickly as possible through early intervention and in-depth case management. Frank?