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Segment Information (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The tabular information that follows shows the financial results of the Company's reportable segments reconciled to results reflected in the Condensed Consolidated Statements of Income and Comprehensive Income. ProAssurance does not consider a gain on bargain purchase or transaction-related costs for completed business combinations, including any related tax impacts, in assessing the financial performance of its operating and reportable segments, and thus are included in the reconciliation of segment results to consolidated results.

Financial results by segment were as follows:

			Three Months Ended June 30, 2022
(In thousands)			Specialty P&C						Workers' Compensation Insurance						Segregated Portfolio Cell Reinsurance						Lloyd's Syndicates						Corporate						Inter-segment Eliminations						Consolidated
Net premiums earned			$	183,547					$	41,709					$	16,222					$	5,793					$	—					$	—					$	247,271
Net investment income			—						—						211						143						21,590						—						21,944
Equity in earnings (loss) of unconsolidated subsidiaries			—						—						—						—						5,180						—						5,180
Net investment gains (losses)			—						—						(2,782)						(485)						(20,617)						—						(23,884)
Other income (expense)(1)			1,903						517						1						129						3,626						(862)						5,314
Net losses and loss adjustment expenses(2)			(137,002)						(27,947)						(9,272)						(3,449)						—						—						(177,670)
Underwriting, policy acquisition and operating expenses(1)(2)			(48,077)						(13,669)						(5,237)						(1,508)						(9,019)						862						(76,648)
SPC U.S. federal income tax expense(3)			—						—						(349)						—						—						—						(349)
SPC dividend (expense) income			—						—						854						—						—						—						854
Interest expense			—						—						—						—						(4,919)						—						(4,919)
Income tax benefit (expense)			—						—						—						—						1,789						—						1,789
Segment results			$	371					$	610					$	(352)					$	623					$	(2,370)					$	—					(1,118)
Reconciliation of segments to consolidated results:
Transaction-related costs, net(4)																																							(541)
Net income (loss)																																							$	(1,659)
Significant non-cash items:
Depreciation and amortization, net of accretion			$	2,948					$	874					$	345					$	10					$	5,882					$	—					$	10,059

			Six Months Ended June 30, 2022
(In thousands)			Specialty P&C						Workers' Compensation Insurance						Segregated Portfolio Cell Reinsurance						Lloyd's Syndicates						Corporate						Inter-segment Eliminations						Consolidated
Net premiums earned			$	381,514					$	82,393					$	35,536					$	13,539					$	—					$	—					$	512,982
Net investment income			—						—						323						355						41,709						—						42,387
Equity in earnings (loss) of unconsolidated subsidiaries			—						—						—						—						12,799						—						12,799
Net investment gains (losses)			—						—						(3,493)						(884)						(33,013)						—						(37,390)
Other income (expense)(1)			2,924						1,199						1						263						5,691						(1,959)						8,119
Net losses and loss adjustment expenses(2)			(302,960)						(55,158)						(20,763)						(8,212)						—						—						(387,093)
Underwriting, policy acquisition and operating expenses(1)(2)			(90,958)						(26,669)						(9,605)						(4,218)						(17,756)						1,959						(147,247)
SPC U.S. federal income tax expense(3)			—						—						(991)						—						—						—						(991)
SPC dividend (expense) income			—						—						(1,513)						—						—						—						(1,513)
Interest expense			—						—						—						—						(9,360)						—						(9,360)
Income tax benefit (expense)			—						—						—						—						3,559						—						3,559
Segment results			$	(9,480)					$	1,765					$	(505)					$	843					$	3,629					$	—					(3,748)
Reconciliation of segments to consolidated results:
Transaction-related costs, net(4)																																							(1,471)
Net income (loss)																																							$	(5,219)
Significant non-cash items:
Depreciation and amortization, net of accretion			$	5,540					$	1,748					$	715					$	24					$	12,382					$	—					$	20,409

			Three Months Ended June 30, 2021
(In thousands)			Specialty P&C						Workers' Compensation Insurance						Segregated Portfolio Cell Reinsurance						Lloyd's Syndicates						Corporate						Inter-segment Eliminations						Consolidated
Net premiums earned			$	168,635					$	40,626					$	16,272					$	13,460					$	—					$	—					$	238,993
Net investment income			—						—						206						518						16,693						—						17,417
Equity in earnings (loss) of unconsolidated subsidiaries			—						—						—						—						11,927						—						11,927
Net realized gains (losses)			—						—						1,580						89						9,164						—						10,833
Other income (expense)(1)			1,471						900						1						361						351						(626)						2,458
Net losses and loss adjustment expenses			(140,214)						(27,751)						(8,443)						(5,444)						—						—						(181,852)
Underwriting, policy acquisition and operating expenses(1)			(28,877)						(12,712)						(5,293)						(4,721)						(5,929)						626						(56,906)
SPC U.S. federal income tax expense(2)			—						—						(504)						—						—						—						(504)
SPC dividend (expense) income			—						—						(2,864)						—						—						—						(2,864)
Interest expense			—						—						—						—						(5,176)						—						(5,176)
Income tax benefit (expense)			—						—						—						—						(220)						—						(220)
Segment results			$	1,015					$	1,063					$	955					$	4,263					$	26,810					$	—					34,106
Reconciliation of segments to consolidated results:
Gain on bargain purchase																																							74,408
Transaction-related costs, net(4)																																							(16,464)
Net income (loss)																																							$	92,050
Significant non-cash items:
Gain on bargain purchase																																							$	74,408
Depreciation and amortization, net of accretion			$	3,134					$	903					$	361					$	16					$	5,183					$	—					$	9,597

			Six Months Ended June 30, 2021
(In thousands)			Specialty P&C						Workers' Compensation Insurance						Segregated Portfolio Cell Reinsurance						Lloyd's Syndicates						Corporate						Inter-segment Eliminations						Consolidated
Net premiums earned			$	284,249					$	80,636					$	32,156					$	29,310					$	—					$	—					$	426,351
Net investment income			—						—						427						1,246						30,761						—						32,434
Equity in earnings (loss) of unconsolidated subsidiaries			—						—						—						—						18,715						—						18,715
Net investment gains (losses)			—						—						2,568						(26)						17,140						—						19,682
Other income (expense)(1)			1,939						1,293						2						582						2,245						(1,599)						4,462
Net losses and loss adjustment expenses			(241,400)						(53,958)						(17,867)						(18,411)						—						—						(331,636)
Underwriting, policy acquisition and operating expenses(1)			(55,223)						(24,998)						(10,320)						(11,311)						(12,177)						1,599						(112,430)
SPC U.S. federal income tax expense(3)			—						—						(860)						—						—						—						(860)
SPC dividend (expense) income			—						—						(4,606)						—						—						—						(4,606)
Interest expense			—						—						—						—						(8,389)						—						(8,389)
Income tax benefit (expense)			—						—						—						—						(1,151)						—						(1,151)
Segment results			$	(10,435)					$	2,973					$	1,500					$	1,390					$	47,144					$	—					42,572
Reconciliation of segments to consolidated results:
Gain on bargain purchase																																							74,408
Transaction-related costs(4)																																							(17,195)
Net income (loss)																																							$	99,785
Significant non-cash items:
Gain on bargain purchase																																							$	74,408
Depreciation and amortization, net of accretion			$	5,305					$	1,806					$	677					$	32					$	8,500					$	—					$	16,320
(1) Certain fees for services provided to the SPCs at Inova Re and Eastern Re are recorded as expenses within the Segregated Portfolio Cell Reinsurance segment and as other income within the Workers' Compensation Insurance segment. These fees are primarily SPC rental fees and are eliminated between segments in consolidation.
(2) Beginning in 2022, ProAssurance revised its process for estimating ULAE as a result of substantially integrating NORCAL into the Specialty P&C segment operations. The change in the Company's estimate of ULAE increased underwriting, policy acquisition and operating expenses with an offsetting decrease to net losses and loss adjustment expenses in the Specialty P&C segment; there was no impact on segment results for the three and six months ended June 30, 2022. See further discussion on this change in estimate in Note 1.
(3) Represents the provision for U.S. federal income taxes for SPCs at Inova Re, which have elected to be taxed as a U.S. corporation under Section 953(d) of the Internal Revenue Code. U.S. federal income taxes are included in the total SPC net results and are paid by the individual SPCs.
(4) Represents the transaction-related costs, after-tax, associated with the acquisition of NORCAL. For the three and six months ended June 30, 2022 pre-tax transaction-related costs of approximately $0.7 million and $1.9 million, respectively, as compared to $20.3 million and $21.2 million for the same respective periods of 2021 were included as a component of consolidated operating expense and the associated income tax benefit of approximately $0.2 million and $0.4 million, respectively, as compared to $3.8 million and $4.0 million for the same respective periods of 2021 were included as a component of consolidated income tax benefit (expense) on the Condensed Consolidated Statements of Income and Comprehensive Income.

Schedule of Gross Premiums by Product

The following table provides detailed information regarding ProAssurance's gross premiums earned by product as well as a reconciliation to net premiums earned. All gross premiums earned are from external customers except as noted. ProAssurance's insured risks are primarily within the U.S.

			Three Months Ended June 30												Six Months Ended June 30
(In thousands)			2022						2021						2022						2021
Specialty P&C Segment
Gross premiums earned:
HCPL			$	165,496					$	150,784					$	341,043					$	247,829
Small Business Unit			26,188						25,905						52,726						51,831
Medical Technology Liability			9,968						9,613						19,968						18,551
Other			203						172						397						323
Ceded premiums earned			(18,308)						(17,839)						(32,620)						(34,285)
Segment net premiums earned			183,547						168,635						381,514						284,249
Workers' Compensation Insurance Segment
Gross premiums earned:
Traditional business			45,395						43,693						88,551						85,436
Alternative market business			18,126						17,017						36,004						33,906
Ceded premiums earned			(21,812)						(20,084)						(42,162)						(38,706)
Segment net premiums earned			41,709						40,626						82,393						80,636
Segregated Portfolio Cell Reinsurance Segment
Gross premiums earned:
Workers' compensation(1)			17,092						16,254						34,270						32,368
HCPL(2)			1,504						2,173						5,990						4,026
Ceded premiums earned			(2,374)						(2,155)						(4,724)						(4,238)
Segment net premiums earned			16,222						16,272						35,536						32,156
Lloyd's Syndicates Segment
Gross premiums earned:
Property and casualty			6,443						16,635						15,675						37,020
Ceded premiums earned			(650)						(3,175)						(2,136)						(7,710)
Segment net premiums earned			5,793						13,460						13,539						29,310
Consolidated net premiums earned			$	247,271					$	238,993					$	512,982					$	426,351

(1) Premium for all periods is assumed from the Workers' Compensation Insurance segment.

(2) Premium for all periods is assumed from the Specialty P&C segment.

X

- Definition

Tabular disclosure of entity-wide revenues from external customers for each product or service or each group of similar products or services if the information is not provided as part of the reportable operating segment information.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
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Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
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