ProAssurance Repurchases Shares - Analyst Blog

In order to return value to its shareholders, the board of directors of ProAssurance Corporation (PRA) authorized a new program of $200 million to repurchase ProAssurance's shares or retire outstanding debt, effective immediately.

However, ProAssurance stated that the timing and quantity of the purchases will depend on market conditions and liquidity. Moreover, the share repurchases will be subject to limitations under applicable securities laws and regulations and the rules of the New York Stock Exchange.

In addition to this new authorization, ProAssurance had approximately $11.2 million remaining under a previous share repurchase authorization approved in September 2009. Also, during the third quarter of 2010, ProAssurance repurchased approximately 975,000 shares of its common stock for about $55.3 million.

ProAssurance has been constantly repurchasing shares since April 2007 and has purchased 5.7 million shares at a cost of $297 million and retired $40.9 million of outstanding debt. The strong capital position of ProAssurance has helped in optimizing the shareholder value through a comprehensive capital management strategy that includes initiatives such as prudently repurchasing shares, executing appropriate acquisitions and supporting strategic business expansion.

Recently in September, ProAssurance agreed to acquire American Physicians Service Group, Inc. (AMPH) in an all-cash transaction. The shareholders of American Physicians will receive $32.50 per share in cash and the transaction is expected to close in the fourth quarter of 2010.

ProAssurance will offer superior quality insurance protection for the policyholders of American Physicians. ProAssurance also believes that this will prove to be a strategic expansion that will help grow both the business and top line in 2011.

There are inherent threats associated with the medical professional liability insurance sector as a whole, stemming from price competition, legislative reform, loss cost trends and regulatory challenges. However, we anticipate the results of ProAssurance to reflect benefits of acquisitions, geographic diversity and strong financial position.