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PROASSURANCE CORP

PROASSURANCE CORPPRAEarnings & Financial Report

NYSE · Financials · Fire, Marine & Casualty Insurance

ProAssurance Corporation, headquartered in Birmingham, Alabama, is a property and casualty company that sells professional liability insurance to doctors. The company was founded in 1976 as Mutual Assurance and was later renamed to Medical Assurance in 1997. The name "ProAssurance" was created in 2001 when Medical Assurance merged with Professionals Group. The company is currently the fourth largest medical professional liability insurance writer and has over $6 billion in assets.

What changed in PROASSURANCE CORP's 10-K — 2024 vs 2025

Top changes in PROASSURANCE CORP's 2025 10-K

541 paragraphs added · 596 removed · 424 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

60 edited+17 added−14 removed96 unchanged
Specialty Property and Casualty Segment Our Specialty P&C segment focuses on professional liability insurance and medical technology liability insurance. Professional liability insurance is primarily offered to healthcare providers and institutions. Medical technology liability insurance is offered to medical technology and life sciences companies that manufacture or distribute products including entities conducting human clinical trials.
Specialty Property and Casualty Segment Our Specialty P&C segment focuses on medical professional liability insurance and medical technology liability insurance. Medical professional liability insurance is primarily offered to healthcare providers and institutions. Medical technology liability insurance is offered to medical technology and life sciences companies that manufacture or distribute products including entities conducting human clinical trials.
Some examples of key programs and initiatives that are focused on attracting, developing and retaining our diverse workforce include: • Diversity, Equity and Inclusion - To advance our commitment to fostering a diverse, inclusive and equitable workplace, our Diversity, Equity and Inclusion Council, comprised of team members from across the organization and supported by a Diversity, Equity and Inclusion Program Manager, are focused on three key strategic areas, including: ◦ building and sustaining a diverse workforce that is inclusive and representative of the insureds we serve and the communities in which we work; ◦ providing learning and engagement opportunities that enables every team member to succeed; enhancing overall morale and performance, while recognizing and addressing the distinct challenges faced by diverse populations; and ◦ fostering a Company culture where every individual can bring their authentic self to work and feels a deep sense of belonging by sustaining an environment that prioritizes inclusivity, respect and shared success. • Team Member and Leadership Development - We invest in training and development programs that support our Mission, Vision and Values, encourage continuous learning, equip team members for advancement and encourage a long-term partnership with the Company.
Some examples of key programs and initiatives that are focused on attracting, developing and retaining our diverse workforce include: • Diversity, Equity and Inclusion - To advance our commitment to fostering a diverse, inclusive and equitable workplace, our Diversity, Equity and Inclusion Council, comprised of team members from across the organization and supported by a Diversity, Equity and Inclusion Program Manager, is focused on three key strategic areas, including: ◦ building and sustaining a diverse workforce that is inclusive and representative of the insureds we serve and the communities in which we work; ◦ providing learning and engagement opportunities that enables every team member to succeed; enhancing overall morale and performance, while recognizing and addressing the distinct challenges faced by diverse populations; and ◦ fostering a Company culture where every individual can bring their authentic self to work and feels a deep sense of belonging by sustaining an environment that prioritizes inclusivity, respect and shared success. • Team Member and Leadership Development - We invest in training and development programs that support our Mission, Vision and Values, encourage continuous learning, equip team members for advancement and encourage a long-term partnership with the Company.
Within the U.S., our competitors are primarily domestic insurance companies ranging from large national insurers whose financial strength and resources may be greater than ours to smaller insurance entities that concentrate on a single state and as a result have an extensive knowledge of the local markets, or smaller unrated organizations who are targeting growth aggressively in multiple jurisdictions.
Within the U.S., our competitors are primarily domestic insurance companies ranging from large national insurers whose financial strength and resources may be greater than ours to smaller insurance entities that concentrate on a single state and as a result have an extensive knowledge of the local markets, or smaller unrated organizations that are targeting growth aggressively in multiple jurisdictions.
Professional Liability Insurance Our professional liability business is focused on providing medical professional liability insurance to healthcare providers and facilities. We target the full spectrum of the medical professional liability market, covering multiple categories of healthcare professionals, institutions (which includes hospitals, surgery centers and miscellaneous medical facilities) and, to a lesser extent, facilities specializing in long term residential care.
Medical Professional Liability Insurance Our MPL business is focused on providing professional liability insurance to healthcare providers and facilities. We target the full spectrum of the medical professional liability market, covering multiple categories of healthcare professionals, institutions (which includes hospitals, surgery centers and miscellaneous medical facilities) and, to a lesser extent, facilities specializing in long term residential care.
The data security laws require an information security program based on an ongoing risk assessment, overseeing third-party service providers, investigating data breaches and notifying regulators of a cybersecurity event. In June 2018, California adopted the California Consumer Privacy Act of 2018, which provided comprehensive data privacy protections to California residents.
The data security laws require an information security program based on an ongoing risk assessment, overseeing third-party service providers, investigating data breaches and notifying regulators of a cybersecurity event. In June 2018, California adopted the California Consumer Privacy Act of 2018 ("CCPA"), which provided comprehensive data privacy protections to California residents.
Insurance Regulatory Matters We are subject to regulation under the insurance and insurance holding company statutes of various jurisdictions, including the domiciliary states of our insurance subsidiaries and other states in which our insurance subsidiaries do business. Our insurance subsidiaries are primarily domiciled in the U.S. Our states of domicile include Alabama, California, Delaware, Illinois, Missouri, Pennsylvania, Texas and Vermont.
Insurance Regulatory Matters We are subject to regulation under the insurance and insurance holding company statutes of various jurisdictions, including the domiciliary states of our insurance subsidiaries and other states in which our insurance subsidiaries do business. Our insurance subsidiaries are primarily domiciled in the U.S. Our states of domicile include Alabama, California, Illinois, Missouri, Pennsylvania, Texas and Vermont.
We provide coverage for commercialized products and all phases of clinical trials. Our products-completed operations and errors and omissions liability coverage offerings are provided on both a primary or excess basis.
We provide coverage for commercialized products and all phases of clinical trials. Our products-completed operations and errors and omissions liability coverage offerings are provided on both a primary and excess basis.
New business opportunities, renewal pricing and retention continue to be a challenge as a result of intense competition, especially from multi-line insurers that appear to be willing to underprice their workers’ compensation products in order to gain access to write other coverages that may be more lucrative and we expect this trend to continue in 2025.
New business opportunities, renewal pricing and retention continue to be a challenge as a result of intense competition, especially from multi-line insurers that appear to be willing to underprice their workers’ compensation products in order to gain access to write other coverages that may be more lucrative and we expect this trend to continue in 2026.
Risk-Based Capital and Risk Assessment In order to enhance the regulation of insurer solvency, each state of domicile in accordance with an NAIC-defined formula specifies risk-based capital requirements for property and casualty insurance companies. At December 31, 2024, the Company estimates that all of ProAssurance’s insurance subsidiaries will exceed the minimum required risk-based capital levels.
Risk-Based Capital and Risk Assessment In order to enhance the regulation of insurer solvency, each state of domicile in accordance with an NAIC-defined formula specifies risk-based capital requirements for property and casualty insurance companies. At December 31, 2025, the Company estimates that all of ProAssurance’s insurance subsidiaries will exceed the minimum required risk-based capital levels.
As of December 31, 2024, all states have adopted the Model Holding Co. Law and 49 states have adopted ORSA. Due to our written premium volume for the year ended December 31, 2023, ProAssurance filed its internal assessment of solvency under the ORSA criteria during 2024. Also, the NAIC subsequently revised the Model Holding Co.
As of December 31, 2025, all states have adopted the Model Holding Co. Law and 49 states have adopted ORSA. Due to our written premium volume for the year ended December 31, 2024, ProAssurance filed its internal assessment of solvency under the ORSA criteria during 2025. Also, the NAIC subsequently revised the Model Holding Co.
(2) Rating provided is the rating applicable to all Lloyd's syndicates. Our ability to service current debt and potential debt is regularly evaluated and rated by AM Best. In 2024, AM Best maintained ProAssurance's debt rating of "A+" with a stable outlook.
(2) Rating provided is the rating applicable to all Lloyd's syndicates. Our ability to service current debt and potential debt is regularly evaluated and rated by AM Best. In 2025, AM Best maintained ProAssurance's debt rating of "A+" with a stable outlook.
The underwriting, marketing and distribution of policies written in alternative market programs are the same as that of the segment from which the policy was assumed: Workers' Compensation Insurance or Specialty P&C segments. Corporate Segment Our Corporate segment includes our investment operations excluding those reported in our Segregated Portfolio Cell Reinsurance segment.
The underwriting, marketing and distribution of policies written in alternative market programs are the same as that of the segment from which the policy was assumed: Workers' Compensation Insurance or Specialty P&C segments. 12 Table of Contents Corporate Segment Our Corporate segment includes our investment operations excluding those reported in our Segregated Portfolio Cell Reinsurance segment.
Some states permit member insurers to recover assessments paid through surcharges on policyholders or through full or partial premium tax offsets, while other states 16 Table of Contents permit recovery of assessments through the rate filing process. In recent years, participation in guaranty funds has not had a material effect on our results of operations.
Some states permit member insurers to recover assessments paid through surcharges on policyholders or through full or partial premium tax offsets, while other states permit recovery of assessments through the rate filing process. In recent years, participation in guaranty funds has not had a material effect on our results of operations.
We participate to a varying degree in the results of certain SPCs and, for the SPCs in which we participate, our participation interest ranges from a low of 15% to a high of 85% as of December 31, 2024.
We participate to a varying degree in the results of certain SPCs and, for the SPCs in which we participate, our participation interest ranges from a low of 15% to a high of 85% as of December 31, 2025.
Inova Re and Eastern Re are required 17 Table of Contents to maintain minimum capital of approximately $200,000 and must receive approval from the CIMA before they can pay any dividends. Human Capital Resources Our people are the most critical element in assuring we deliver our promise of protecting others.
Inova Re and Eastern Re are required to maintain minimum capital of approximately $200,000 and must receive approval from the CIMA before they can pay any dividends. Human Capital Resources Our people are the most critical element in assuring we deliver our promise of protecting others.
This strategy enables us drive and deliver on our long-term goal to generate an attractive long-term total return for our shareholders 8 Table of Contents while maintaining financial strength and adequate capital. The basic components of our strategy for achieving this objective are as follows: • Pursue profitable underwriting opportunities.
This strategy enables us drive and deliver on our long-term goal to generate an attractive long-term total return for our shareholders while maintaining financial strength and adequate capital. The basic components of our strategy for achieving this objective are as follows: • Pursue profitable underwriting opportunities.
Further, we seek to provide a fulfilling work experience through the creation of well-documented career paths and opportunities for advancement, robust training and development programs and the management of transparent salary administration practices. Our competitive pay and benefit programs are designed to reward, support and retain our team members.
Further, we seek to provide fulfilling work experiences through the creation of well-documented career paths and opportunities for advancement, robust training and development programs and the management of transparent salary administration practices. Our competitive pay and benefit programs are designed to reward, support and retain our team members.
Our Chief Executive Officer and members of executive management are responsible for identifying material risks associated with these and other risk areas and for establishing and monitoring risk management solutions that address levels of risk appetite and risk tolerance that are recommended by management and reviewed by our Board.
Our Chief Executive Officer and members of executive management are responsible for identifying material risks associated with these and other risk areas and for establishing and monitoring risk management 18 Table of Contents solutions that address levels of risk appetite and risk tolerance that are recommended by management and reviewed by our Board.
We are committed to the pursuit of continuous improvement through careful and constant examination of our business processes which will allow us to improve our competitive position through operational excellence and productivity gains. We are investing in innovation solutions, including artificial intelligence and process automation, to enhance risk selection, decision making and workflows.
We are committed to the pursuit of continuous improvement through careful and constant examination of our business processes that will allow us to improve our competitive position through operational excellence and productivity gains. We are investing in innovation solutions, including artificial intelligence and process automation, to enhance risk selection, decision making, response time and workflows.
See Note 3 of the Notes to Consolidated Financial Statements for more information on our investments. Competition The marketplace for most of our lines of business is very competitive, though competition does vary among the different product lines and healthcare sectors.
See Note 3 of the Notes to Consolidated Financial Statements for more information on our investments. Competition The marketplace for all of our lines of business is very competitive, though competition does vary among the different product lines and business sectors.
In developing their claims paying rating, this agency makes an independent evaluation of an insurer’s ability to meet its obligations to policyholders. The following table presents the claims paying rating of our insurance subsidiaries as of February 24, 2025. Rating Agency AM Best (1) (www.ambest.com) ProAssurance Indemnity Company, Inc.
In developing their claims paying rating, this agency makes an independent evaluation of an insurer’s ability to meet its obligations to policyholders. The following table presents the claims paying rating of our insurance subsidiaries as of February 18, 2026. Rating Agency AM Best (1) (www.ambest.com) ProAssurance Indemnity Company, Inc.
In addition to federal filings on our website, we make available other documents that provide important additional information about our financial condition and operations. Documents available on our website include the financial statements we file with state regulators (compiled under SAP as required by regulation), news releases that we issue, a listing of our investment holdings and certain investor presentations.
In addition to federal filings on our website, we make available other documents that provide important additional information about our financial condition and operations. Documents available on our website include the financial statements we file with state regulators (compiled under SAP as required by regulation), news releases that we issue and certain investor presentations.
To support those objectives, we conduct quarterly “Pulse” surveys that gain real-time feedback from our team members on key issues. We regularly monitor and evaluate turnover metrics to ensure we are responsive to the evolving, competitive market for top talent.
We are committed to facilitating and fostering team member engagement. To support those objectives, we conduct quarterly “Pulse” surveys that gain real-time feedback from our team members on key issues. We regularly monitor and evaluate turnover metrics to ensure we are responsive to the evolving, competitive market for top talent.
In our Specialty P&C segment, we had net written premium of $39.3 million in 2024, $38.1 million in 2023 and $39.2 million in 2022 associated with international insurance exposures, primarily related to our strategic partnership with an international medical professional liability insurer and, to a lesser extent, exposures from our participation in Lloyd's Syndicates 1729 and 6131.
In our Specialty P&C segment, we had net written premium of $42.8 million in 2025, $39.3 million in 2024 and $38.1 million in 2023 associated with international insurance exposures, primarily related to our strategic partnership with an international medical professional liability insurer and, to a lesser extent, exposures from our previous participation in Lloyd's Syndicates 1729 and 6131.
In 2024, our top ten largest brokers generated approximately 45% of our Medical Technology Liability gross written premium, with no one broker representing more than 11%. We work with licensed property and casualty insurance brokerages across the country and do not require an appointment except where required by law.
In 2025, our top ten largest brokers generated approximately 48% of our Medical Technology Liability gross written premium, with no one broker representing more than 13%. We work with licensed property and casualty insurance brokerages across the country and do not require an appointment except where required by law.
TRIA currently provides that during 2022 and in any year thereafter a loss event must exceed $200 million to trigger coverage and that the federal government will reimburse 80% of an insurer’s losses in excess of the insurer’s deductible, up to the maximum annual federal liability of $100 billion.
The 2019 reauthorization extended the program through 2027. TRIA currently provides that during 2022 and in any year thereafter a loss event must exceed $200 million to trigger coverage and that the federal government will reimburse 80% of an insurer’s losses in excess of the insurer’s deductible, up to the maximum annual federal liability of $100 billion.
To grow the skills of our current managers and plan for future succession needs, we provide a tiered leadership development program, Leadership That Works, that includes both in-person group and self-led content. • Team Member Health and Welfare - We recognize the importance of a comprehensive benefits strategy to support the unique needs of all team members.
To strengthen the skills of our current managers and plan for future succession needs, we provide a tiered leadership development program, Leadership That Works, that includes both in-person group and self-led content. • Team Member Health and Welfare - We recognize the importance of a comprehensive benefits strategy to support the unique needs of all team members and offer a comprehensive benefit program to meet the diverse needs of our team member population.
At December 31, 2024, we had 1,036 employees, none of whom were represented by a labor union. We consider our employee relations to be good. 18 Table of Contents Enterprise Risk Management As a property and casualty insurance provider, we are exposed to many risks stemming from both our insurance operations and the environments in which we operate.
At December 31, 2025, we had 972 employees, none of whom were represented by a labor union. We consider our employee relations to be good. Enterprise Risk Management As a property and casualty insurance provider, we are exposed to many risks stemming from both our insurance operations and the environments in which we operate.
ITEM 1. BUSINESS Overview ProAssurance Corporation is a holding company for property and casualty insurance companies. For the year ended December 31, 2024, our net premiums written totaled $1.0 billion, and at December 31, 2024 we had total assets of $5.6 billion and $1.2 billion of shareholders' equity.
ITEM 1. BUSINESS Overview ProAssurance Corporation is a holding company for property and casualty insurance companies. For the year ended December 31, 2025, our net premiums written totaled $0.9 billion, and at December 31, 2025 we had total assets of $5.4 billion and $1.3 billion of shareholders' equity.
The agencies and brokers we use typically sell through healthcare insurance specialists who are able to convey the factors that 10 Table of Contents differentiate our insurance products. In 2024, our ten largest agents or brokers produced approximately 29% of our MPL premium; individually, no one agency or broker produced more than 8% of our MPL premium.
The agencies and brokers we use typically sell through healthcare insurance specialists who are able to convey the factors that differentiate our insurance products. In 2025, our ten largest agents or brokers produced approximately 30% of our MPL premium; individually, no one agency or broker produced more than 9% of our MPL premium.
Generally, dividends may be paid only out of unassigned earned surplus. In every case, surplus subsequent to the payment of any dividends must be reasonable in relation to an insurance company’s outstanding liabilities and must be adequate to meet its financial needs. State insurance holding company regulations generally require domestic insurers to obtain prior approval of extraordinary dividends.
In every case, surplus 15 Table of Contents subsequent to the payment of any dividends must be reasonable in relation to an insurance company’s outstanding liabilities and must be adequate to meet its financial needs. State insurance holding company regulations generally require domestic insurers to obtain prior approval of extraordinary dividends.
We evaluate the merit of each claim and determine the appropriate strategy for resolution of the claim, either seeking a reasonable good faith settlement appropriate for the circumstances of the claim or aggressively defending the claim.
We evaluate the merit of each claim and determine the appropriate strategy for resolution of the claim, either seeking a reasonable settlement appropriate for the circumstances of the claim or defending the claim through trial.
To further illustrate the significance of our commitment to our team members and being the Employer of Choice, the Board regularly reviews the Company’s human capital management strategies and outcomes, including matters related to the Company's culture, talent management and development, talent acquisition and team member engagement and satisfaction. We are committed to facilitating and fostering team member engagement.
To further illustrate the significance of our commitment to our team members and being the Employer of Choice, the Board regularly reviews the 17 Table of Contents Company’s human capital management strategies and outcomes, including matters related to the Company's culture, talent management and development, talent acquisition and team member engagement and satisfaction.
Organization and Segment Information We operate through multiple insurance organizations and report our financial results in four segments which are based on our internal management reporting structure for which financial results are regularly evaluated by our Chief Executive Officer (our CODM) to determine resource allocation and assess operating performance: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance and Corporate.
Our investment portfolio consists primarily of investment-grade, fixed-maturity securities of short-to-medium-term duration. 9 Table of Contents Organization and Segment Information We operate through multiple insurance organizations and report our financial results in four segments which are based on our internal management reporting structure for which financial results are regularly evaluated by our Chief Executive Officer (our CODM) to determine resource allocation and assess operating performance: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance and Corporate.
We utilize independent agencies and brokers as well as an internal business development team to write our MPL business. For the year ended December 31, 2024, approximately 66% of our MPL gross premiums written were produced through independent insurance agencies or brokers.
We utilize independent agencies and brokers as well as an internal business development team to write our MPL business. For the year ended 10 Table of Contents December 31, 2025, approximately 62% of our MPL gross premiums written, excluding tail coverages, were produced through independent insurance agencies or brokers.
Within the past few years, the following domiciliary states of our insurance subsidiaries and affiliates have enacted or amended data security or data privacy laws: • Alabama enacted the Insurance Data Security Law, effective May 1, 2019. • California enacted the California Consumer Privacy Act of 2018, effective January 1, 2020, and the California Privacy Rights Act of 2020, effective January 1, 2023.
Within the past few years, the following domiciliary states of our insurance subsidiaries have enacted or amended data security or data privacy laws: • California enacted the California Privacy Rights Act of 2020 ("CPRA"), effective January 1, 2023.
In addition, this segment includes corporate expenses, interest expense, U.S. and U.K. income taxes and non-premium revenues generated outside of our insurance entities. This segment focuses on supporting the operations of our insurance subsidiaries through strategically managing our investment portfolio and providing certain administrative services.
In addition, this segment includes corporate expenses, interest expense, U.S. and U.K. income taxes and foreign currency exchange rate gains and losses. This segment focuses on supporting the operations of our insurance subsidiaries through strategically managing our investment portfolio and providing certain administrative services.
We have widely distributed claims management staff with concentrations in key geographic locations to monitor and adjudicate MPL claims. We engage experienced, independent litigation attorneys in each venue to assist with the claims process as we believe this practice aids us in providing a defense that is aggressive, effective and cost-efficient.
We engage experienced, independent litigation attorneys in each venue to assist with the claims process as we believe this practice aids us in providing a defense that is aggressive, effective and cost-efficient.
Accordingly, we report those investment results and net investment gains and losses within our Corporate segment. Our overall investment strategy is to maximize current income from our investment portfolio while maintaining appropriate credit risk, liquidity, duration, portfolio diversification and capital efficiency.
Accordingly, we report those investment results and net investment gains and losses within our Corporate segment. Our overall investment strategy is to maximize current income from our investment portfolio while maintaining appropriate credit risk, liquidity, duration and portfolio diversification. The portfolio is generally managed by professional third-party asset managers whose results we monitor and evaluate.
We are committed to ensuring a supportive and safe environment for all team members, that fosters an inclusive workplace where variety of thought, creativity and innovation fuel team member engagement and ultimately increases shareholder return.
We are committed to ensuring a supportive and safe environment for all team members, that fosters an inclusive workplace where variety of thought, creativity and innovation fuel team member engagement and ultimately increases shareholder return. See further discussion on our team members and culture within this section under the heading "Human Capital Resources." • Provide superior customer service.
Shared Markets State insurance regulations may force us to participate in mandatory property and casualty shared market mechanisms or pooling arrangements that provide certain insurance coverage to individuals or other entities that are otherwise unable to purchase such coverage in the commercial insurance marketplace.
The assessments are generally based on insurer’s proportionate share of premiums or losses in a particular state, and the assessment rate can vary from year to year. 16 Table of Contents Shared Markets State insurance regulations may force us to participate in mandatory property and casualty shared market mechanisms or pooling arrangements that provide certain insurance coverage to individuals or other entities that are otherwise unable to purchase such coverage in the commercial insurance marketplace.
Our Workers' Compensation Insurance segment consists of two major business activities: • Traditional workers' compensation insurance coverages provided to employers, generally those with 1,000 employees or less.
Workers' Compensation Insurance Segment Our Workers' Compensation Insurance segment offers workers' compensation products in 19 core states in the East, South and Midwest regions of the continental U.S. Our Workers' Compensation Insurance segment consists of two major business activities: • Traditional workers' compensation insurance coverages provided to employers, generally those with 1,000 employees or less.
The CPRA amends and expands the CCPA. • Delaware enacted the Delaware Personal Data Privacy Act, effective January 1, 2025. • The District of Columbia enacted the Security Breach Protection Amendment Act of 2020, effective June 17, 2020. • Illinois amended its Personal Information Protection Act, effective January 1, 2020, and enacted the Insurance Data Security Law, effective January 1, 2024. • Pennsylvania enacted the Insurance Data Security Law, effective December 11, 2023. • Texas enacted the Texas Data Privacy and Security Act, effective July 1, 2024. • Vermont amended its Security Breach Notice Act, effective July 1, 2020, and enacted the Vermont Insurance Data Security Law, effective January 1, 2023.
The CPRA amends and expands the CCPA. • Illinois enacted the Insurance Data Security Law, effective January 1, 2024. • Pennsylvania enacted the Insurance Data Security Law, effective December 11, 2023. • Texas enacted the Texas Data Privacy and Security Act, effective July 1, 2024. • Vermont enacted the Vermont Insurance Data Security Law, effective January 1, 2023.
Additional information on our four operating and reportable segments is included in Note 16 of the Notes to Consolidated Financial Statements and in the segment discussions that follows. 9 Table of Contents Gross Premiums Written Gross premiums written for the years ended December 31, 2024, 2023 and 2022 were comprised as follows: Year Ended December 31 ($ in thousands) 2024 2023 2022 Specialty P&C $ 807,463 77 % $ 835,430 77 % $ 856,861 78 % Workers' Compensation Insurance 243,404 23 % 246,857 23 % 247,132 22 % Segregated Portfolio Cell Reinsurance (1) 57,904 6 % 70,259 7 % 78,937 7 % Inter-segment revenues (1) (57,904) (6 %) (70,267) (7 %) (78,937) (7 %) Total $ 1,050,867 100 % $ 1,082,279 100 % $ 1,103,993 100 % (1) Premiums in our Segregated Portfolio Cell Reinsurance segment are assumed from either our Workers' Compensation Insurance or Specialty P&C segments.
Gross Premiums Written Gross premiums written for the years ended December 31, 2025, 2024 and 2023 were comprised as follows: Year Ended December 31 ($ in thousands) 2025 2024 2023 Specialty P&C $ 776,942 77 % $ 807,463 77 % $ 835,430 77 % Workers' Compensation Insurance 235,763 23 % 243,404 23 % 246,857 23 % Segregated Portfolio Cell Reinsurance (1) 51,052 5 % 57,904 6 % 70,259 7 % Inter-segment revenues (1) (51,052) (5 %) (57,904) (6 %) (70,267) (7 %) Total $ 1,012,705 100 % $ 1,050,867 100 % $ 1,082,279 100 % (1) Premiums in our Segregated Portfolio Cell Reinsurance segment are assumed from either our Workers' Compensation Insurance or Specialty P&C segments.
Insurance regulators periodically examine each insurer’s adherence to SAP, financial condition and compliance with insurance department rules and regulations. 15 Table of Contents Regulation of Dividends and Other Payments from Our Operating Subsidiaries Our U.S. operating subsidiaries are subject to various state statutory and regulatory restrictions that limit the amount of dividends or distributions an insurance company may pay to its shareholders, including our insurance holding company, without prior regulatory approval.
Regulation of Dividends and Other Payments from Our Operating Subsidiaries Our U.S. operating subsidiaries are subject to various state statutory and regulatory restrictions that limit the amount of dividends or distributions an insurance company may pay to its shareholders, including our insurance holding company, without prior regulatory approval. Generally, dividends may be paid only out of unassigned earned surplus.
Lloyd's Syndicates Operations (Participation Discontinued) Our Lloyd's Syndicates business is currently in run-off, and our Specialty P&C segment includes the results from our participation in underwriting years that remain open in Syndicate 1729 and Syndicate 6131 at Lloyd's of London (approximately 1% of our 2024 gross premiums written).
We defend our Medical Technology Liability claims vigorously, with a negotiated settlement being the most frequent means of resolution. Lloyd's Syndicates Operations (Participation Discontinued) Our Lloyd's Syndicates business is currently in run-off, and our Specialty P&C segment includes the results from our participation in underwriting years that remain open in Syndicate 1729 and Syndicate 6131 at Lloyd's of London.
Certain states in which we write workers’ compensation insurance have established administrative and/or second injury funds that levy assessments against insurers that write business in their state. The assessments are generally based on insurer’s proportionate share of premiums or losses in a particular state, and the assessment rate can vary from year to year.
Certain states in which we write workers’ compensation insurance have established administrative and/or second injury funds that levy assessments against insurers that write business in their state.
We cannot predict whether the proposals will be adopted or what impact, if any, subsequently enacted laws might have on our business, financial condition or results of operations.
We cannot predict whether the proposals will be adopted or what impact, if any, subsequently enacted laws might have on our business, financial condition or results of operations. Terrorism Risk Insurance Act TRIA, initially enacted in 2002 and reauthorized in 2007, 2015 and 2019, ensures the availability of insurance coverage for certain acts of terrorism as defined in the legislation.
Our SPCs at Inova Re can provide a unique captive solution for insureds large enough to have credible claims data, yet too small to have their own captive arrangement. The workers’ compensation industry is highly competitive.
Our SPCs at Inova Re can provide a unique captive solution for insureds large enough to have credible claims data, yet too small to have their own captive arrangement. In addition, consolidation continues among insurance distributors, with the top 10 brokers now accounting for nearly 65% of industry commercial premiums nationwide.
Further, we are leveraging our data science and predictive analytics capabilities to support growth in profitable markets and sub-sectors. • Effectively manage capital.
Further, we are leveraging our data science and predictive analytics capabilities to support growth in profitable markets and sub-sectors. • Manage claims effectively. Our industry leading claims professionals bring extensive industry and insurance experience, along with local jurisdictional knowledge to resolve claims in a cost-effective manner.
In marketing our MPL products we emphasize our financial strength, breadth of product offerings and excellent claims, underwriting and risk management services. We market our insurance products through our business development team and through our agents as well as direct mailings and advertising in industry-related publications.
In marketing our MPL products we emphasize our financial strength, breadth of product offerings and excellent claims, underwriting and risk management services as well as ease-of-doing business, which is a priority for agencies and brokers.
Our assumed reinsurance is primarily comprised of premiums assumed on a quota share basis from our strategic partnership with an international medical professional liability insurer.
Our custom alternative risk solutions include assumed reinsurance for healthcare entities that, most commonly, are changing an insurance approach or simply looking for a more tailored solution for transferring risk. Our assumed reinsurance is primarily comprised of premiums assumed on a quota share basis from our strategic partnership with an international medical professional liability insurer.
See further discussion on our team members and culture within this section under the heading "Human Capital Resources." • Provide specialized healthcare-centric expertise and thought leadership to meet the evolving demands in the healthcare and medical technology markets . We provide traditional liability products and services to both markets.
Our valued team members demonstrate our core values of integrity, leadership, relationships and enthusiasm every day and are focused on meeting the needs of our customers. • Provide specialized healthcare-centric expertise and thought leadership to meet the evolving demands in the healthcare and medical technology markets . We provide traditional liability products and services to both markets.
We do this by providing innovative programs and solutions that address the specific needs of our customers and return injured workers to wellness and the dignity of work. • Provide superior customer service. Our goal is to deliver an exceptional service experience that is consistent, responsive and provides value to customers through a regional business model.
We do this by providing innovative programs and solutions that address the specific needs of our customers and return injured workers to wellness and the dignity of work. • Focus on innovation to achieve operational excellence.
Lloyd's of London generally operates on a three year accounting system for final distribution of results generated by each underwriting year; however certain underwriting years can remain open after the three year period. The 2021 underwriting year for Syndicate 6131 remained open due to remaining exposures related to aviation coverages in connection with Russia's invasion of Ukraine.
We normally report results from our involvement in Lloyd's Syndicates on a quarter lag, except when information is available that is material to the current period. Lloyd's of London generally operates on a three year accounting system for final distribution of results generated by each underwriting year; however certain underwriting years can remain open after the three year period.
For Syndicate 6131, we ceased participation beginning with the 2022 underwriting year which was not reflected in our results until the second quarter of 2022. We have also provided capital to Syndicate 1729 at Lloyd's of London to support our previous participation.
We have also provided capital to Syndicate 1729 at Lloyd's of London to support our previous participation.
Total gross premiums written in this segment in our alternative market captive cell program were approximately $4.2 million, $6.7 million and $11.8 million during 2024, 2023 and 2022, respectively. Underwriting MPL contemplates many factors including, but not limited to, the specific exposures, loss history, coverage scope/terms, level of the insured's retention, policy limits and operational venues.
Total gross premiums written in this segment in our alternative market captive cell program were approximately $4.4 million, $4.2 million and $6.7 million during 2025, 2024 and 2023, respectively.
The results from our participation in Syndicate 1729 from open underwriting years prior to 2024 will continue to earn out pro rata over the entire policy period of the underlying business. 11 Table of Contents Workers' Compensation Insurance Segment Our Workers' Compensation Insurance segment offers workers' compensation products in 19 core states in the East, South and Midwest regions of the continental U.S.
The results from our participation in Syndicate 1729 from open underwriting years prior to 2024 will continue to earn out pro rata over the entire policy period of the underlying business. 11 Table of Contents Legal Professional Liability Insurance (In Run-off) On April 15, 2025, we sold the renewal rights related to our legal professional liability book of business to an unrelated third party for $1.0 million.
We also are involved in professional societies and related organizations and support legislation that will have a positive effect on healthcare liability issues. We maintain a regional business model which permits us to consistently provide a high level of services to customers on a local basis.
We maintain a regional business model that permits us to consistently provide a high level of services to customers on a local basis. We have widely distributed claims management staff with concentrations in key geographic locations to monitor and adjudicate MPL claims.
Our industry leading claims professionals bring extensive industry and insurance experience, along with local jurisdictional knowledge to resolve claims in a cost effective manner. Additionally, we aim to utilize data analytics and artificial intelligence to enhance outcomes, improve decision making and lighten administrative burdens for claims professionals. • Strategically manage our investment portfolio.
Additionally, we are utilizing data analytics and artificial intelligence to enhance outcomes, improve decision making and lighten administrative burdens for claims professionals. • Strategically manage our investment portfolio. Our investment strategy is designed to maximize current income from our investment portfolio while maintaining appropriate credit risk, liquidity, duration and portfolio diversification.
Removed
Our valued team members demonstrate our core values of integrity, leadership, relationships and enthusiasm every day and are focused on meeting the needs of our customers. • Focus on innovation to achieve operational excellence.
Added
On March 19, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Doctors Company, a California-domiciled reciprocal inter-insurance exchange, and Jackson Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of The Doctors Company (“Merger Sub”), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into ProAssurance (the “Merger”).
Removed
We carefully monitor use of our capital and consider various options for capital deployment, such as business expansion by our existing subsidiaries, opportunities that arise for mergers or acquisitions, investment portfolio diversification to maximize yield and share repurchases. • Manage claims effectively.
Added
ProAssurance will continue as the surviving corporation in the Merger as a wholly owned subsidiary of The Doctors Company. The Board has approved the Merger Agreement and the transactions contemplated thereby, including the Merger.
Removed
Our investment strategy is designed to emphasize the preservation of our capital and provide adequate liquidity for the prompt payment of claims. Our investment portfolio consists primarily of investment-grade, fixed-maturity securities of short-to medium-term duration.
Added
On June 24, 2025, ProAssurance held a special meeting of stockholders (the “ProAssurance Special Meeting”) at which holders of ProAssurance’s common stock approved each of the proposals voted on at the ProAssurance Special Meeting relating to the transactions contemplated by the Merger Agreement. On July 2, 2025, the U.S.
Removed
The Specialty P&C segment also includes the underwriting results from our participation in Syndicate 1729 and Syndicate 6131 at Lloyd's London, which is currently in run-off. We normally report results from our involvement in Lloyd's Syndicates on a quarter lag, except when information is available that is material to the current period.
Added
Federal Trade Commission 8 Table of Contents granted early termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976 with respect to the Merger. The closing of the proposed Merger is subject to other customary closing conditions, including approval from insurance regulators in the jurisdictions where the Company’s operating subsidiaries are domiciled.
Removed
Our custom alternative risk solutions include loss portfolio transfer programs for healthcare entities who, most commonly, are exiting a line of business, and assumed reinsurance for healthcare entities who, most commonly, are changing an insurance approach or simply looking for a more tailored solution for transferring risk.
Added
As of February 23, 2026, The Doctors Company has received final approval from insurance regulators in Alabama, the District of Columbia, Illinois, Missouri, Texas and Vermont. Review of the proposed Merger by insurance regulators remains pending in California and Pennsylvania.
Removed
Each SPC is owned, fully or in part, by an individual company, agency, group or association, and we currently have a 25% participation interest in the results of one of the SPCs. See further discussion that follows under the heading "Segregated Portfolio Cell Reinsurance Segment." The portion not ceded to the SPCs is retained within our Specialty P&C segment.
Added
The Company has also obtained final approval from Lloyd’s of London with respect to PRA Corporate Capital Ltd., and from the Cayman Islands Monetary Authority with respect to Inova Re and Eastern Re, each of which is a licensed entity in the Cayman Islands.
Removed
We defend our Medical Technology Liability claims vigorously, with a negotiated settlement being the most frequent means of resolution.
Added
The timing for completion of the pending reviews is uncertain and not within the Company’s control, but in light of progress made toward satisfaction of closing conditions, at the time of this filing, the Company continues to anticipate closing the transaction by June 30, 2026.
Removed
The portfolio is generally managed by professional third-party asset managers whose results we monitor and 12 Table of Contents evaluate.
Added
Our goal is to deliver an exceptional service experience that is consistent, responsive and provides value to customers through a regional business model and becoming a carrier of choice for our distribution partners.
Removed
In June 2012, Congress passed the Biggert-Waters Bill, which provided for a five-year renewal of the NFIP and, among other things, authorized the Federal Emergency Management Agency to carry out initiatives to determine the capacity of private insurers, reinsurers, and financial markets to assume a greater portion of the flood risk exposure in the U.S. and to assess the capacity of the private reinsurance market to assume some of the program’s risk.
Added
Additional information on our four operating and reportable segments is included in Note 15 of the Notes to Consolidated Financial Statements and in the segment discussions that follows.
Removed
In August 2017, the President of the U.S. signed an executive order revoking the establishment of a federal flood risk management standard. In November 2017, the U.S. House of Representatives adopted a bill to reauthorize the NFIP for five years and implement several reforms, including provisions designed to spur additional private insurer involvement in covering flood risk, but the U.S.
Added
The Specialty P&C segment also includes the underwriting results from our Lloyd's Syndicates business and our legal professional liability book of business, both of which are currently in run-off, as well as non-premium revenues generated by our subsidiary IAO, Inc. d/b/a ProAssurance Agency.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

65 edited+8 added−15 removed135 unchanged
Provisions in our charter documents, Delaware law and state insurance law may impede attempts to replace or remove management or may impede a takeover, which could adversely affect the value of our common stock. Our certificate of incorporation, bylaws and Delaware law contain provisions that may have the effect of inhibiting a non-negotiated merger or other business combination.
Provisions in our charter documents, Delaware law and state insurance laws may impede attempts to replace or remove management or may impede a takeover, which could adversely affect the value of our common stock. Our certificate of incorporation, bylaws and Delaware law contain provisions that may have the effect of inhibiting a non-negotiated merger or other business combination.
When exchange or over-the-counter quotes are not available, we estimate fair values based on broker dealer quotes and various other valuation methodologies, which may require us to choose among various input assumptions and utilize judgment. At December 31, 2024, approximately 85% of our investments were valued in this manner.
When exchange or over-the-counter quotes are not available, we estimate fair values based on broker dealer quotes and various other valuation methodologies, which may require us to choose among various input assumptions and utilize judgment. At December 31, 2025, approximately 85% of our investments were valued in this manner.
Some states permit member insurers to recover assessments paid through surcharges on policyholders or through full or partial premium tax offsets, while other states permit recovery of assessments through the rate filing process. We had no significant guaranty fund recoupments or assessments in 2024, 2023 or 2022. Our practice is to accrue for insurance insolvencies when notified of assessments.
Some states permit member insurers to recover assessments paid through surcharges on policyholders or through full or partial premium tax offsets, while other states permit recovery of assessments through the rate filing process. We had no significant guaranty fund recoupments or assessments in 2025, 2024 or 2023. Our practice is to accrue for insurance insolvencies when notified of assessments.
Operational Our performance is dependent on the business, economic, regulatory and legislative conditions of states where we have a significant amount of business. Our top five states, Pennsylvania, California, Alabama, Florida, and Texas represented 45% of our direct premiums written for the year ended December 31, 2024.
Operational Our performance is dependent on the business, economic, regulatory and legislative conditions of states where we have a significant amount of business. Our top five states, Pennsylvania, California, Alabama, Florida, and Texas represented 45% of our direct premiums written for the year ended December 31, 2025.
At December 31, 2024, approximately 5% of our investments are investment funds which measure fund assets at fair value on a recurring basis and provide us with a NAV for our interest. As a practical expedient, we consider the NAV provided to approximate the fair value of the interest.
At December 31, 2025, approximately 5% of our investments are investment funds which measure fund assets at fair value on a recurring basis and provide us with a NAV for our interest. As a practical expedient, we consider the NAV provided to approximate the fair value of the interest.
See Note 11 of the Notes to Consolidated Financial Statements for additional information. Our interest rate swaps are designated and qualify as highly effective cash flow hedges. However, there is a possibility that our cash flow hedge instruments may be ineffective.
See Note 10 of the Notes to Consolidated Financial Statements for additional information. Our interest rate swaps are designated and qualify as highly effective cash flow hedges. However, there is a possibility that our cash flow hedge instruments may be ineffective.
At December 31, 2024 and in accordance with applicable GAAP, we valued 97% of our investments at fair value and the remaining 3% at cost, equity, or cash surrender value. See Notes 1, 2 and 3 of the Notes to Consolidated Financial Statements for additional information.
At December 31, 2025 and in accordance with applicable GAAP, we valued 97% of our investments at fair value and the remaining 3% at cost, equity, or cash surrender value. See Notes 1, 2 and 3 of the Notes to Consolidated Financial Statements for additional information.
The payment of dividends by these operating subsidiaries is subject to restrictions set forth in the insurance laws and regulations of their respective states of domicile, as discussed in Item I under the heading "Insurance Regulatory Matters." A natural disaster or pandemic event, or closely related series of events, could cause loss of lives or a substantial loss of property or operational ability at one or more of the Company's facilities.
The payment of dividends by these operating subsidiaries is subject to restrictions set forth in the insurance laws and regulations of their respective states of domicile, as discussed in Item I under the heading "Insurance Regulatory Matters." 28 Table of Contents A natural disaster or pandemic event, or closely related series of events, could cause loss of lives or a substantial loss of property or operational ability at one or more of the Company's facilities.
Should our mandatory participation in such pools be increased or if the assessments from such pools increased, our results of operations and financial condition would be negatively affected, although that was not the case in 2024, 2023 or 2022.
Should our mandatory participation in such pools be increased or if the assessments from such pools increased, our results of operations and financial condition would be negatively affected, although that was not the case in 2025, 2024 or 2023.
We cannot predict with any certainty how state appellate courts will rule on these laws. While the effects of tort reform have been generally beneficial to our business in states where these laws have been enacted, there can be no assurance that such reforms will be ultimately upheld by the courts.
We cannot predict with any certainty how state appellate courts will rule on these laws. While the effects of tort reform have been generally 25 Table of Contents beneficial to our business in states where these laws have been enacted, there can be no assurance that such reforms will be ultimately upheld by the courts.
The Company is dependent upon its technology infrastructure and that of certain third parties to operate and report financial and other Company information accurately and timely. ProAssurance collects, uses, stores or transmits an increasingly 29 Table of Contents large amount of confidential, proprietary, personal, legally protected, and other information in connection with the operation of our business.
The Company is dependent upon its technology infrastructure and that of certain third parties to operate and report financial and other Company information accurately and timely. ProAssurance collects, uses, stores or transmits an increasingly large amount of confidential, proprietary, personal, legally protected and other information in connection with the operation of our business.
We determine the fair value of our investments using quoted exchange or over-the-counter prices, when available. At December 31, 2024, we valued approximately 7% of our investments in this manner.
We determine the fair value of our investments using quoted exchange or over-the-counter prices, when available. At December 31, 2025, we valued approximately 7% of our investments in this manner.
As of December 31, 2024, no reinsurer, on an individual basis, had an estimated net amount due which exceeded $55 million. If our businesses do not perform well, we may be required to recognize an impairment of our indefinite lived intangible assets or long-lived assets, which could have a material adverse effect on our results of operations and financial condition.
As of December 31, 2025, no reinsurer, on an individual basis, had an estimated net amount due which exceeded $48 million. If our businesses do not perform well, we may be required to recognize an impairment of our indefinite lived intangible assets or long-lived assets, which could have a material adverse effect on our results of operations and financial condition.
Changes in the frequency and severity of losses may affect the cycles of the insurance and reinsurance markets significantly. During "soft markets" where price competition is high and underwriting profits are poor, growth and retention of business become challenging which may result in reduced premium volume.
Changes in the frequency and severity of losses may affect the cycles of the insurance and reinsurance markets significantly. During "soft markets" where price competition is high 19 Table of Contents and underwriting profits are poor, growth and retention of business become challenging which may result in reduced premium volume.
The effectiveness of our cash flow hedges depends on our ability to execute interest renewal terms that mirror the previously contracted swap agreements. If our exposure to interest rate fluctuations exceeds what we are able to hedge against, we could incur significant losses. We assess the effectiveness of our hedge instruments quarterly.
The effectiveness of our cash flow hedges depends on our ability to execute interest renewal terms that mirror the previously contracted swap agreements. If our exposure to interest rate fluctuations exceeds what we are able to hedge against, we could incur significant losses.
Disruption, damage or destruction of any of the Company's systems or data could cause its normal operations to be disrupted, or unauthorized internal or external knowledge or misuse of confidential Company data could occur, all of which could be harmful to the Company from a financial, legal and reputational perspective.
Disruption, damage or destruction of any of the Company's systems or data could cause its normal operations to be disrupted, or unauthorized internal or external knowledge or misuse of confidential Company data could occur, all of which 29 Table of Contents could be harmful to the Company from a financial, legal and reputational perspective.
Moreover, on a combined basis, Pennsylvania, California and Alabama accounted for 34% of our direct premiums written for the year ended December 31, 2024. Unfavorable business, economic or regulatory conditions in any of these states could have a disproportionately greater effect on us than they would if we were less geographically concentrated.
Moreover, on a combined basis, Pennsylvania, California and Alabama accounted for 33% of our direct premiums written for the year ended December 31, 2025. Unfavorable business, economic or regulatory conditions in any of these states could have a disproportionately greater effect on us than they would if we were less geographically concentrated.
The modeled outputs and related analyses from both proprietary and third parties are subject to various assumptions, uncertainties, model design errors and the 21 Table of Contents inherent limitations of any statistical analysis, including those arising from the use of historical internal and industry data and assumptions.
The modeled outputs and related analyses from both proprietary and third parties are subject to various assumptions, uncertainties, model design errors and the inherent limitations of any statistical analysis, including those arising from the use of historical internal and industry data and assumptions.
The agreement requires that our consolidated debt to capital ratio (0.26 to 1.0 at December 31, 2024) be 0.35 to 1.0 or less and that we maintain a minimum net worth, excluding AOCI, of at least $912 million which represented 65% of consolidated shareholders' equity, excluding AOCI, determined as of December 31, 2022.
The agreement requires that our consolidated debt to capital ratio (0.24 to 1.0 at December 31, 2025) be 0.35 to 1.0 or less and that we maintain a minimum net worth, excluding AOCI, of at least $912 million which represented 65% of consolidated shareholders' equity, excluding AOCI, determined as of December 31, 2022.
However, because the rights and preferences of any series of preferred stock may be set by the Board in its sole discretion, the rights and 27 Table of Contents preferences of any such preferred stock may be superior to those of our common stock and thus may adversely affect the rights of the holders of common stock.
However, because the rights and preferences of any series of preferred stock may be set by the Board in its sole discretion, the rights and preferences of any such preferred stock may be superior to those of our common stock and thus may adversely affect the rights of the holders of common stock.
Adverse economic and market conditions could cause investment losses or impairment of our securities, which could affect our financial condition, results of operations or cash flows. At December 31, 2024 approximately 26% of our investment portfolio was invested in mortgage and asset-backed securities.
Adverse economic and market conditions could cause investment losses or impairment of our securities, which could affect our financial condition, results of operations or cash flows. At December 31, 2025 approximately 29% of our investment portfolio was invested in mortgage and asset-backed securities.
Failure to adhere to NYSE requirements, including the recent requirement around recovery of erroneously awarded compensation, could result in fines, trading restrictions or delisting. In addition, we may incur significant costs in the course of complying with NYSE and SEC requirements.
Failure to adhere to NYSE requirements, including the requirement 27 Table of Contents around recovery of erroneously awarded compensation, could result in fines, trading restrictions or delisting. In addition, we may incur significant costs in the course of complying with NYSE and SEC requirements.
The degree to which the SEC or other regulatory bodies may require climate change disclosures or other ESG-related measures is currently uncertain. As a result, we cannot fully assess the risk associated with the time, expense and business impact of compliance with ESG related matters at this time, and we will closely monitor developments and changes in this area.
Further, the degree to which federal regulatory bodies may require climate change disclosures or other ESG-related measures is currently uncertain. 26 Table of Contents As a result, we cannot fully assess the risk associated with the time, expense and business impact of compliance with ESG related matters at this time, and we will closely monitor developments and changes in this area.
Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property. If any of these events were to occur, it could have a material, adverse effect on our business and reputation.
Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property. If any of these events were to occur, it could have a material, adverse effect on our business and reputation. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
Our outstanding debt at December 31, 2024 includes a Revolving Credit Agreement, Term Loan and Contribution Certificates. See Note 10 of the Notes to Consolidated Financial Statements for additional information.
Our outstanding debt at December 31, 2025 includes a Revolving Credit Agreement, Term Loan and Contribution Certificates. See Note 9 of the Notes to Consolidated Financial Statements for additional information.
There is no guarantee 24 Table of Contents that additional debt could be issued on similar terms in the future as rates available to us may change due to changes in the economic climate, or shifts in the yield curve may occur, or an increase in our level of debt may result in rating agencies lowering our debt rating.
There is no guarantee that additional debt could be issued on similar terms in the future as rates available to us may change due to changes in the economic climate, or shifts in the yield curve may occur, or an increase in our level of debt may result in AM Best lowering our debt rating.
We intend to leverage this platform beginning in 2025 to address various aspects of escalating medical costs, including their medical document intelligence platform that helps direct care to the best-performing providers, and their tool to help identify high-severity claims early in the claims’ life cycle.
In March 2025, we began leveraging this platform to address various aspects of escalating medical costs, including their medical document intelligence platform that helps direct care to the best-performing providers, and their tool to help identify high-severity claims early in the claims’ life cycle.
The 2021 underwriting year for Syndicate 6131 remained open due to remaining exposures related to aviation coverages in connection with Russia's invasion of Ukraine. At the end of each underwriting year, the liabilities of the Syndicates are reinsured into the Syndicate's following underwriting year.
As of December 31, 2025, the 2021 underwriting year for Syndicate 6131 remained open due to uncertainty surrounding remaining exposures related to aviation coverages in connection with Russia's invasion of Ukraine. At the end of each underwriting year, the liabilities of the Syndicates are reinsured into the Syndicate's following underwriting year.
As of December 31, 2024, we currently have no preferred stock outstanding.
As of December 31, 2025, we currently have no preferred stock outstanding.
At December 31, 2024, our receivable from reinsurers on unpaid losses and loss adjustment expenses was $409 million, our receivable from reinsurers on paid losses and loss adjustment expenses was $18 million and our expected credit losses associated with our reinsurance receivables (related to both paid and unpaid losses) were nominal in amount.
At December 31, 2025, our receivable from reinsurers on unpaid losses and loss adjustment expenses was $335 million, our receivable from reinsurers on paid losses and loss adjustment expenses was $20 million and our expected credit losses associated with our reinsurance receivables (related to both paid and unpaid losses) were nominal in amount.
We face competition from other insurance companies for their services and allegiance. These agents and brokers may choose to direct business to competing insurance companies. As a member of the Lloyd's market and a participant in open underwriting years in certain Lloyd's Syndicates we are subject to certain risks which could affect us.
These agents and brokers may choose to direct business to competing insurance companies. As a member of the Lloyd's market and a participant in open underwriting years in certain Lloyd's Syndicates we are subject to certain risks which could affect us.
Given the current uncertainty surrounding Environmental, Social and Governance and other similar environmental and public policy matters, we cannot predict whether there will be legislation and regulation that will ultimately affect our financial condition, operating performance and ability to compete.
Given the current uncertainty surrounding Environmental, Social and Governance and other similar environmental and public policy matters, we cannot predict whether there will be legislation and regulation that will ultimately affect our financial condition, operating performance and ability to compete. State regulators, investors, policyholders and other stakeholders may continue to focus on ESG matters.
Due to the size of our reserve for losses and loss adjustment expenses, even a small percentage adjustment to our reserve can have a material effect on our results of operations for the period in which the change is made. 20 Table of Contents The process of estimating loss reserves is complex and highly judgmental.
Our largest liability is our reserve for losses and loss adjustment expenses. Due to the size of our reserve for losses and loss adjustment expenses, even a small percentage adjustment to our reserve can have a material effect on our results of operations for the period in which the change is made.
A prepayment is the unscheduled return of principal. When rates decline, the propensity for refinancing may increase and the period of time we hold our asset-backed securities may shorten due to prepayments. Prepayments may cause us to reinvest cash proceeds at lower yields than the retired security.
A prepayment is the unscheduled return of principal. When rates decline, the propensity for refinancing may increase and the period of time we hold our asset-backed securities may shorten due to prepayments.
If our operating subsidiaries are unable to make payments to us, or are able to pay only limited amounts, we may be unable to make payments on our indebtedness, meet other holding company financial obligations, or pay dividends to shareholders.
In addition, cash dividends and other permitted payments from operating subsidiaries represent another source of funds. If our operating subsidiaries are unable to make payments to us or are able to pay only limited amounts, we may be unable to make payments on our indebtedness, meet other holding company financial obligations, or pay dividends to shareholders.
There is no guarantee that these mitigation efforts will be effective due to factors such as volatility, currency variations and timing of foreign currency cash flows which could result in significant losses incurred.
Instead of investing in foreign currency denominated available-for-sale fixed maturities, we began utilizing foreign currency forward contracts. There is no guarantee that these mitigation efforts will be effective due to factors such as volatility, currency variations and timing of foreign currency cash flows which could result in significant losses incurred.
While the Federal Reserve recently reduced interest rates in the second half of 2024 and more interest rate cuts are expected in 2025, interest rates remain elevated as compared to current book yields. 23 Table of Contents As we have both the intent and ability to hold the vast majority of these investments until maturity, we consider this negative impact to be temporary.
While the Federal Reserve reduced interest rates in 2024 and 2025, interest rates remain elevated as compared to current book yields. As we have both the intent and ability to hold the vast majority of these investments until maturity, we consider this negative impact to be temporary. Our investments are subject to credit, prepayment and other risks.
Significant periods of time may elapse between the occurrence of an insured loss, the reporting of the loss by the insured and payment of that loss.
The process of estimating loss reserves is complex and highly judgmental. Significant periods of time may elapse between the occurrence of an insured loss, the reporting of the loss by the insured and payment of that loss.
In a period of market illiquidity and instability, the fair values of our investments are more difficult to assess, and our assessments may prove to be greater or less than amounts received in actual transactions.
An economic downturn could lessen tax receipts and other revenues in many states and their municipalities. In a period of market illiquidity and instability, the fair values of our investments are more difficult to assess, and our assessments may prove to be greater or less than amounts received in actual transactions.
Market conditions beyond our control determine the availability and cost of the reinsurance. We may be unable to maintain current reinsurance coverage or to obtain other reinsurance coverage in adequate amounts and at favorable rates.
As part of our overall risk and capacity management strategy, we purchase reinsurance for significant amounts of risk underwritten by our insurance subsidiaries. Market conditions beyond our control determine the availability and cost of the reinsurance. We may be unable to maintain current reinsurance coverage or to obtain other reinsurance coverage in adequate amounts and at favorable rates.
Also, there are many opportunities for self-insurance and for participation in an alternative risk transfer mechanism, such as a captive insurer or a risk retention group. 19 Table of Contents Competition in the property and casualty insurance business is based on many factors, including premiums charged and other terms and conditions of coverage, services provided, financial ratings assigned by independent rating agencies, claims services, reputation, geographic scope, local presence, agent and client relationships, financial strength and the experience of the insurance company in the line of insurance to be written.
Competition in the property and casualty insurance business is based on many factors, including premiums charged and other terms and conditions of coverage, services provided, financial ratings assigned by independent rating agencies, claims services, reputation, geographic scope, local presence, agent and client relationships, financial strength and the experience of the insurance company in the line of insurance to be written.
Although our reinsurance agreements make the reinsurer liable to us to the extent the risk is transferred, our liability to our policyholders remains our responsibility. Reinsurers may periodically dispute our demand for reimbursement from them based upon their interpretation of the terms of our agreements or may fail to pay us for financial or other reasons.
Reinsurers may periodically dispute our demand for reimbursement from them based upon their interpretation of the terms of our agreements or may fail to pay us for financial or other reasons.
As such, we are still exposed to adverse loss development on certain large claims in open underwriting years in which we participated, primarily catastrophe and aviation related losses. Further, we are obligated to maintain FAL to support those open underwriting years and risk-based capital requirements which are assessed periodically by Lloyd's and subject to variation.
As such, we are still exposed to adverse loss development on certain large claims in open underwriting years in which we participated, primarily catastrophe and aviation related losses.
We are a holding company and are dependent on dividends and other payments from our operating subsidiaries, which may be subject to dividend restrictions. We are a holding company whose principal source of external revenue is our investment revenues. In addition, cash dividends and other permitted payments from operating subsidiaries represent another source of funds.
Any of these events could materially adversely affect our business, financial condition, results of operations, cash flows, liquidity and stock price. We are a holding company and are dependent on dividends and other payments from our operating subsidiaries, which may be subject to dividend restrictions. We are a holding company whose principal source of external revenue is our investment revenues.
See previous discussion under the heading "Rating Agency" for additional information on our debt rating. 22 Table of Contents Our business could be adversely affected by the loss or consolidation of independent agents, agencies, brokers or brokerage firms. We heavily depend on the services of independent agents and brokers in the marketing of our insurance products.
Our business could be adversely affected by the loss or consolidation of independent agents, agencies, brokers or brokerage firms. We heavily depend on the services of independent agents and brokers in the marketing of our insurance products. We face competition from other insurance companies for their services and allegiance.
Our loss reserves also may be affected by court decisions that expand liability of our policies after they have been issued. Further, a significant jury award or series of awards against one or more of our insureds could require us to pay large sums of money in excess of our reserved amounts.
Further, a significant jury award or series of awards against one or more of our insureds could require us to pay large sums of money in excess of our reserved amounts.
Moreover, it is difficult to estimate our ultimate liability for such claims due to evolving judicial interpretations of various tort theories of liability and defense theories, such as federal preemption and joint and several liability, as well as the application of insurance coverage to these claims.
Moreover, it is difficult to estimate our ultimate liability for such claims due to evolving judicial interpretations of various tort theories of liability and defense theories, such as federal preemption and joint and several liability, as well as the application of insurance coverage to these claims. 21 Table of Contents If market conditions cause reinsurance to be more costly or unavailable, we may be required to bear increased risk or reduce the level of our underwriting commitments.
Our reserving process assumes that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate, but not necessarily accurate, basis for predicting future events. There is no precise method for evaluating the impact of any specific factor on the adequacy of reserves, and actual results are likely to differ from original estimates.
Our reserving process assumes that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate, but not necessarily accurate, basis for predicting future events.
Conversely, as rates increase and motivations for prepayments lessen, the period of time over which our asset-backed securities are repaid may lengthen, causing us to not reinvest cash flows at higher available yields. At December 31, 2024 the fair value of our state/municipal portfolio was $446.6 million (amortized cost basis of $471.0 million).
Prepayments may cause us to reinvest cash proceeds at lower yields than the retired security. 23 Table of Contents Conversely, as rates increase and motivations for prepayments lessen, the period of time over which our asset-backed securities are repaid may lengthen, causing us to not reinvest cash flows at higher available yields.
We mitigate foreign exchange exposure and manage market risks that arise in the normal course of business by generally matching the currency and duration of associated investments to the corresponding loss reserves as well as utilizing foreign currency forward contracts.
Historically, we have mitigated foreign exchange exposure and manage market risks that arise in the normal course of business by matching the currency and duration of associated investments to the corresponding loss reserves. During the first quarter of 2025, we changed our hedging strategy around foreign currency exchange exposures.
As the Company has reinsurance operations domiciled in the Cayman Islands, changes in the tax laws of the Cayman Islands as well as the change in U.S. federal tax law as a result of the TCJA regarding outbound cross border affiliate reinsurance could result in the loss of profitability of that business.
As the Company has reinsurance operations domiciled in the Cayman Islands, changes in the tax laws of the Cayman Islands as well as the change in U.S. federal tax law as a result of the OBBBA, which included extensions and modifications to various provisions that were originally enacted under the TCJA, could negatively affect the profitability of that business.
Changes to the number of state sponsored entities of this type could result in a large number of insureds changing the amount and type of coverage purchased from private insurance entities such as ProAssurance. We own two subsidiaries domiciled in the Cayman Islands and subject to the laws of the Cayman Islands and regulations promulgated by the CIMA.
Also, certain states sponsor insurance entities which affect the amount and type of liability coverages purchased in the sponsoring state. Changes to the number of state sponsored entities of this type could result in a large number of insureds changing the amount and type of coverage purchased from private insurance entities such as ProAssurance.
Compliance with the California law or other similar requirements for disclosures related to climate change and other environmental issues would be burdensome and costly.
In October 2024, the Governor of California signed a bill requiring certain climate-related disclosures for certain companies that do business in California, with initial disclosures to begin in August 2026. Compliance with the California law or other similar requirements for disclosures related to climate change and other environmental issues would be burdensome and costly.
We are exposed to fluctuations in foreign currency exchange rates, which could have an adverse effect on our results of operations and financial condition. Fluctuations in foreign currency exchange rate changes primarily relate to foreign currency denominated available-for-sale fixed maturities and loss reserves associated with our strategic partnership with an international medical professional liability insurer.
Fluctuations in foreign currency exchange rate changes primarily relate to foreign currency denominated loss reserves associated with our strategic partnership with an international medical professional liability insurer.
While our state/municipal portfolio had a high credit rating (AA on average), which indicates a strong ability to pay, there is no assurance that there will not be a credit related event which would cause fair values to decline. An economic downturn could lessen tax receipts and other revenues in many states and their municipalities.
At December 31, 2025 the fair value of our state/municipal portfolio was $430.1 million (amortized cost basis of $439.1 million). While our state/municipal portfolio had a high credit rating (AA on average), which indicates a strong ability to pay, there is no assurance that there will not be a credit related event which would cause fair values to decline.
Our investments are subject to credit, prepayment and other risks. At December 31, 2024 our investment portfolio accounts for $4.4 billion or 78% of our total assets.
At December 31, 2025 our investment portfolio accounts for $4.4 billion or 81% of our total assets.
The passage of tort reform or other legislation, and the subsequent review of such laws by the courts, could have a material impact on our operations.
Our business could be affected by changes to the U.S. system of insurance regulation including legislative or regulatory requirements imposed by or promulgated in connection with the Dodd-Frank Act. The passage of tort reform or other legislation, and the subsequent review of such laws by the courts, could have a material impact on our operations.
The U.S. federal government generally has not directly regulated the insurance industry except for certain areas of the market, such as insurance for flood, nuclear and terrorism risks. However, the federal government has undertaken initiatives or considered legislation in several areas that may affect the insurance industry.
Regulatory and Compliance Changes due to financial reform legislation could have a material effect on our operations. The U.S. federal government generally has not directly regulated the insurance industry except for certain areas of the market, such as insurance for flood, nuclear and terrorism risks.
Most states also regulate insurance holding companies like us in a variety of matters such as 26 Table of Contents acquisitions, solvency and risk assessment, changes of control and the terms of affiliated transactions.
Most states also regulate insurance holding companies like us in a variety of matters such as acquisitions, solvency and risk assessment, changes of control and the terms of affiliated transactions. In addition, rules and regulations have recently been introduced in the area of information security, which may also affect our business (see further discussion that follows in Item 1C "Cybersecurity").
A rating downgrade could also have a material adverse effect on our liquidity, including the ability to refinance long term debt on favorable terms and potentially limit our access to capital markets. We previously maintained Fitch, S&P and Moody's ratings for the purpose of issuing registered public debt but no longer require or receive public ratings from these rating agencies.
A rating downgrade could also have a material adverse effect on our liquidity, including the ability to refinance long term debt on favorable terms and potentially limit our access to capital markets. See previous discussion under the heading "Rating Agency" for additional information on our debt rating.
The Dodd-Frank Act was enacted in July 2010 and established additional regulatory oversight of financial institutions (see previous discussion under the heading "Insurance Regulatory Matters"). Our business could be affected by changes to the U.S. system of insurance regulation including legislative or regulatory requirements imposed by or promulgated in connection with the Dodd-Frank Act.
However, the federal government has undertaken initiatives or considered legislation in several areas that may affect the insurance industry. The Dodd-Frank Act was enacted in July 2010 and established additional regulatory oversight of financial institutions (see previous discussion under the heading "Insurance Regulatory Matters").
Our estimate of our potential liability for known uncertain tax positions is reflected in our financial statements.
Our estimate of our potential liability for known uncertain tax positions is reflected in our financial statements. As of December 31, 2025 we had a net deferred tax asset of approximately $121.9 million and a net federal income tax payable of approximately $2.4 million.
Financial We cannot guarantee that our reinsurers will pay in a timely fashion or at all, and as a result, we could experience losses . We transfer part of our risks to reinsurance companies in exchange for part of the premium we receive in connection with the risk.
Further, we are obligated to maintain FAL to support those open underwriting years and risk-based capital requirements which are assessed periodically by Lloyd's and subject to variation. 22 Table of Contents Financial We cannot guarantee that our reinsurers will pay in a timely fashion or at all, and as a result, we could experience losses .
We evaluate our reserves each period and increase or decrease reserves as necessary based on our estimate of future claims payments. An increase to reserves has a negative effect on our results of operations in the period of increase whereas a reduction to reserves has a positive effect on our results of operations in the period of reduction.
There is no precise method for 20 Table of Contents evaluating the impact of any specific factor on the adequacy of reserves, and actual results are likely to differ from original estimates. We evaluate our reserves each period and increase or decrease reserves as necessary based on our estimate of future claims payments.
As these trends continue most physicians no longer practice medicine as owners of an independent practice.
As these trends continue most physicians no longer practice medicine as owners of an independent practice. Also, there are many opportunities for self-insurance and for participation in an alternative risk transfer mechanism, such as a captive insurer or a risk retention group.
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Our largest liability is our reserve for losses and loss adjustment expenses.
Added
An increase to reserves has a negative effect on our results of operations in the period of increase whereas a reduction to reserves has a positive effect on our results of operations in the period of reduction. Our loss reserves also may be affected by court decisions that expand liability of our policies after they have been issued.
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If market conditions cause reinsurance to be more costly or unavailable, we may be required to bear increased risk or reduce the level of our underwriting commitments. As part of our overall risk and capacity management strategy, we purchase reinsurance for significant amounts of risk underwritten by our insurance subsidiaries.
Added
We transfer part of our risks to reinsurance companies in exchange for part of the premium we receive in connection with the risk. Although our reinsurance agreements make the reinsurer liable to us to the extent the risk is transferred, our liability to our policyholders remains our responsibility.
Removed
As of December 31, 2024 we had a net deferred tax asset of approximately $163.9 million and a net federal income tax payable of approximately $1.0 million, which included a nominal liability for unrecognized current tax benefits. 25 Table of Contents Regulatory and Compliance Changes due to financial reform legislation could have a material effect on our operations.
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We assess the effectiveness of our hedge instruments quarterly. 24 Table of Contents We are exposed to fluctuations in foreign currency exchange rates, which could have an adverse effect on our results of operations and financial condition.
Removed
In addition, rules and regulations have recently been introduced in the area of information security, which may also affect our business (see further discussion that follows in Item 1C "Cybersecurity"). Also, certain states sponsor insurance entities which affect the amount and type of liability coverages purchased in the sponsoring state.
Added
We own two subsidiaries domiciled in the Cayman Islands and subject to the laws of the Cayman Islands and regulations promulgated by the CIMA.
Removed
Aside from federal regulatory requirements, state regulators, investors, policyholders and other stakeholders may continue to focus on ESG matters. In October 2024, the Governor of California signed a bill requiring certain climate-related disclosures for certain companies that do business in California, with initial disclosures to begin in 2026.
Added
There are numerous risks and uncertainties associated with the proposed acquisition by The Doctors Company. We have entered into a definitive agreement to be acquired by The Doctors Company through a proposed merger transaction. See Note 1 of the Notes to Consolidated Financial Statements for further information.
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From time to time, we may identify opportunities for growth through acquisitions. However, approval of acquisitions may not be granted or conditions of approval may adversely alter the expected value and benefits of the acquisition. In addition, expected benefits from acquisitions may not be achieved or may be delayed longer than expected.
Added
There are numerous risks and uncertainties around the transaction, including, among others: • risk that the parties are unable to complete the planned acquisition on the anticipated terms and timing. The transaction is subject to a number of closing conditions, including, but not limited to, receipt of regulatory approvals.
Removed
Growth through the acquisition of other companies or books of business is opportunistic and sporadic. If we are able to identify a target for acquisition, state insurance regulation concerning change or acquisition of control could delay or prevent us from completing the acquisition.
Added
The failure to satisfy all the required conditions could prevent the acquisition from occurring. In addition, regulators could impose additional requirements or obligations as conditions for their approval.
Removed
State insurance regulatory codes provide that the acquisition of “control” of a domestic insurer or of any person that directly or indirectly controls a domestic insurer cannot be consummated without the prior approval of the domiciliary insurance regulator.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Our Vice President of Information Security has been with ProAssurance since 1998 and has over 26 years of IT and cybersecurity experience. The Company has a formal process in place for identifying, handling and disclosing of material cybersecurity incidents.
Our Vice President of Information Security has been with ProAssurance since 1998 and has over 27 years of IT and cybersecurity experience. The Company has a formal process in place for identifying, handling and disclosing of material cybersecurity incidents.
The Company's guidelines explain how to protect the Company from risks that can arise if legally protected, proprietary or confidential information is shared with these tools. The Company also evaluates the integrity and security of the technology infrastructure of certain third parties that access, process or store data that the Company considers to be sensitive, significant or legally protected.
The Company's guidelines explain how to protect the Company from risks that can arise if legally protected, proprietary or confidential information is shared with these tools. 30 Table of Contents The Company also evaluates the integrity and security of the technology infrastructure of certain third parties that access, process or store data that the Company considers to be sensitive, significant or legally protected.
To date, no risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company. Please refer to Item 1A, Risk Factors under the heading "Technology, Data Security and Privacy" for additional information on our cybersecurity threats. 31 Table of Contents
To date, no risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company. Please refer to Item 1A, Risk Factors under the heading "Technology, Data Security and Privacy" for additional information on our cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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We own three office properties, all of which are unencumbered: Square Footage of Properties Property Location Occupied by ProAssurance Leased or Available for Lease Total Birmingham, AL (1) 120,000 45,000 165,000 Franklin, TN (2) 25,000 78,000 103,000 Okemos, MI 53,000 — 53,000 (1) Corporate Headquarters (2) In January 2025, ProAssurance accepted an offer for the sale of the Franklin, TN property to a third-party for approximately $19.5 million.
We own two office properties, both of which are unencumbered: Square Footage of Properties Property Location Occupied by ProAssurance Leased or Available for Lease Total Birmingham, AL (1)(2) 120,000 45,000 165,000 Okemos, MI 53,000 — 53,000 (1) Corporate Headquarters (2) In December 2025, ProAssurance entered into a LOI for the sale of the Birmingham, AL property to a third party.
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The sale is expected to close during March 2025.
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The LOI is subject to a number of customary closing conditions.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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While the outcome of all legal actions is not presently determinable, management and its legal counsel are of the opinion that these actions will not have a material adverse effect on our financial position or results of operations. See Note 8 of the Notes to Consolidated Financial Statements included herein.
While the outcome of all legal actions is not presently determinable, management and its legal counsel are of the opinion that these actions will not have a material adverse effect on our financial position or results of operations.
Lisenby is a member of the Alabama State Bar and the United States Supreme Court Bar and is a Chartered Property Casualty Underwriter. (Age 56) 32 Table of Contents Karen M. Murphy Ms. Murphy was appointed President of Life Sciences and to the Executive Leadership team in 2023. Ms.
Prior to joining ProAssurance, Mr. Lisenby practiced law privately in Birmingham, Alabama. Mr. Lisenby is a member of the Alabama State Bar and the United States Supreme Court Bar and is a Chartered Property Casualty Underwriter. (Age 57) Karen M. Murphy Ms. Murphy was appointed President of Life Sciences and to the Executive Leadership team in 2023. Ms.
Francis Mr. Francis was appointed President of Medical Professional Liability and to the Executive Leadership Team in 2023. Mr. Francis began his career in medical professional liability insurance at Mutual Assurance Society of Alabama in 1984 and worked for predecessors of ProAssurance until 2004, serving as Chief Underwriting Officer and Chief Operating Officer of the Southern Division.
Francis began his career in medical professional liability insurance at Mutual Assurance Society of Alabama in 1984 and worked for predecessors of ProAssurance until 2004, serving as Chief Underwriting Officer and Chief Operating Officer of the Southern Division. Prior to rejoining ProAssurance, Mr. Francis was Chief Operating Officer of The Doctor’s Company. (Age 63) Dana S. Hendricks Ms.
Prior to rejoining ProAssurance, Mr. Francis was Chief Operating Officer of The Doctor’s Company. (Age 62) Dana S. Hendricks Ms. Hendricks was appointed as an Executive Vice President in 2018 and is also our Chief Financial Officer and Corporate Treasurer. Ms. Hendricks has previously served as Senior Vice President of Business Operations for our PICA subsidiary.
Hendricks was appointed as an Executive Vice President in 2018 and is also our Chief Financial Officer and Corporate Treasurer. Ms. Hendricks has previously served as Senior Vice President of Business Operations for our PICA subsidiary. Prior to that time, Ms. Hendricks served PICA as Vice President of Finance and Corporate Controller. Prior to joining PICA in 2001, Ms.
Rand also has previously served as President of our Medmarc subsidiary from 2016 to 2018. Prior to joining ProAssurance, Mr. Rand was Chief Accounting Officer and Head of Corporate Finance for PartnerRe Ltd. Prior to that time, Mr. Rand served as the Chief Financial Officer of Atlantic American Corporation. (Age 58) Noreen L. Dishart Ms.
Rand previously served as Chief Operating Officer, Chief Financial Officer, Executive Vice President and Senior Vice President since joining ProAssurance in 2004. Mr. Rand also has previously served as President of our Medmarc subsidiary from 2016 to 2018. Prior to joining ProAssurance, Mr. Rand was Chief Accounting Officer and Head of Corporate Finance for PartnerRe Ltd.
Dishart was appointed as an Executive Vice President in 2020 and has served as our Chief Human Resources Officer since 2015. Ms. Dishart has previously served as Vice President of Human Resources of our Eastern subsidiary for 9 years. Ms. Dishart has over 39 years of experience in Human Resources including positions with Johnson & Johnson/Merck. (Age 61) Robert D.
Dishart has previously served as Vice President of Human Resources of our Eastern subsidiary for 9 years. Ms. Dishart has over 40 years of experience in Human Resources including positions with Johnson & Johnson/Merck. (Age 62) Robert D. Francis Mr. Francis was appointed President of Medical Professional Liability and to the Executive Leadership Team in 2023. Mr.
Both our Code of Ethics and Conduct and our Share Ownership Guidelines are available on the Corporate Information section of our website. Printed copies of these documents may be obtained from our Investor Relations department by email at InvestorRelations@ProAssurance.com, by mail at P.O. Box 590009, Birmingham, Alabama 35259-0009, or by telephone at (205) 776-3028 or (800) 282-6242. ITEM 4.
Printed copies of these documents may be obtained from our Investor Relations department by email at InvestorRelations@ProAssurance.com, by mail at P.O. Box 590009, Birmingham, Alabama 35259-0009, or by telephone at (205) 776-3028 or (800) 282-6242. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 32 Table of Contents PART II
(Age 55) We have adopted a Code of Ethics and Conduct that applies to our directors and executive officers, including but not limited to our principal executive officer and principal financial officer. We also have share ownership guidelines in place to ensure that management maintains a significant portion of their personal investments in the stock of ProAssurance.
We also have share ownership guidelines in place to ensure that management maintains a significant portion of their personal investments in the stock of ProAssurance. Both our Code of Ethics and Conduct and our Share Ownership Guidelines are available on the Corporate Information section of our website.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of ProAssurance Corporation serve at the pleasure of the Board. We have a knowledgeable and experienced management team with established track records in building and managing successful insurance operations. Following is a brief description of each executive officer of ProAssurance, including their principal occupation, and relevant background with ProAssurance and former employers.
See Note 7 of the Notes to Consolidated Financial Statements included herein. 31 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of ProAssurance Corporation serve at the pleasure of the Board. We have a knowledgeable and experienced management team with established track records in building and managing successful insurance operations.
Lisenby was appointed as an Executive Vice President in 2014 and is also our General Counsel, Corporate Secretary and head of the corporate Legal Department. Mr. Lisenby has previously served as Senior Vice President. Prior to joining ProAssurance, Mr. Lisenby practiced law privately in Birmingham, Alabama. Mr.
Hendricks held various finance and data analysis positions with American General Life & Accident Insurance Company. (Age 58) Jeffrey P. Lisenby Mr. Lisenby was appointed as an Executive Vice President in 2014 and is also our General Counsel, Corporate Secretary and head of the corporate Legal Department. Mr. Lisenby has previously served as Senior Vice President.
Edward L. Rand, Jr. Mr. Rand was appointed as our Chief Executive Officer in 2019 and has served as President since 2018. Mr. Rand previously served as Chief Operating Officer, Chief Financial Officer, Executive Vice President and Senior Vice President since joining ProAssurance in 2004. Mr.
Following is a brief description of each executive officer of ProAssurance, including their principal occupation, and relevant background with ProAssurance and former employers. Edward L. Rand, Jr. Mr. Rand was appointed as our Chief Executive Officer in 2019 and has served as President since 2018. Mr.
Murphy previously served as General Counsel of Medmarc where she oversaw the legal, regulatory compliance and human resources functions and functioned as Corporate Secretary. Ms. Murphy is licensed to practice law in the State of New York and holds a Corporate Counsel license in the Commonwealth of Virginia. (Age 60) Kevin M. Shook Mr.
Murphy is licensed to practice law in the State of New York and holds a Corporate Counsel license in the Commonwealth of Virginia. (Age 61) Kevin M. Shook Mr. Shook was appointed as President of our Eastern subsidiary in 2019. Mr. Shook previously served as Executive Vice President of our Eastern subsidiary and has been with Eastern for 22 years.
Shook was appointed as President of our Eastern subsidiary in 2019. Mr. Shook previously served as Executive Vice President of our Eastern subsidiary and has been with Eastern for 21 years. Mr. Shook has over 31 years of insurance industry experience, including 10 years with PricewaterhouseCoopers where he primarily served companies within the insurance industry.
Mr. Shook has over 32 years of insurance industry experience, including 10 years with PricewaterhouseCoopers where he primarily served companies within the insurance industry. (Age 56) We have adopted a Code of Ethics and Conduct that applies to our directors and executive officers, including but not limited to our principal executive officer and principal financial officer.
Removed
Prior to that time, Ms. Hendricks served PICA as Vice President of Finance and Corporate Controller. Prior to joining PICA in 2001, Ms. Hendricks held various finance and data analysis positions with American General Life & Accident Insurance Company. (Age 57) Jeffrey P. Lisenby Mr.
Added
Prior to that time, Mr. Rand served as the Chief Financial Officer of Atlantic American Corporation. (Age 59) Noreen L. Dishart Ms. Dishart was appointed as an Executive Vice President in 2020 and has served as our Chief Human Resources Officer since 2015. Ms.
Added
Murphy has previously served as Executive Vice President and Head of Life Sciences for ProAssurance and Senior Vice President of Business Development and Marketing, Risk Management, and Claims for Medmarc. Prior to that time, Ms. Murphy served Medmarc, as General Counsel where she oversaw the legal, regulatory compliance and human resources functions and functioned as Corporate Secretary. Ms.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Item 4. Mine Safety Disclosures 33 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 33 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 89 Item 8. Financial Statements and Supplementary Data 91
Item 4. Mine Safety Disclosures 32 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 33 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 86 Item 8. Financial Statements and Supplementary Data 88

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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ProAssurance’s common stock currently trades on the NYSE under the symbol “PRA.” For information regarding dividends paid to shareholders in 2023 see Note 12 of the Notes to Consolidated Financial Statements. ProAssurance’s insurance subsidiaries are subject to restrictions on the payment of dividends to the parent.
ProAssurance’s common stock currently trades on the NYSE under the symbol “PRA.” For information regarding dividends paid to shareholders in 2023 see Note 11 of the Notes to Consolidated Financial Statements. ProAssurance’s insurance subsidiaries are subject to restrictions on the payment of dividends to the parent.
Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information regarding ProAssurance’s equity compensation plans as of December 31, 2024.
Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information regarding ProAssurance’s equity compensation plans as of December 31, 2025.
Other outstanding share units have no exercise price. 33 Table of Contents Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs* (In thousands) October 1 - October 31, 2024 — N/A — $55,902 November 1 - November 30, 2024 — N/A — $55,902 December 1 - December 31, 2024 — N/A — $55,902 Total — $— — * Under its current plan begun in November 2010, the Board has authorized $600 million for the repurchase of common shares or the retirement of outstanding debt.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs* (In thousands) October 1 - October 31, 2025 — N/A — $55,902 November 1 - November 30, 2025 — N/A — $55,902 December 1 - December 31, 2025 — N/A — $55,902 Total — $— — * Under its current plan begun in November 2010, the Board has authorized $600 million for the repurchase of common shares or the retirement of outstanding debt.
This is ProAssurance's only plan for the repurchase of common shares, and the plan has no expiration date.
This is ProAssurance's only plan for the repurchase of common shares, and the plan has no expiration date. 33 Table of Contents
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 1,577,413 $— * 1,668,466 Equity compensation plans not approved by security holders — — — * No outstanding options as of December 31, 2024.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 1,657,573 $— * 1,189,211 Equity compensation plans not approved by security holders — — — * No outstanding options as of December 31, 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. At February 20, 2025, ProAssurance Corporation had 3,767 stockholders of record and 51,156,821 shares of common stock outstanding.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. At February 18, 2026, ProAssurance Corporation had 3,997 stockholders of record and 51,413,643 shares of common stock outstanding.
Added
Other outstanding share units have no exercise price.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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See a reconciliation to its GAAP counterpart in the Executive Summary of Operations section under the heading “Non-GAAP Financial Measures” that follows. • Book value per share which is calculated as total shareholders’ equity divided by the total number of common shares outstanding at the balance sheet date.
See a reconciliation to its GAAP counterpart in the Executive Summary of Operations section under the heading “Non-GAAP Financial Measures” that follows. • Book value per share which is calculated as total GAAP shareholders’ equity divided by the total number of common shares outstanding at the balance sheet date.
This Non-GAAP calculation measures the net worth of the Company to shareholders on a per share basis excluding AOCI to eliminate the temporary and potentially significant effects of fluctuations in interest rates on our fixed income portfolio; however, it should be considered in conjunction with book value per share computed in accordance with GAAP.
This Non-GAAP calculation measures the net worth of the Company to shareholders on a per share basis excluding AOCI to eliminate the temporary and potentially significant effects of fluctuations in interest rates on our fixed income portfolio; however, it should be considered in conjunction with book value per share computed in accordance with GAAP.
For occurrence policies, the insured event becomes a liability when the event takes place even though the claim may be reported to us at a later date. For retroactive coverages, the insured event becomes a liability at inception of the underlying contract.
For occurrence policies, the insured event becomes a liability when the event takes place, even though the claim may be reported to us at a later date. For retroactive coverages, the insured event becomes a liability at the inception of the underlying contract.
These tax credit partnership investments are reaching the end of their lifecycle, therefore partnership operating losses and tax benefits associated with these investments have been and are expected to continue to be nominal in amount. However, we may receive distributions from time to time due to the sale of properties, as was the case in 2024.
These tax credit partnership investments are reaching the end of their lifecycle, therefore partnership operating losses and tax benefits associated with these investments have been and are expected to continue to be nominal in amount. However, we may receive distributions from time to time due to the sale of properties, as was the case in 2025 and 2024.
See a reconciliation to its GAAP counterpart in the Executive Summary of Operations section under the heading “Non-GAAP Financial Measures” that follows. In particular, we focus on our combined ratio and investment returns, both of which directly affect our ROE and growth in our book value per share.
See a reconciliation to its GAAP counterpart in the Executive Summary of Operations section under the heading “Non-GAAP Financial Measures” that follows. In particular, we focus on our combined ratio and investment returns, both of which directly affect our ROE, operating ratio and growth in our book value per share.
In calculating Non-GAAP operating income (loss), we exclude the effects of items that do not reflect normal operating results. We believe Non-GAAP operating income (loss) presents a useful view of the performance of our core insurance operations; however, it should be considered in conjunction with net income (loss) computed in accordance with GAAP.
In calculating Non-GAAP operating income (loss), we exclude the effects of items that do not reflect normal operating results. We believe Non-GAAP operating income (loss) presents a useful view of the performance of our ongoing core insurance operations; however, it should be considered in conjunction with net income (loss) computed in accordance with GAAP.
See a reconciliation to its GAAP counterpart in the Executive Summary of Operations section under the heading “Non-GAAP Financial Measures” that follows. • ROE which is calculated as net income (loss) divided by the average of beginning and ending shareholders’ equity.
See a reconciliation to its GAAP counterpart in the Executive Summary of Operations section under the heading “Non-GAAP Financial Measures” that follows. • ROE which is calculated as net income (loss) divided by the average of beginning and ending total shareholders’ equity.
Non-GAAP operating ROE measures the overall after-tax profitability of our core insurance operations and shows how efficiently capital is being used; however, it should be considered in conjunction with ROE computed in accordance with GAAP.
Non-GAAP operating ROE measures the overall after-tax profitability of our ongoing core insurance operations and shows how efficiently capital is being used; however, it should be considered in conjunction with ROE computed in accordance with GAAP.
As previously discussed, alternative market premiums written by our Workers' Compensation Insurance segment are 100% ceded, less a ceding commission, to either the SPCs in our Segregated Portfolio Cell Reinsurance segment or unaffiliated captive insurers.
(3) As previously discussed, alternative market premiums written by our Workers' Compensation Insurance segment are 100% ceded, less a ceding commission, to either the SPCs in our Segregated Portfolio Cell Reinsurance segment or unaffiliated captive insurers.
At December 31, 2024, the distribution of our investments based on GAAP fair value hierarchies (levels) was as follows: Distribution by GAAP Fair Value Hierarchy Level 1 Level 2 Level 3 Not Categorized Total Investments Investments recorded at: Fair value 7% 83% 2% 5% 97% Other valuations 3% Total Investments 100% Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
At December 31, 2025, the distribution of our investments based on GAAP fair value hierarchies (levels) was as follows: Distribution by GAAP Fair Value Hierarchy Level 1 Level 2 Level 3 Not Categorized Total Investments Investments recorded at: Fair value 7% 83% 2% 5% 97% Other valuations 3% Total Investments 100% Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
See further explanation of changes in renewal pricing above under the heading "Gross Premiums Written". Ceded Premiums Written Ceded premiums represent the amounts owed to our reinsurers for their assumption of a portion of our losses.
See further explanation of changes in renewal pricing above under the heading "Gross Premiums Written". Ceded Premiums Ratio Ceded premiums represent the amounts owed to our reinsurers for their assumption of a portion of our losses.
For the 2023 underwriting year our participation in the results of Syndicate 1729 was approximately 5%. Our Lloyd’s Syndicates premium during 2024 reflected the impact of our ceased participation. (5) This component of gross premiums written includes all other product lines within our Specialty P&C segment, primarily professional liability coverage to attorneys and their firms in select areas of practice.
For the 2023 underwriting year our participation in the results of Syndicate 1729 was approximately 5%. Our Lloyd’s Syndicates premium during 2025 reflected the impact of our ceased participation. (5) This component of gross premiums written includes all other product lines within our Specialty P&C segment, primarily professional liability coverage to attorneys and their firms in select areas of practice.
See further discussion in our Segment Results - Specialty Property & Casualty section that follows under the heading "Losses and Loss Adjustment Expenses." The risks insured in our Medical Technology Liability business (3% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2024) are more varied, and policies are individually priced based on the risk characteristics of the policy and the account.
See further discussion in our Segment Results - Specialty Property & Casualty section that follows under the heading "Losses and Loss Adjustment Expenses." The risks insured in our Medical Technology Liability business (3% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2025) are more varied, and policies are individually priced based on the risk characteristics of the policy and the account.
Many factors affect the ultimate losses incurred for our workers' compensation coverages (6% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2024) including but not limited to the type and severity of the injury, the age, health and occupation of the injured worker, the estimated length of disability, medical treatment and related costs, and the jurisdiction and workers' compensation laws of the state of the injury occurrence.
Many factors affect the ultimate losses incurred for our workers' compensation coverages (6% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2025) including but not limited to the type and severity of the injury, the age, health and occupation of the injured worker, the estimated length of disability, medical treatment and related costs, and the jurisdiction and workers' compensation laws of the state of the injury occurrence.
The factors that affect the ultimate losses incurred for the workers' compensation and medical professional liability coverages assumed by the SPCs at Inova Re and Eastern Re (2% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2024) are consistent with that of our Workers’ Compensation Insurance and Specialty P&C segments, respectively.
The factors that affect the ultimate losses incurred for the workers' compensation and medical professional liability coverages assumed by the SPCs at Inova Re and Eastern Re (2% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2025) are consistent with that of our Workers’ Compensation Insurance and Specialty P&C segments, respectively.
See further discussion of share repurchases and debt in this section under the heading "Financing Activities and Related Cash Flows." Operating Activities and Related Cash Flows Losses The following table, known as the Analysis of Reserve Development, presents information over the preceding ten years regarding the payment of our losses as well as changes to (the development of) our estimates of losses during that time period.
See further discussion of debt in this section under the heading "Financing Activities and Related Cash Flows." Operating Activities and Related Cash Flows Losses The following table, known as the Analysis of Reserve Development, presents information over the preceding ten years regarding the payment of our losses as well as changes to (the development of) our estimates of losses during that time period.
To manage our exposure to interest rate risk due to variability in the base rate on borrowings under the Revolving Credit Agreement and Term Loan, we entered into two forward-starting interest rate swap agreements ("Interest Rate Swaps"). Additional information regarding our Interest Rate Swaps is provided in Note 11 of the Notes to Consolidated Financial Statements.
To manage our exposure to interest rate risk due to variability in the base rate on borrowings under the Revolving Credit Agreement and Term Loan, we entered into two forward-starting interest rate swap agreements ("Interest Rate Swaps"). Additional information regarding our Interest Rate Swaps is provided in Note 10 of the Notes to Consolidated Financial Statements.
We recognized $1.4 million of other net investment losses for the year ended December 31, 2024 driven by net realized losses from the sale of certain available-for-sale fixed maturities and, to a lesser extent, unrealized holding losses resulting from changes in the fair value of our equity investments.
We recognized $4.0 million of other net investment losses for the year ended December 31, 2024 driven by net realized losses from the sale of certain available-for-sale fixed maturities and, to a lesser extent, unrealized holding losses resulting from changes in the fair value of our equity investments.
We are also committed to ensuring that our insured and distribution partners find us easy to do business with - helping distinguish us in the marketplace. Our Specialty P&C segment also includes medical technology liability insurance, which contributed 4% to consolidated gross premiums written in 2024.
We are also committed to ensuring that our insured and distribution partners find us easy to do business with - helping distinguish us in the marketplace. Our Specialty P&C segment also includes medical technology liability insurance, which contributed 4% to consolidated gross premiums written in 2025.
We manage our investing cash flows to ensure that we will have sufficient liquidity to meet our obligations, taking into consideration the timing of cash flows from our investments, including interest payments, dividends and principal payments, as well as the expected cash flows to be generated by our operations as discussed in this section under the heading "Investing Activities and Related Cash Flows." Our financing cash flows are primarily comprised of share repurchases, borrowings and repayment of debt, as well as capital contributions received from or return of capital to external SPC participants.
We manage our investing cash flows to ensure that we will have sufficient liquidity to meet our obligations, taking into consideration the timing of cash flows from our investments, including interest payments, dividends and principal payments, as well as the expected cash flows to be generated by our operations as discussed in this section under the heading "Investing Activities and Related Cash Flows." Our financing cash flows are primarily comprised of repayment of debt as well as capital contributions received from or return of capital to external SPC participants.
The following discussion generally focuses on the change in financial condition, results of operations and cash flows for the year ended December 31, 2024 as compared to the year ended December 31, 2023 and should be read in conjunction with the Consolidated Financial Statements and Notes to those statements which accompany this report.
The following discussion generally focuses on the change in financial condition, results of operations and cash flows for the year ended December 31, 2025 as compared to the year ended December 31, 2024 and should be read in conjunction with the Consolidated Financial Statements and Notes to those statements which accompany this report.
As of December 31, 2024, management concluded that the previously recorded valuation allowances were still required against the deferred tax assets related to the NOL carryforwards for our U.K. operations, against the deferred tax assets related to some of our U.S. state NOL carryforwards and the deferred tax assets of certain SPCs at Inova Re.
As of December 31, 2025, management concluded that the previously recorded valuation allowances were still required against the deferred tax assets related to the NOL carryforwards for our U.K. operations, against the deferred tax assets related to some of our U.S. state NOL carryforwards and the deferred tax assets of certain SPCs at Inova Re.
Segment results for the years ended December 31, 2024 and 2023 exclude the change in fair value of contingent consideration and, for the year ended December 31, 2024, transaction-related costs, including the associated income tax benefit, as we do not consider these items in assessing the financial performance of the segment.
Segment results for the years ended December 31, 2025 and 2024 exclude transaction-related costs including the associated income tax benefit and, for the year ended December 31, 2024, the change in fair value of contingent consideration as we do not consider these items in assessing the financial performance of the segment.
For a full discussion of the changes in the financial condition, results of operations and cash flows for the year ended December 31, 2023 as compared to the year ended December 31, 2022, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of ProAssurance's December 31, 2023 report on Form 10-K.
For a full discussion of the changes in the financial condition, results of operations and cash flows for the year ended December 31, 2024 as compared to the year ended December 31, 2023, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of ProAssurance's December 31, 2024 report on Form 10-K.
Information presented in the table is cumulative and, accordingly, each amount includes the effects of all changes in amounts for prior years. The table presents the development of our balance sheet reserve for losses; it does not present accident year or policy year development data.
Information presented in the table is cumulative and, accordingly, each amount includes the effects of all changes in amounts for prior years. 48 Table of Contents The table presents the development of our balance sheet reserve for losses; it does not present accident year or policy year development data.
For a full discussion of the changes in the financial condition, results of operations and cash flows for the year ended December 31, 2023 as compared to the year ended December 31, 2022, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of ProAssurance's December 31, 2023 report on Form 10-K.
For a full discussion of the changes in the financial condition, results of operations and cash flows for the year ended December 31, 2024 as compared to the year ended December 31, 2023, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of ProAssurance's December 31, 2024 report on Form 10-K.
Changes to estimates of premiums ceded related to prior accident years are fully earned in the period the changes in estimates occur. Ceded Premiums Ratio As shown in the table below, our ceded premiums ratio was affected in both 2024 and 2023 by revisions to our estimate of premiums owed to reinsurers related to coverages provided in prior accident years.
Changes to estimates of premiums ceded related to prior accident years are fully earned in the period the changes in estimates occur. As shown in the table below, our ceded premiums ratio was affected in both 2025 and 2024 by revisions to our estimate of premiums owed to reinsurers related to coverages provided in prior accident years.
Incurred losses reported in any period reflect our estimate of losses incurred related to the premiums earned in that period as well as any changes to our previous estimate of the reserve required for prior periods. As of December 31, 2024, our reserve is comprised almost entirely of long-tail exposures.
Incurred losses reported in any period reflect our estimate of losses incurred related to the premiums earned in that period as well as any changes to our previous estimate of the reserve required for prior periods. As of December 31, 2025, our reserve is comprised almost entirely of long-tail exposures.
Our consolidated gross reserve for losses on a GAAP basis exceeds the combined gross reserves of our insurance subsidiaries on a statutory basis by approximately $215 million, which is principally due to the portion of the GAAP reserve for losses that is reflected for statutory accounting purposes as unearned premiums.
Our consolidated gross reserve for losses on a GAAP basis exceeds the combined gross reserves of our insurance subsidiaries on a statutory basis by approximately $125 million, which is principally due to the portion of the GAAP reserve for losses that is reflected for statutory accounting purposes as unearned premiums.
Our current MPL pricing models assume severity trends in the range of 3% to 6% depending on state, territory and specialty. In some portions of our MPL business, we have observed and reflected higher severity trends in our estimates of losses and loss adjustment expenses.
Our current MPL pricing models assume severity trends in the range of 3% to 5% depending on state, territory and specialty. In some portions of our MPL business, we have observed and reflected higher severity trends in our estimates of losses and loss adjustment expenses.
We also consider reasonable and supportable forecasts of future economic conditions in our estimate of expected credit losses. Expected credit losses associated with our reinsurance receivables (related to both paid and unpaid losses) were nominal in amount as of December 31, 2024 and 2023.
We also consider reasonable and supportable forecasts of future economic conditions in our estimate of expected credit losses. Expected credit losses associated with our reinsurance receivables (related to both paid and unpaid losses) were nominal in amount as of December 31, 2025 and 2024.
Management fees are charged pursuant to a management agreement by the Corporate segment to the core domestic operating subsidiaries within our Specialty P&C segment for services provided based on the extent to which services are provided to the subsidiary and the amount of premium written by the subsidiary.
Management fees are charged pursuant to a management agreement by the Corporate segment to the core domestic insurance subsidiaries within our Specialty P&C segment for services provided based on the extent to which services are provided to the subsidiary and the amount of premium written by the subsidiary.
We offer alternative market solutions whereby we cede certain premiums from our Workers' Compensation Insurance and Specialty P&C segments to either the SPCs at Inova Re, one of our Cayman Islands reinsurance subsidiaries which is reported in our Segregated Portfolio Cell Reinsurance segment, or captive insurers unaffiliated with ProAssurance for two programs.
We offer alternative market solutions whereby we cede certain premiums from our Workers' Compensation Insurance and Specialty P&C segments to either the SPCs at Inova Re, one of our Cayman Islands reinsurance subsidiaries which is reported 52 Table of Contents in our Segregated Portfolio Cell Reinsurance segment, or captive insurers unaffiliated with ProAssurance for two programs.
Internal Revenue Code and are subject to U.S. federal income tax; therefore, tax expense allocated to our Corporate segment also includes tax expense incurred from any SPC at Inova Re in which we have a participation interest of 80% or greater as those SPCs are required to be included in our consolidated tax 87 Table of Contents return.
Internal Revenue Code and are subject to U.S. federal income tax; therefore, tax expense allocated to our Corporate segment also includes tax expense incurred from any SPC at Inova Re in which we have a participation interest of 80% or greater as those SPCs are required to be included in our consolidated tax return.
Our process for setting an initial reserve considers the unique characteristics of each product, but in general we rely heavily on the loss assumptions that were used to price business, as our pricing reflects our analysis of loss costs that we expect to incur relative to the insurance product being priced. Specialty P&C Segment.
Our process for setting an initial reserve considers the unique characteristics of each product, but in general we rely heavily on the loss assumptions that were used to price business, as our pricing reflects our analysis of loss costs that we expect to incur relative to the insurance product being priced. 37 Table of Contents Specialty P&C Segment.
At December 31, 2024, these investments represented approximately 3% of total investments and are detailed in the following table. Additional information about these investments is provided in Note 2 and Note 3 of the Notes to Consolidated Financial Statements.
At December 31, 2025, these investments represented approximately 3% of total investments and are detailed in the following table. Additional information about these investments is provided in Note 2 and Note 3 of the Notes to Consolidated Financial Statements.
See additional information on our tax credit partnership investments in Note 3 of the Notes to Consolidated Financial Statements. 85 Table of Contents Net Investment Gains (Losses) The following table provides detailed information regarding our net investment gains (losses).
See additional information on our tax credit partnership investments in Note 3 of the Notes to Consolidated Financial Statements. 83 Table of Contents Net Investment Gains (Losses) The following table provides detailed information regarding our net investment gains (losses).
The rates we charge our policyholders remain pressured by the continuation of loss cost decreases in the states within our operating territories, and most states in which we operate have approved additional loss cost decreases for 2025. Our workers' compensation product offerings are designed to provide flexibility in offering solutions to our customers at a competitive price.
Our workers' compensation product offerings are designed to provide flexibility in offering solutions to our customers at a competitive price; however, the rates we charge our policyholders remain pressured by the continuation of loss cost decreases in the states within our operating territories, and most states in which we operate have approved additional loss cost decreases for 2026.
Two of our insurance subsidiaries are members of an FHLB. Through membership, those subsidiaries have access to secured cash advances which can be used for liquidity purposes or other operational needs. In order for us to use FHLB 57 Table of Contents proceeds, regulatory approvals may be required depending on the nature of the transaction.
Two of our insurance subsidiaries are members of an FHLB. Through membership, those subsidiaries have access to secured cash advances which can be used for liquidity purposes or other operational needs. In order for us to use FHLB proceeds, regulatory approvals may be required depending on the nature of the transaction.
Healthcare delivery settings are changing with the growth of retail delivery by allied healthcare professionals as well as physicians practicing in distributed clinics, pharmacies, large consumer stores and online. The shifts within the healthcare settings continue to impact the overall market for medical professional liability products due to their differing risk profiles.
Healthcare delivery settings are changing with the growth of retail delivery by advanced practice healthcare professionals as well as physicians practicing in distributed clinics, pharmacies, large consumer stores and online. The shifts within the healthcare settings continue to impact the overall market for medical professional liability products due to their differing risk profiles.
Income from our short-term and other investments decreased during 2024 as compared to 2023 primarily due to lower average investment balances and lower yields given the decrease in interest rates.
Income from our short-term and other investments decreased during 2025 as compared to 2024 primarily due to lower average investment balances and lower yields given the decrease in interest rates.
A summary of the activity in our net reserve for losses during 2024 and 2023 is provided under the heading "Losses" in the Liquidity and Capital Resources and Financial Condition section that follows.
A summary of the activity in our net reserve for losses during 2025 and 2024 is provided under the heading "Losses" in the Liquidity and Capital Resources and Financial Condition section that follows.
See previous discussion in our Liquidity and Capital Resources and Financial Condition section under the heading "Reinsurance" for information regarding our Medical Professional Liability and Medical Technology Liability excess of loss reinsurance arrangements.
See previous discussion in our Liquidity and Capital Resources and Financial Condition section under the heading "Reinsurance" for information regarding our MPL and Medical Technology Liability excess of loss reinsurance arrangements.
See further discussion on our outstanding debt in Note 10 of the Notes to Consolidated Financial Statements and additional information regarding our Interest Rate Swaps is provided in Note 11 of the Notes to Consolidated Financial Statements.
See further discussion on our outstanding debt in Note 9 of the Notes to Consolidated Financial Statements and additional information regarding our Interest Rate Swaps is provided in Note 10 of the Notes to Consolidated Financial Statements.
We also recorded other adjustments to NORCAL’s reserve as a result of purchase accounting including negative VOBA on NORCAL’s assumed unearned premium and assumed DDR reserve. Use of Judgment/Variability of Loss Reserves The process of estimating reserves involves a high degree of judgment and is subject to a number of variables.
We also recorded other adjustments to NORCAL’s reserve as a result of purchase accounting including negative VOBA on NORCAL’s assumed unearned premium and assumed DDR reserve. 39 Table of Contents Use of Judgment/Variability of Loss Reserves The process of estimating reserves involves a high degree of judgment and is subject to a number of variables.
Our investment portfolio continues to be primarily composed of high quality fixed income securities with approximately 93% of our fixed maturities being investment grade securities as determined by national rating agencies.
Our investment portfolio continues to be primarily composed of high quality fixed income securities with approximately 92% of our fixed maturities being investment grade securities as determined by national rating agencies.
Given the uncertainty inherent in our estimates of losses and related amounts recoverable from reinsurers, these estimates may vary significantly from the ultimate outcome. Under the terms of certain of our reinsurance agreements, the amount of premium that we cede to our reinsurers is based in part on the losses we recover under the agreements.
Given the uncertainty inherent in our estimates of losses and related amounts recoverable from reinsurers, these estimates may vary significantly from the ultimate outcome. 43 Table of Contents Under the terms of certain of our reinsurance agreements, the amount of premium that we cede to our reinsurers is based in part on the losses we recover under the agreements.
Management’s assessment of the need for these valuation allowances at December 31, 2024 included an analysis of the available sources of income. See further discussion on ProAssurance’s deferred tax assets in Note 5 of the Notes to Consolidated Financial Statements. U.S.
Management’s assessment of the need for these valuation allowances at December 31, 2025 included an analysis of all available sources of income. See further discussion on ProAssurance’s deferred tax assets in Note 5 of the Notes to Consolidated Financial Statements. U.S.
(4) Historically, retention has ranged from $1M to $2M. 53 Table of Contents (5) Subject to a limit of $20M per individual claimant. If an individual loss were to exceed this level the Company would retain this excess exposure. Historically, the limit per individual claimant has ranged from $15M to $20M. (6) Historically, retention has ranged from $0.5M to $0.75M.
(4) Historically, retention has ranged from $1M to $2M. (5) Subject to a limit of $20M per individual claimant. If an individual loss were to exceed this level the Company would retain this excess exposure. Historically, the limit per individual claimant has ranged from $15M to $20M. (6) Historically, retention has ranged from $0.5M to $0.75M.
The ranges have been developed by aggregating the expected volatility of losses across partitions of our business to obtain a consolidated distribution of potential reserve outcomes. The aggregation of this data takes into consideration correlations among our geographic and specialty mix of business.
The ranges have been developed by aggregating the expected volatility of losses across partitions of our business to 40 Table of Contents obtain a consolidated distribution of potential reserve outcomes. The aggregation of this data takes into consideration correlations among our geographic and specialty mix of business.
In 2024, net favorable reserve development was driven by favorable prior accident year reserve development of $1.6 million, including the reduction of the AAD liability, as discussed above, partially offset by an adjustment to aggregate losses assumed from the Segregated Portfolio Cell Reinsurance segment of $1.1 million.
In 2024, net favorable reserve development was driven by favorable prior accident year reserve development of $1.6 million, including the reduction of the AAD liability, partially offset by an adjustment to aggregate losses assumed from the Segregated Portfolio Cell Reinsurance segment of $1.1 million.
Long-tailed insurance is characterized by the extended period of time typically required both to assess the viability of a claim and potential 36 Table of Contents damages, if any, and to reach a resolution of the claim. The claims resolution process may extend to more than five years.
Long-tailed insurance is characterized by the extended period of time typically required both to assess the viability of a claim and potential damages, if any, and to reach a resolution of the claim. The claims resolution process may extend to more than five years.
Over time, an SPC's retained profits are considered in the determination of the collateral amount required to be provided by the cell's external participants. Taxes We are subject to the tax laws and regulations of the U.S., Cayman Islands and U.K.
Over time, an SPC's retained profits are considered in the determination of the collateral amount required to be provided by the cell's external participants. 54 Table of Contents Taxes We are subject to the tax laws and regulations of the U.S., Cayman Islands and U.K.
Retention losses during 2024 generally reflect our pursuit of rate adequacy in a competitive market where other carriers may not have the same profitability objectives, recognize the rate need, or are attempting to gain market share despite near term underwriting losses which can be supported by investment returns from excess capital.
Retention losses during 2025 generally reflect our pursuit of rate adequacy in a competitive market where other carriers may not have the same profitability objectives, appreciate the rate need, or are attempting to gain market share despite near term underwriting losses which can be supported by investment returns from excess capital.
As of February 20, 2025, $175 million could be made available for use through our Revolving Credit Agreement, as discussed in this section under the heading "Debt." Given the duration of our investments, we do not foresee a shortfall that would require us to meet operating cash needs through additional borrowings.
As of February 18, 2026, $175 million could be made available for use through our Revolving Credit Agreement, as discussed in this section under the heading "Debt." Given the duration of our investments, we do not foresee a shortfall that would require us to meet operating cash needs through additional borrowings.
The alternative market medical professional liability policies are ceded from our Specialty P&C segment to the SPCs under either excess of loss or quota share reinsurance agreements, depending on the structure of the 52 Table of Contents individual program.
The alternative market medical professional liability policies are ceded from our Specialty P&C segment to the SPCs under either excess of loss or quota share reinsurance agreements, depending on the structure of the individual program.
Growth Opportunities and Outlook Given the cyclical nature of our insurance operations, our financial objectives span multiple years and we target a dynamic long-term ROE of 700 basis points above the 10-year U.S. Treasury rate, which at December 31, 2024 was approximately 11.6%.
Growth Opportunities and Outlook Given the cyclical nature of our insurance operations, our financial objectives span multiple years and we target a dynamic long-term ROE of 700 basis points above the 10-year U.S. Treasury rate, which at December 31, 2025 was approximately 11.2%.
We make the decision to pay dividends from an insurance subsidiary based on the capital needs of that subsidiary and may pay less than the permitted dividend or may also request permission to pay an additional amount (an extraordinary dividend).
We make the decision to pay dividends from an insurance subsidiary based on the 47 Table of Contents capital needs of that subsidiary and may pay less than the permitted dividend or may also request permission to pay an additional amount (an extraordinary dividend).
While the terms of the management agreement were generally consistent between 2024 and 2023, fluctuations in the amount of premium written by each subsidiary can result in corresponding variations in the management fee charged to each subsidiary during a particular period.
While the terms of the management agreement were consistent between 2025 and 2024, fluctuations in the amount of premium written by each subsidiary can result in corresponding variations in the management fee charged to each subsidiary during a particular period.
While the terms of the arrangement were generally consistent between 2024 and 2023, fluctuations in the amount of premium written by each subsidiary can result in corresponding variations in the management fee charged to each subsidiary during a particular period.
While the terms of the arrangement were consistent between 2025 and 2024, fluctuations in the amount of premium written by each subsidiary can result in corresponding variations in the management fee charged to each subsidiary during a particular period.
We utilize a primary pricing service for each security type and compare provided information for consistency with alternate pricing services, known market data and information from our own trades, considering both values and valuation trends. We also review weekly trades versus the prices supplied by the services.
We utilize a primary pricing service for each security type and compare provided information for consistency with alternate pricing services, known market data and information 44 Table of Contents from our own trades, considering both values and valuation trends. We also review weekly trades versus the prices supplied by the services.
In addition to the interest and dividends we will receive from our investments, we anticipate that between $100 million and $140 million of our portfolio will mature (or be paid down) each quarter over the next twelve months and become available, if needed, to meet our cash flow requirements.
In addition to the interest and dividends we will receive from our investments, we anticipate that between $80 million and $170 million of our portfolio will mature (or be paid down) each quarter over the next twelve months and become available, if needed, to meet our cash flow requirements.
The ceded premiums ratio was as follows: Year Ended December 31 2024 2023 Change Ceded premiums ratio 8.7 % 8.7 % — pts Less the effect of adjustments in premiums owed under reinsurance agreements, prior accident years (as previously discussed) 0.2 % (0.3 %) 0.5 pts Ratio, current accident year 8.5 % 9.0 % (0.5 pts) The above table reflects ceded premiums written, excluding the effect of prior year ceded premium adjustments, as previously discussed, as a percent of gross premiums written.
The ceded premiums ratio was as follows: Year Ended December 31 2025 2024 Change Ceded premiums ratio 9.2 % 8.7 % 0.5 pts Less the effect of adjustments in premiums owed under reinsurance agreements, prior accident years (as previously discussed) (0.3 %) 0.2 % (0.5 pts) Ratio, current accident year 9.5 % 8.5 % 1.0 pts The above table reflects ceded premiums written, excluding the effect of prior year ceded premium adjustments, as previously discussed, as a percentage of gross premiums written.
As of December 31, 2024, there is no reinsurer, on an individual basis, for which our recoverables for both paid and unpaid claims (net of amounts due to the reinsurer) and our prepaid balances are more than $55 million, in the aggregate.
As of December 31, 2025, there is no reinsurer, on an individual basis, for which our recoverables for both paid and unpaid claims (net of amounts due to the reinsurer) and our prepaid balances are more than $48 million, in the aggregate.
No reinsurance balances were written off for credit reasons during the years ended December 31, 2024 or 2023.
No reinsurance balances were written off for credit reasons during the years ended December 31, 2025 or 2024.
The remaining variance in operating cash flows in 2024 as compared to 2023 was composed of individually insignificant components.
The remaining variance in operating cash flows in 2025 as compared to 2024 was composed of individually insignificant components.
The pricing services scrutinize market data for consistency with other relevant market information before including the data in the pricing models. The pricing services disclose the types of pricing models used and the inputs 44 Table of Contents used for each asset class.
The pricing services scrutinize market data for consistency with other relevant market information before including the data in the pricing models. The pricing services disclose the types of pricing models used and the inputs used for each asset class.
To the extent inflation causes these costs to increase above reserves established for these claims, we will be required to increase our loss reserves with a corresponding reduction in our financial results in the period in which the need for additional reserves is identified. 39 Table of Contents MPL.
To the extent inflation causes these costs to increase above reserves established for these claims, we will be required to increase our loss reserves with a corresponding reduction in our financial results in the period in which the need for additional reserves is identified. MPL.
We did not have any other assets or liabilities that were measured at fair value on a nonrecurring basis at December 31, 2024 or December 31, 2023. 45 Table of Contents Investments - Other Valuation Methodologies Certain of our investments, in accordance with GAAP for the type of investment, are measured using methodologies other than fair value.
We did not have any assets or liabilities that were measured at fair value on a nonrecurring basis at December 31, 2025 or December 31, 2024. Investments - Other Valuation Methodologies Certain of our investments, in accordance with GAAP for the type of investment, are measured using methodologies other than fair value.
Financing Activities and Related Cash Flows Treasury Shares Treasury share activity for 2024, 2023 and 2022 was as follows: (Share amounts in thousands) 2024 2023 2022 Treasury shares at the beginning of the period 12,607 9,464 9,325 Shares reacquired, at cost of $50.5 million and $3.3 million for 2023 and 2022, respectively — 3,143 139 Treasury shares at the end of the period 12,607 12,607 9,464 We did not repurchase any common shares subsequent to December 31, 2024, and as of February 20, 2025, our remaining Board authorization was approximately $55.9 million.
Financing Activities and Related Cash Flows Treasury Shares Treasury share activity for 2025, 2024 and 2023 was as follows: (Share amounts in thousands) 2025 2024 2023 Treasury shares at the beginning of the period 12,607 12,607 9,464 Shares reacquired, at cost of $50.5 million for 2023 — — 3,143 Treasury shares at the end of the period 12,607 12,607 12,607 We did not repurchase any common shares subsequent to December 31, 2025, and as of February 18, 2026, our remaining Board authorization was approximately $55.9 million.
As of February 20, 2025, we also have an additional $125 million in permitted borrowings available under our Revolving Credit Agreement as well as the possibility of a $50 million accordion feature, if successfully subscribed, as discussed in this section under the heading "Debt." During 2024, our operating subsidiaries paid dividends to us of $66 million.
As of February 18, 2026, we also have an additional $125 million in permitted borrowings available under our Revolving Credit Agreement as well as the possibility of a $50 million accordion feature, if successfully subscribed, as discussed in this section under the heading "Debt." During 2025, our operating subsidiaries paid dividends to us of $113 million.
Investing Activities and Related Cash Flows Our investments at December 31, 2024 and December 31, 2023 are comprised as follows: December 31, 2024 December 31, 2023 ($ in thousands) Carrying Value % of Total Investment Carrying Value % of Total Investment Fixed maturities, available-for-sale: U.S. Treasury obligations $ 243,903 5 % $ 243,525 5 % U.S.
Investing Activities and Related Cash Flows Our investments at December 31, 2025 and December 31, 2024 are comprised as follows: December 31, 2025 December 31, 2024 ($ in thousands) Carrying Value % of Total Investment Carrying Value % of Total Investment Fixed maturities, available-for-sale: U.S. Treasury obligations $ 219,402 5 % $ 243,903 5 % U.S.
See further discussion on alternative market gross premiums written in our Segment Results - Segregated Portfolio Cell Reinsurance section under the heading "Gross Premiums Written" that follows. We retained twenty-one of the twenty-four (five in the fourth quarter) workers' compensation alternative market programs that were up for renewal during the year ended December 31, 2024.
See further discussion on alternative market gross premiums written in our Segment Results - Segregated Portfolio Cell Reinsurance section under the heading "Gross Premiums Written" that follows. We retained sixteen of the twenty-one (three in the fourth quarter) workers' compensation alternative market programs that were up for renewal during the year ended December 31, 2025.
At December 31, 2024, we held cash and liquid investments of approximately $101 million outside our insurance subsidiaries that were available for use without regulatory approval or other restriction.
At December 31, 2025, we held cash and liquid investments of approximately $166 million outside our insurance subsidiaries that were available for use without regulatory approval or other restriction.
Within our Specialty P&C segment, for our professional liability business (86% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2024; predominately comprised of our MPL products), we set an initial reserve using a loss ratio approach based upon our evaluation of the current loss environment including frequency, severity, monetary inflation, social inflation and legal trends.
Within our Specialty P&C segment, for our Medical Professional Liability business (86% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2025), we set an initial reserve using a loss ratio approach based upon our evaluation of the current loss environment including frequency, severity, monetary inflation, social inflation and legal trends.
The medical professional liability business is assumed net of reinsurance from our Specialty P&C segment; therefore, there are no ceded premiums related to the medical professional liability business reflected in the table above. Premiums ceded under our SPC reinsurance treaty are based on premiums written during the treaty period.
The medical professional liability business is assumed net of reinsurance from our Specialty P&C segment; therefore, there are no ceded premiums related to the medical professional liability business reflected in the table above. Workers' compensation premiums ceded under our SPC reinsurance treaty are based on premiums written during the program year that renews during the treaty period.
The Reported Method assigns partial weight to the initial expected losses and partial weight to current reported losses. The weights assigned to the initial expected losses decrease as the accident year matures. Paid Development and Reported (Incurred) Development Methods .
The Reported Method assigns partial weight to the initial expected losses and partial weight to current reported losses. The weights assigned to the initial expected losses decrease as the accident year matures. 38 Table of Contents Paid Development and Reported (Incurred) Development Methods .
New business, audit premium, renewal retention and renewal price changes for our traditional business and the alternative market business are shown in the table below: Year Ended December 31 2024 2023 ($ in millions) Traditional Business Alternative Market Business Segment Results Traditional Business Alternative Market Business Segment Results New business $ 17.5 $ 3.5 $ 21.0 $ 22.0 $ 4.2 $ 26.2 Audit premium (excluding EBUB) $ 12.1 $ 3.7 $ 15.8 $ 9.1 $ 3.6 $ 12.7 Retention (1) 87 % 84 % 86 % 88 % 93 % 89 % Change in renewal pricing (2) (2 %) (1 %) (1 %) (5 %) (5 %) (5 %) (1) We calculate our workers' compensation retention as renewed premium divided by premium available to renew.
New business, audit premium, renewal retention and renewal price changes for our traditional business and the alternative market business are shown in the table below: Year Ended December 31 2025 2024 ($ in millions) Traditional Business Alternative Market Business (3) Segment Results Traditional Business Alternative Market Business (3) Segment Results New business $ 18.9 $ 3.7 $ 22.6 $ 17.5 $ 3.5 $ 21.0 Audit premium (excluding EBUB) $ 10.5 $ 3.9 $ 14.4 $ 12.1 $ 3.7 $ 15.8 Retention rate (1) 84 % 90 % 86 % 87 % 84 % 86 % Change in renewal pricing (2) (1 %) (3 %) (1 %) (2 %) (1 %) (1 %) (1) We calculate our workers' compensation retention as renewed premium divided by premium available to renew.
To achieve our long-term ROE target, we emphasize rate adequacy, selective underwriting, use of our proprietary data and predictive analytics, effective claims management, operational efficiency gained by leveraging our enhanced scope and scale and prudent investment management.
To achieve our long-term ROE target, we emphasize rate adequacy, selective underwriting, use of our proprietary data and predictive analytics, effective claims management, operational efficiency gained by leveraging our scope and scale, continued investment in technology-based solutions and prudent investment management.
Our Specialty P&C segment includes our MPL insurance operations, which represents the largest product line in our consolidated gross premiums written (70% in 2024). The healthcare market in the U.S. is continuing to consolidate, which brings competitive challenges and opportunities.
Our Specialty P&C segment includes our MPL insurance operations, which represent the largest product line in our consolidated gross premiums written (71% in 2025). The healthcare market in the U.S. is continuing to consolidate, which brings competitive challenges and opportunities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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The following tables summarize estimated changes in the fair value of our available-for-sale fixed maturity securities for specific hypothetical changes in interest rates by asset class at December 31, 2024 and December 31, 2023. There are principally two factors that determine interest rates on a given security: changes in the level of yield curves and credit spreads.
The following tables summarize estimated changes in the fair value of our available-for-sale fixed maturity securities for specific hypothetical changes in interest rates by asset class at December 31, 2025 and December 31, 2024. There are principally two factors that determine interest rates on a given security: changes in the level of yield curves and credit spreads.
As different asset classes can be affected in different ways by movements in those two factors, we have separated our portfolio by asset class in the following tables. Interest Rate Shift in Basis Points December 31, 2024 ($ in millions) (200) (100) Current 100 200 Fair Value: Fixed maturities, available-for-sale: U.S.
As different asset classes can be affected in different ways by movements in those two factors, we have separated our portfolio by asset class in the following tables. Interest Rate Shift in Basis Points December 31, 2025 ($ in millions) (200) (100) Current 100 200 Fair Value: Fixed maturities, available-for-sale: U.S.
At December 31, 2024, our fixed maturities portfolio includes fixed maturities classified as trading securities which do not have a significant amount of exposure to market interest rates or credit spreads. Our cash and short-term investments at December 31, 2024 were carried at fair value which approximates their cost basis due to their short-term nature.
At December 31, 2025, our fixed maturities portfolio includes fixed maturities classified as trading securities which do not have a significant amount of exposure to market interest rates or credit spreads. Our cash and short-term investments at December 31, 2025 were carried at fair value which approximates their cost basis due to their short-term nature.
We monitor the credit risk associated with our reinsurers using publicly available financial and rating agency data. We have not historically experienced material credit losses due to the financial condition of a reinsurer, and as of December 31, 2024 our expected credit losses associated with our receivables from reinsurers were nominal in amount.
We monitor the credit risk associated with our reinsurers using publicly available financial and rating agency data. We have not historically experienced material credit losses due to the financial condition of a reinsurer, and as of December 31, 2025 our expected credit losses associated with our receivables from reinsurers were nominal in amount.
See Note 1 of the Notes to Consolidated Financial Statements for further information on our allowance for expected credit losses related to our premiums receivable. Our receivables from reinsurers (with regard to both paid and unpaid losses) approximated $427 million at December 31, 2024 and $467 million at December 31, 2023.
See Note 1 of the Notes to Consolidated Financial Statements for further information on our allowance for expected credit losses related to our premiums receivable. Our receivables from reinsurers (with regard to both paid and unpaid losses) approximated $354 million at December 31, 2025 and $427 million at December 31, 2024.
We also have exposure to credit risk related to our premiums receivable and receivables from reinsurers; however, to-date we have not experienced any significant amount of credit losses. At December 31, 2024, our premiums receivable was approximately $229 million, net of an allowance for expected credit losses of approximately $8 million.
We also have exposure to credit risk related to our premiums receivable and receivables from reinsurers; however, to-date we have not experienced any significant amount of credit losses. At December 31, 2025, our premiums receivable was approximately $228 million, net of an allowance for expected credit losses of approximately $8 million.
As of December 31, 2024, the Revolving Credit Agreement and Term Loan have $125 million and $120 million in outstanding borrowings, respectively. Additional information regarding our debt is provided in Note 10 and further information regarding the Interest Rate Swaps in Note 11 of the Notes to Consolidated Financial Statements.
As of December 31, 2025, the Revolving Credit Agreement and Term Loan have $125 million and $114 million in outstanding borrowings, respectively. Additional information regarding our debt is provided in Note 9 and further information regarding the Interest Rate Swaps in Note 10 of the Notes to Consolidated Financial Statements.
We control this exposure by emphasizing investment grade credit quality in the fixed income securities we purchase. 90 Table of Contents As of December 31, 2024, 93% of our fixed maturity securities were rated investment grade as determined by NRSROs, such as Fitch, Moody’s and Standard & Poor’s.
We control this exposure by emphasizing investment grade credit quality in the fixed income securities we purchase. 87 Table of Contents As of December 31, 2025, 92% of our fixed maturity securities were rated investment grade as determined by NRSROs, such as Fitch, Moody’s and Standard & Poor’s.
Foreign Currency Risk Foreign currency exchange rate movements are primarily related to foreign currency denominated available-for-sale fixed maturities and loss reserves associated with premium assumed from an international medical professional liability insurer in our Specialty P&C segment.
Foreign Currency Risk Foreign currency exchange rate gains (losses) are reported in our Corporate segment and are primarily related to foreign currency denominated loss reserves associated with premium assumed from an international medical professional liability insurer in our Specialty P&C segment.
The counterparty to the foreign currency forward contract is a major financial institution which had an investment grade rating of BBB as of December 31, 2024. Additional information regarding our foreign currency forward contracts is provided in Note 11 of the Notes to Consolidated Financial Statements.
The counterparty to the foreign currency forward contract is a major financial institution which had an investment grade rating of BBB as of December 31, 2025. Additional information regarding our foreign currency forward contract is provided in Note 10 of the Notes to Consolidated Financial Statements and in the Executive Summary of Operations section under the heading "Revenues."
Government-sponsored enterprise obligations 3.46 3.46 3.41 3.35 3.27 State and municipal bonds 3.90 3.97 4.07 4.19 4.30 Corporate debt 3.26 3.25 3.23 3.18 3.12 Asset-backed securities 2.82 2.94 3.03 3.10 3.14 Total fixed maturities, available-for-sale 3.19 3.23 3.25 3.26 3.25 Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including the maintenance of the existing level and composition of fixed income security assets, and should not be relied on as indicative of future results.
Government-sponsored enterprise obligations 3.33 3.40 3.51 3.56 3.55 State and municipal bonds 4.04 4.13 4.25 4.41 4.50 Corporate debt 3.18 3.20 3.18 3.13 3.08 Asset-backed securities 2.81 2.96 3.05 3.15 3.19 Total fixed maturities, available-for-sale 3.13 3.19 3.22 3.24 3.23 Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including the maintenance of the existing level and composition of fixed income security assets, and should not be relied on as indicative of future results.
At December 31, 2024, we had one foreign currency forward contract with a notional amount of €5.0 million ($5.5 million based on December 31, 2024 exchange rates) and a fair value of approximately $0.3 million.
At December 31, 2025, we had one foreign currency forward contract with a notional amount of €113.0 million ($133.2 million based on December 31, 2025 exchange rates) and a fair value of approximately $0.5 million included as a component of other liabilities on the Consolidated Balance Sheet.
Government-sponsored enterprise obligations 3.33 3.40 3.51 3.56 3.55 State and municipal bonds 4.04 4.13 4.25 4.41 4.50 Corporate debt 3.18 3.20 3.18 3.13 3.08 Asset-backed securities 2.81 2.96 3.05 3.15 3.19 Total fixed maturities, available-for-sale 3.13 3.19 3.22 3.24 3.23 89 Table of Contents Interest Rate Shift in Basis Points December 31, 2023 ($ in millions) (200) (100) Current 100 200 Fair Value: Fixed maturities, available-for-sale: U.S.
Government-sponsored enterprise obligations 3.20 3.20 3.48 3.83 3.92 State and municipal bonds 4.15 4.30 4.46 4.62 4.67 Corporate debt 3.38 3.39 3.40 3.35 3.28 Asset-backed securities 2.62 2.79 3.11 3.42 3.60 Total fixed maturities, available-for-sale 3.17 3.24 3.37 3.47 3.50 86 Table of Contents Interest Rate Shift in Basis Points December 31, 2024 ($ in millions) (200) (100) Current 100 200 Fair Value: Fixed maturities, available-for-sale: U.S.
We mitigate foreign currency exchange exposure and manage market risks that arise in the normal course of business by generally matching the currency and duration of associated investments to the corresponding loss reserves as well as utilizing foreign currency forward contracts. Foreign currency forward contracts are typically short-term in nature with a maturity at inception of less than three months.
Historically, we mitigated foreign currency exchange exposure and managed market risks that arise in the normal course of business by matching the currency and duration of associated investments to the corresponding loss reserves. During the first quarter of 2025, we changed our hedging strategy around foreign currency exchange exposures.
Removed
Treasury obligations $ 258 $ 251 $ 244 $ 237 $ 230 U.S.
Added
Treasury obligations $ 231 $ 225 $ 219 $ 214 $ 209 U.S.
Removed
Government-sponsored enterprise obligations 20 19 19 18 18 State and municipal bonds 492 473 454 436 418 Corporate debt 1,865 1,807 1,751 1,697 1,645 Asset-backed securities 1,090 1,058 1,026 995 963 Total fixed maturities, available-for-sale $ 3,725 $ 3,608 $ 3,494 $ 3,383 $ 3,274 Duration: Fixed maturities, available-for-sale: U.S. Treasury obligations 2.95 2.88 2.82 2.76 2.70 U.S.
Added
Government-sponsored enterprise obligations 11 10 10 9 9 State and municipal bonds 469 450 430 411 392 Corporate debt 1,885 1,823 1,762 1,703 1,647 Asset-backed securities 1,342 1,304 1,265 1,223 1,179 Total fixed maturities, available-for-sale $ 3,938 $ 3,812 $ 3,686 $ 3,560 $ 3,436 Duration: Fixed maturities, available-for-sale: U.S. Treasury obligations 2.60 2.55 2.49 2.44 2.40 U.S.
Added
Instead of investing in foreign currency denominated available-for-sale fixed maturities, we began utilizing foreign currency forward contracts. Foreign currency forward contracts are typically short-term in nature with a maturity at inception of less than three months.

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