XML 28 R15.htm IDEA: XBRL DOCUMENT v3.7.0.1
Shareholders' Equity
 3 Months Ended
Mar. 31, 2017
Equity [Abstract]  
Shareholders' Equity
Shareholders’ Equity
At March 31, 2017 and December 31, 2016, 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. To date, the Board has not approved the issuance of preferred stock.
ProAssurance declared cash dividends of $0.31 per share during the first quarters of both 2017 and 2016, totaling $16.5 million and $16.4 million, respectively.
At March 31, 2017, Board authorizations for the repurchase of common shares or the retirement of outstanding debt of $109.6 million remained available for use. ProAssurance did not repurchase any common shares during the three months ended March 31, 2017 and repurchased approximately 27,700 shares at a cost of $1.3 million during the three months ended March 31, 2016.
Share-based compensation expense and related tax benefits were as follows:
 
Three Months Ended March 31
(In thousands)
2017
 
2016
Share-based compensation expense
$
3,346

 
$
2,715

Related tax benefits
$
1,171

 
$
950


ProAssurance awarded approximately 84,600 restricted share units and 48,000 base performance share units to employees in February 2017. The fair value of each unit awarded was estimated at $58.35, equal to the market value of a ProAssurance common share on the date of grant less the estimated present value of dividends during the vesting period. All awards are charged to expense as an increase to equity over the service period (generally the vesting period) associated with the award. Restricted share units and performance share units vest in their entirety at the end of a three-year period following the grant date based on a continuous service requirement and, for performance share units, achievement of a performance objective. Partial vesting is permitted for retirees. A ProAssurance common share is issued for each unit once vesting requirements are met, except that units sufficient to satisfy required tax withholdings are paid in cash. The number of common shares issued for performance share units varies from 50% to 200% of base awards depending upon the degree to which stated performance objectives are achieved. ProAssurance issued approximately 29,300 and 99,500 common shares to employees in February 2017 related to restricted share units and performance share units, respectively, granted in 2014. Performance share units for the 2014 award were issued at levels ranging from 117% to 125%.
ProAssurance issued approximately 9,000 common shares to employees in February 2017 as bonus compensation, as approved by the Compensation Committee of the Board. The shares issued were valued at fair value (the market price of a ProAssurance common share on the date of award).
Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)
For the three months ended March 31, 2017 and 2016, OCI was primarily comprised of unrealized gains and losses, including non-credit impairment losses, arising during the period related to available-for-sale securities, less reclassification adjustments, as shown in the table that follows, net of tax. For the three months ended March 31, 2016, OCI included gains of $0.3 million related to changes from the reestimation of two defined benefit plans assumed in the Eastern acquisition, one of which was terminated late in 2016. The remaining plan is frozen as to the earnings of additional benefits, but the unrecognized plan benefit liability is reestimated annually.
At March 31, 2017 and December 31, 2016, AOCI was primarily comprised of unrealized gains and losses from available-for-sale securities, including non-credit impairments recognized in OCI of $0.5 million and $0.3 million, respectively, net of tax. During 2016, as discussed above, one of the defined benefit plans assumed in the Eastern acquisition was terminated and the related unrecognized losses were reclassified from AOCI to earnings. At March 31, 2017 and December 31, 2016, unrecognized changes in the remaining defined benefit plan liability were nominal in amount. All tax effects were computed using a 35% rate, with the exception of unrealized gains and losses on available-for-sale securities held at our U.K. and Cayman Island entities which were immaterial in amount.
Amounts reclassified from AOCI to Net income and the amounts of deferred tax expense (benefit) included in OCI were as follows:
 
Three Months Ended March 31
(In thousands)
2017
 
2016
Reclassifications from AOCI to Net income:
 
 
 
Realized investment gains (losses)
$
1,616

 
$
(5,241
)
Non-credit impairment losses reclassified to earnings, due to sale of securities or reclassification as a credit loss
—

 
(2,758
)
Total amounts reclassified, before tax effect
1,616

 
(7,999
)
Tax effect (at 35%)
(566
)
 
2,800

Net reclassification adjustments
$
1,050

 
$
(5,199
)
 
 
 
 
Deferred tax expense (benefit) included in OCI
$
1,481

 
$
12,260