ProAssurance Corporation

Good morning, everyone. Welcome to ProAssurance's conference call to discuss the company's fourth quarter 2024 results. I'd like to remind you that the call is being recorded and there will be time for questions after the conclusion of the prepared remarks. Now, I will turn the call over to Heather Wetzel.

Good morning, everyone. ProAssurance issued its news release investor presentation and 2024 report informed 10K yesterday, February 24th, 2025. 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 ProAssurance's business and alter expected results. Please review those statements. This morning, our management team will discuss selected aspects of the results on this call, and investors should review the 10-K news 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 law and subject to applicable safe harbor protections. Content of this call is accurate only on February 25, 2025 and accepts as required by law or regulation. ProAssurance will not undertake or expressly disclaim any obligation to update or alter information disclosed as part of these forward-looking statements. We also expect 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 are Ned Rand, President and CEO, and Dana Hendricks, Chief Financial Officer. Also joining on the call today are executive leadership team members, Rob Francis, Kevin Schuch, and Karen Murphy. Now, we'll turn the call over to Ned.

Thank you, and I'd like to start by welcoming everyone to our call. Yesterday, we reported our fifth consecutive quarter of improved operating earnings. In particular, these results demonstrate the progress we're making in our medical professional liability business, which makes up the majority of our largest segment, specialty P&C. My comments are focused on ongoing core operations. Dan will touch on the impact of our Lloyds business on our net income for the quarter. For the quarter, the specialty P&C segment reported a combined ratio of 101%, benefiting from almost nine points of favorable prior action year reserve development. It is a sign that our multi-year effort to respond to rising medical professional liability severity is generating positive results. The segment's full year combined ratio improves sequentially by nearly five points to 104%, including almost six points of favorable development. Continuing social inflation and eroding tort reform mean we are facing a challenging legal environment exacerbated by legal system abuse. We believe we have stayed ahead of many in the space in achieving rate levels in NPL that outpaced the resulting severity trends. We've achieved more than 20 points of improvement in the accident year loss and LAE ratio since 2019. Renewal premium increases, as well as the impact of our re-underwriting efforts and other strategic initiatives. Even with the progress of this past year, work remains. We continue to forego renewal and new business opportunities that we believe do not meet our expectation of rate adequacy in the current loss environment. Renewal premium increases in this year's fourth quarter were 10% for our standard NPL business and 8% for the specialty portion of our NPL book. This brings renewal premium increases since 2018 within our NPL line of business to almost 70% cumulatively. We remain very well positioned in the market and highly relevant in our targeted sectors and with our distribution partners. Exclusive of rate changes, retention of our existing premiums was a solid 83% in the quarter, including strong retention in the standard book, where we rate much of our more profitable small to midsize accounts. As expected, new business continues to be impacted by our focus on rate adequacy and was below 2023 for the quarter and the year. Complementing our focus on pricing is our commitment to disciplined underwriting and managing claims to address market conditions. Innovation tools continue to enhance our risk-predictive analytics by letting us leverage our extensive data and help us identify specific geographic markets, especially subsectors, where there are opportunities to write business that we believe will meet our profitability objectives. We're also committed to ensuring that our insurance and distribution partners find us easy to do business with, helping distinguish us in the market place. In late 2024, we launched an AI-ready web portal that delivers a variety of enhanced self-service options for policyholders and agents. We're enhancing workflows using the functionality of the new system and are in the process of filing a fully revised policy form and manuals for use nationwide for all of our standard business. Turning to our workers' compensation segment, we continue to carefully manage our underwriting appetites as we work to obtain the necessary rate and address the higher medical loss trends that we initially saw in mid-2023, although they had begun to moderate over 2024. Net written premiums were up only $4 million for the year, reflecting higher audit premiums and improved renewal pricing, while new business in our traditional book was more than $4 million below last year. In addition, we believe our focus on operational discipline is having a positive impact with the combined ratio improved for the quarter and the year compared with 2023. The progress we were making has partially been due to our ability to leverage the integrated policy claims risk management and billing system we implemented in early 2024. Not only is that system working well, it's paving the way for innovation initiatives that will help us address the challenging market conditions. These initiatives are using AI tools, along with underwriting and claims data analytics, to enhance profitability, productivity, and efficiency. We are pleased with the initial implementation with workers' comp claim specialist, Clare Analytics. This partnership will help us enhance medical outcomes for injured workers, improve our case reserve estimation capabilities, and lighten the administrative burdens of our claims professionals. We are leveraging their platform to address aspects of escalating medical costs, including their medical document intelligence platform that assists with directing care to the best performing providers. and our tool to help identify high-severity claims early in the claims lifecycle. And that's just one example of what's underway in our workers' compensation segment. We're also ramping up the tools to optimize our network and medical management partners. Plus, we are making innovation investments in proprietary underwriting tools that expand the use of data analytics to guide and support operational decisions, improving penetration in the more profitable small account market segments. Across the organization, we remain intently focused on reaching our long-term objectives and the results that we need to achieve. We are pleased with the progress of 2024, but we will not compromise to achieve a short-term fix at the expense of protecting our balance sheet and our insurance over the long term. Our long history in both medical professional liability and workers' compensation has taught us that these cyclical lines will respond to our focused efforts. We remain confident in our ability to ultimately achieve sustained underwriting profitability in both businesses, despite market headwinds. We know that maintaining our discipline is key to delivering positive long-term results. I think you'll see more signs of our progress as Dana looks further into these results. Dana?