XML 38 R25.htm IDEA: XBRL DOCUMENT
v3.21.2

Business Combination (Tables) | 9 Months Ended
--- | ---
Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract] |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The preliminary allocation of acquisition consideration is shown in the table below.
(In thousands) |
Fixed maturities, available for sale | $ | 1,100,058 |
Equity investments, available for sale | 374,484 |
Short-term investments | 61,289 |
Business owned life insurance | 12,581 |
Investment in unconsolidated subsidiaries | 26,948 |
Other investments | 32,461 |
Cash and cash equivalents | 28,233 |
Premiums receivable | 110,905 |
Receivable from reinsurers on paid losses and loss adjustment expenses | 266 |
Receivable from reinsurers on unpaid losses and loss adjustment expenses | 93,342 |
Prepaid reinsurance premiums | 9,238 |
Deferred tax asset, net | 46,759 |
Operating lease ROU assets | 4,385 |
Intangible assets | 14,000 |
Other assets | 38,648 |
Reserve for losses and loss adjustment expenses | (1,182,445) |
Unearned premiums | (178,400) |
Reinsurance premiums payable | (12,981) |
Operating lease liabilities | (5,275) |
Other liabilities | (51,279) |
Total identifiable net assets acquired | $ | 523,217 |
Gain on bargain purchase | (74,408) |
Total acquisition consideration | $ | 448,809 |
Schedule of Intangible Assets Acquired | Intangible assets acquired included the following:
(In thousands) | Estimated Fair Value on Acquisition Date |  | Estimated Useful Life
Trade name | $ | 1,000 |  |  | 3
Licenses | 13,000 |  |  | Indefinite
Total | $ | 14,000 |  |  |
Schedule of Present Value of Future Insurance Profits, Expected Amortization | The following table reflects the fair value adjustment on the net reserve for losses and loss adjustment expenses, the negative net VOBA recorded on the assumed unearned premium and negative VOBA recorded on the DDR reserve, as well as the expected amortization of each for the five years following the acquisition.
(In thousands) | Amount at May 5, 2021 |  | Estimated amortization period (years) |  | Expected pre-tax amortization for year following the acquisition
|  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | Thereafter
Fair value adjustment on reserves, net (1) | $ | 38,701 |  |  | 7 |  | $ | 7,768 |  |  | $ | 10,595 |  |  | $ | 8,090 |  |  | $ | 5,083 |  |  | $ | 3,107 |  |  | $ | 4,058 |
Unearned premium VOBA, net (2) | 11,676 |  |  | 1 |  | 6,737 |  |  | 4,939 |  |  | — |  |  | — |  |  | — |  |  | — |
DDR reserve VOBA (1) | 3,467 |  |  | 15 |  | 139 |  |  | 224 |  |  | 243 |  |  | 243 |  |  | 243 |  |  | 2,375 |
Total | $ | 53,844 |  |  |  |  | $ | 14,644 |  |  | $ | 15,758 |  |  | $ | 8,333 |  |  | $ | 5,326 |  |  | $ | 3,350 |  |  | $ | 6,433 |
(1) Amortization will be recorded as a reduction to prior accident year net losses and loss adjustment expenses.
(2) Amortization will be recorded as a reduction to current accident year net losses and loss adjustment expenses
Schedule of Pro Forma Results | The following table provides Pro Forma Consolidated Results and Actual Consolidated Results for the three and nine months ended September 30, 2021 and 2020 as if the NORCAL transaction had occurred on January 1, 2020. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the operating results that may have actually occurred had the acquisition of NORCAL been completed on January 1, 2020. In addition, the unaudited pro forma financial information does not give effect to any anticipated cost savings, operating efficiencies or other synergies that may be associated with the acquisition, or any estimated costs that have been or will be incurred to integrate the assets and operations of NORCAL.
| Three Months Ended September 30 |  | Nine Months Ended September 30
(In thousands) | 2021 |  | 2020 |  | 2021 |  | 2020
Revenue: |  |  |  |  |  |  |
ProAssurance Pro Forma Consolidated Results | $ | 305,927 |  |  | $ | 340,428 |  |  | $ | 930,350 |  |  | $ | 943,268 |
ProAssurance Actual Consolidated Results | $ | 309,700 |  |  | $ | 226,897 |  |  | $ | 811,344 |  |  | $ | 645,338 |
Net income (loss): |  |  |  |  |  |  |
ProAssurance Pro Forma Consolidated Results | $ | 13,366 |  |  | $ | (158,620) |  |  | $ | 58,692 |  |  | $ | (117,906) |
ProAssurance Actual Consolidated Results | $ | 12,200 |  |  | $ | (149,979) |  |  | $ | 111,984 |  |  | $ | (190,032) |

X
- Definition Tabular disclosure of pro forma results of operations for a material business acquisition or series of individually immaterial business acquisitions that are material in the aggregate. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2) -URI http://asc.fasb.org/extlink&oid=79982066&loc=d3e1392-128463 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(3) -URI http://asc.fasb.org/extlink&oid=79982066&loc=d3e1392-128463 + Details
Name: | us-gaap_BusinessAcquisitionProFormaInformationTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of finite-lived and indefinite-lived intangible assets acquired as part of a business combination. + References No definition available. + Details
Name: | us-gaap_FiniteLivedAndIndefiniteLivedIntangibleAssetsAcquiredAsPartOfBusinessCombinationTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of amount of amortization expense expected to be recorded in succeeding fiscal years for present value of future profits of insurance contract acquired in business combination. + References No definition available. + Details
Name: | us-gaap_PresentValueOfFutureInsuranceProfitsExpectedAmortizationTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. May include but not limited to the following: (a) acquired receivables; (b) contingencies recognized at the acquisition date; and (c) the fair value of noncontrolling interests in the acquiree. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=123413009&loc=d3e4845-128472 + Details
Name: | us-gaap_ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration