Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

ProAssurance Corporation (NYSE:PRA)

Q1 2014 Earnings Conference Call

May 7, 2014 10:00 AM ET

Executives

Frank O’Neil – SVP and Chief Communications Officer

Stan Starnes – Chairman, President and CEO

Howard Friedman – President, Healthcare Professional Liability Group; Chief Underwriting Officer and Chief Actuary

Mike Boguski – President, Eastern Insurance

Ned Rand – EVP and CFO

Analysts

Matt Carletti – JMP Securities

Mark Hughes – SunTrust

Amit Kumar – Macquarie

Ryan Barnes – Janney Capital

Bob Farnam – KBW

Operator

Good day and welcome to ProAssurance First Quarter Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Frank O’Neil. Please go ahead.

Frank O’Neil

Thank you, Jessica. Good morning everyone. Thanks for your interest and participation in our call to discuss ProAssurance’s First Quarter 2014 Results. This is our first quarter results reporting and you’ll notice the news release we issued on May 6, 2014 provides unaudited holding company and segment results. We provided the additional detail in the release in advance of our 10-Q which we expect to file tomorrow sometime late in the day May 8th or early on Friday, May 9th. These documents, along with our latest SEC filings, provide you with important information about the significant risks and other factors that could affect our business. Please read and understand these risk factors and be aware that statements we make on this call dealing with projections, estimates and expectations are explicitly identified as forward-looking statements subject to Safe Harbor protections reserved for these statements.

Except as required by law or regulation, we will not undertake and expressly disclaim any obligation to update or alter information we disclosed as part of these forward-looking statements. The content of this call is accurate only on May 7, 2014. If you are reading a transcript, please know that we have not reviewed it for accuracy, thus it may contain errors that could materially alter the intent or meaning of our statements. We will be referencing non-GAAP items in our call today. Please refer to our recent news release for a reconciliation of these non-GAAP numbers to their GAAP counterparts.

We will be discussing consolidated company results and results from four segments today. Specialty, Property and Casualty, or specialty P&C essentially our business prior to January 1st of this year, workers’ compensation which is Eastern, Lloyd’s which reflects the results from our investment in Syndicate 1729 incorporate which is basically our non-insurance operations such as our internal agency our investments and taxes excluding those related to l Lloyd and is well our debt.

Participating in today’s call are Howard Friedman, President of our Healthcare Professional Liability Group; our Chief Financial Officer and Executive Vice President, Ned Rand; Mike Boguski, President of Eastern Alliance Insurance Group; and our Chairman and CEO, Stan Starnes, who will start us off with some opening thoughts. Stan?

Stan Starnes

Thanks Frank, and my thanks to everyone for joining us. With our transition to segment reporting, we are anticipating a number of questions, so we’ll keep our prepared remarks to a minimum. I’ll start by saying we’re pleased with our overall results. We added significantly to the top-line to the addition of Eastern Alliance Insurance Group, which will refer to as Eastern on this call.

But more importantly, Eastern helped us maintain strong bottom-line results. Specialty P&C produced solid results in the pace of a market it continues to be very competitive. And we continue to drawing capital shareholders through share repurchases and dividends all while growing book value per share. Frank?

Frank O’Neil

Thank you, Stan. We’ll start first with Howard Friedman to touch on highlights in Specialty P&C and Lloyd, then we’ll hear from Mike Boguski, on workers’ comp and Ned Rand, will wrap up the discussion with remarks about our corporate segment and our consolidated results, but first Howard Friedman.

Howard Friedman

Thanks Frank. As in previous quarters, I can tell you that this is a highly competitive segment within all the lines of business. In a professional liability lines physician business was approximately $111 million, the decline of about 10%. We did write $5 million of new physician business and premium retention was 87%, leveled with the first quarter of 2013. Average physician renewal rates were one point lower than in 2013.

Premiums for professionals group into our other healthcare providers classification mostly dentist, chiropractors and allied health professionals, were $8.8 million up 1.4% quarter-over-quarter. Premiums in our legal professional liability line also increased to $8.8 million up almost 9% with $1 million of new business and higher pricing on renewals. Premiums in medical technology and life sciences the products liability line in this segment were $7 million a year-over-year increase of 17%.

Note that premiums for healthcare facilities were $10.8 million up almost 6%, but that is mostly due to the timing of renewals. As we noted in the news release, loss trends remain unchanged overall. We make adjustments in our loss assumptions based on periodic actual evaluations, but there were no major adjustments up or down that would signal a different loss environment.

With that said, we did see an increase in the current accident year net loss ratio. This primarily reflects the affect of ceding a greater portion of our total premiums, a slightly higher accrual for internal claims adjustment expenses and recognizing administrative clients’ defense costs on a quarterly basis rather than as part of the fourth quarter reverse review adjustment.

An example of administrative claim would be a billing dispute or regulatory investigation for which we provide limited defense only coverage. Next quarter we’ll reflect the first session of premium from our podiatric business to fulfill commitments we made to Lloyd’s as part of the entry process. That will be $5 million for the quarter and you will see 58% of that premium come back to us through our Syndicate participation. Frank?

Frank O’Neil

Thank you, Howard. We’ll now bring in Mike Boguski, to discuss the workers’ compensation line. Mike?

Mike Boguski

Thanks Frank. All of us at Eastern are extremely pleased to join the ProAssurance organization, the first quarter was a self-start to 2014 for the workers’ compensation segment and one which I believe Eastern made a meaningful contribution to ProAssurance both financially and operationally.

I was particularly pleased with the 2014 first quarter calendar year combined ratio of 97.1% which includes 2.9 percentage points of intangible asset amortization and 4.3 percentage points of one-time expenses primarily related to ProAssurance’s acquisition of Eastern.

Workers’ compensation gross written premium of $65.9 million for the quarter included $12 million of new business. We achieved 82% premium retention in our existing book, a bit lower than last year due to a variety of reasons including economic conditions, competitive pressures and absolute commitment to maintain our underwriting standards.

The company benefited from premium renewal rate increases of 1.7% and approximately $300,000 in audit premium. This is premium recognized as a result of auditing insured payrolls found the expiration of the policy. The company’s calendar year loss ratio was 62.8% and includes a 2.9 percentage point reduction in prior accident year reserves primarily related to our alternative markets business.

We continue to be a short tail rider on workers’ compensation insurance as evidenced by the fact that the company has only 18 open claims in our traditional business, net of reinsurance for accident years 2007 and prior. The company closed 14% of prior open claims during the quarter.

The workers’ compensation expense ratio was 27.1% for the first quarter of 2014 excluding the impact of intangible asset amortization and certain one-time expenses. This was driven by solid growth in net earned premium and prudent expense management.

I would like to briefly review our alternative markets business and structure which is provided through our wholly-owned Cayman Islands subsidiary Eastern Re, a segregated portfolio cell company.

We offer alternative market workers’ compensation solutions to individual companies, groups and associations, which we refer to as segregated portfolio cell participants through the creation of segregated portfolio to cell.

The insurance coverage is underwritten to Eastern’s domestic alternative market business unit and ceded to 100% to the segregated portfolio cells at Eastern Re. The poor assets and associated liabilities of each segregated portfolio cell are solely for the benefit of the segregated portfolio cell participants of that individual cell.

The segregated portfolio structure permits us to provide customers with a turnkey alternative market solution that includes program design fronting, claims administration, risk management, segregated portfolio cell rental, asset management and segregated portfolio management services.

These segregated portfolio cell structure provides participants the opportunity to participate in the financial results derived from the respective segregated portfolio cells recognized as segregated portfolio cell dividend expense.

Eastern is a preferred shareholder in certain of the segregated portfolio cells. For those segregated portfolio cells in which we participate, Eastern shares in the financial results of those cells and recognizes its share of the segregated portfolio cell dividend.

For the first quarter of 2014, we recorded a segregated portfolio cell dividend expense of approximately $1 million which represents the expected dividend payout, less Eastern’s ownership interest to those third-party segregated portfolio cell participants for the first quarter of 2014 financial results.

As both ProAssurance and Eastern expected, there is crossover product interest from healthcare entities in the segregated portfolio cell structure. For these healthcare customers moving their medical professional liability exposure into a segregated portfolio cell provides them a greater control and access to the exceptional claims in this management resources of ProAssurance.

We are also seeing significant crossover interest from agent to represent Eastern in the Specialty P&C lines of ProAssurance. Based on pre-acquisition indications, we expected this to be a benefit of the transaction and we are pleased to see the crossover interest coming to fruition.

In summary, we are pleased with the solid start in 2014 with respect to the company’s strategic business plan, which continues to focus on profitable organic growth initiatives and the ProAssurance Eastern integration. Frank?

Frank O’Neil

Thank you, Mike. We’re going to go to Ned after we circle back to Howard for a couple of more remarks on the Lloyd’s segment.

Howard Friedman

Thanks Frank. Also I wanted to talk about what we’re doing with our Certitude program and CAP MPT.

Frank O’Neil

Okay, great.

Howard Friedman

Our physician line continues to benefit from the Certitude program; we are already in eighth stage with Certitude and are on track to expand it into several more by year end. On the subject of expansion, in the physician line we have now written our first non-podiatric physician business in New England, as we continue expanding where we see opportunities to write profitably. This will add incremental premium in the segment.

Another risk sharing program that we believe holds great potential is our CapAssurance program with CAP MPT based in California. We have now written our first hospital in CapAssurance to go along with policies that target large physician groups and certain non-California opportunities that CAP MPT cannot accommodate.

There is not much to report this quarter on our Lloyd segment. From an operational standpoint Syndicate 1729 began operations on January 1st as expected and is actively writing coverage. We incurred $875,000 in expense related to the Syndicate start up in the quarter and as we mentioned on last quarter’s call, we will be reporting operating results of our 58% participation in the Syndicate on a one quarter lag. Due to the timing of results being reported us.

One exception is that investment results from on deposit of Lloyd’s will be reported on a current quarter basis. These are the funds that secure our capital commitment to the Syndicate. Frank?

Frank O’Neil

Okay. Thank you, Howard. Ned, if you’ll talk about corporate and consolidated results, please.

Ned Rand

Sure, Frank. Given the level of financial detail, we provided in the news release, I’m going to concentrate on providing background information and I’m bringing together the information provided by Howard and Mike. We’re certainly open to hearing from you as to other information and discussion items we can provide to help you understand our segment by segment results.

Starting at the top of our consolidated results, the addition of Eastern to our group effective January 1st of this year was primarily responsible for the 34% increase in gross premiums written to $218 million. Eastern brought $66 million of new premium to the group, $60 million on a net written basis. And our Specialty P&C line saw a year-over-year decline of about $11 million with net written premium of $138 million.

Howard mentioned several programs in which we are sharing risks with important business partners and this is increased ceded premiums within the Specialty P&C segment over time. These shared risk programs accounted for $6.8 million of our ceded premiums in the quarter with partners such as Ascension Health, CAP MPT and one of our larger agent partners. Our valuation of favorable development of past accident years improves a $3.7 million reduction of ceded premiums in the quarter on our swing rated reinsurance treaties, compared to a $4.8 million reduction in first quarter of 2013.

Our net investment result in the quarter was down slightly and there are number of moving parts. Investment income which is largely derived from our fixed income portfolio was down reflecting both lower average balances in the portfolio and the continuation of the low interest rate environment.

Our results from investment and earning consolidated subsidiaries swung from a small loss to a $1.7 million gain, as the number of our project equity funds returned positive results in the quarter.

The year-over-year decline in net realized investment gains is due to the significant increase from stock market valuations in the first quarter of 2013. Consolidated losses in the quarter were $89.5 million reflecting $48.1 million of favorable reserve development for the quarter, as compared to $53 million in the first quarter of last year.

Of that $48.1 million, $46.8 million was for Specialty P&C primarily from accident years 2007 to 2011. The remaining $1.3 million was from workers’ compensation. The loss ratio for the quarter was 52.1% with the Specialty P&C segment reporting a loss ratio of 48.3% and workers’ compensation reporting a loss ratio of 62.8%.

The underwriting expense ratio was up 3 points in the quarter to 30.6%. Mike mentioned the impact that certain one-time charges had on the combined ratio of our workers’ compensation segment and these had a similar impact on the consolidated combined ratio and expense ratio. One point, nine points of the expense ratio in the quarter are attributable to these items related to Eastern.

This includes one-time professional fees, transaction costs, and the amortization of intangibles. The half a point of the expense ratio was due to start up expenses from our Lloyd’s investment.

Let me make a couple of observations on the bottom-line. As we mentioned in our news release net income declined year-over-year due to lower net realized investment gains in this year’s first quarter and the fact that last year we had the non-taxable gain from the acquisition of Medmarc.

Those are those factors are excluded from operating income and the claim there was due to a higher effective tax rate in 2014 and a lower reserve recognition I mentioned a minute ago.

We were active in share repurchase in the quarter, buying approximately $1.8 million shares at a total cost of $84 million. Premium weighted average shares outstanding to $61.251 million shares and on a diluted basis to $61.497 million.

Year-to-date we have repurchased approximately $2 million shares at a total cost of $91 million. That leaves us with a $112 million in our current repurchase authorization. We believe buying at these levels is a sound investment and the future results of the company given the value we see in our shares. At the same time, we recognize that the buyback can have a dampening effect on book value per share which is one of our primary measures of overall success.

At quarter end, book value per share increased to $39.51 and we estimate our share repurchase limited to grow to book value by $0.18. Tangible book value per share was $34.15 at quarter end. Frank?

Frank O’Neil

Thanks Ned. Stan some final words before we take questions.

Stan Starnes

Thanks Frank. First I would like to thank everyone again for joining us on the call. I say that we welcome the challenges that are ahead of us, as we adapt to the world which evolves in healthcare. We continue to believe that ProAssurance is uniquely equipped to respond effectively to all that lies ahead, our product depth and the experience in knowledge of the people behind those products is unmatched. We have the geographic reach and the capital to be wherever and whatever our customers need us to be. And we remain quite excited about the future.

And finally Frank, as heads up to those on the call, there is a strong possibility that I will not be able to participate in the second quarter call. My wife and I will be celebrating our 35th wedding anniversary that week on the Baltic Sea. While I will record something before the call, but just it’s me not permit my live participation. Everyone would be in capable hand with our senior leadership team and that I will be missed.

Questions Frank?

Frank O’Neil

Thanks. Jessica will open the lines now. Thank you.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). And we’ll go first to Matt Carletti with JMP Securities.

Matt Carletti – JMP Securities

Hey, good morning.

Frank O’Neil

Good morning.

Matt Carletti – JMP Securities

Just one – one quick question just on the M&A front, I just hope you could may be update us on in terms of pipeline, how M&A opportunities are looking and more specifically, what – we are what sort of segments, you’re seeing the most opportunity is it the traditional physician segment, should we expect more and kind of more ancillary healthcare areas or med products or where are you seeing the most intrigue?

Stan Starnes

Matt, we see interest from some part of all of those segments. As you know it’s very sporadic and it can’t be planned or scheduled or sequenced in any sense. We look at a lot more than we can conclude our actionable, we’re very, very selective as you know and what we do and where we go. My sense is that in the coming years we’ll see more activity in the medical professional line than other lines. But as I’ve said before, I also think the callers of the very significant evolutionary changes in healthcare, we’ll see significant opportunities for organic growth that we have not seen in the past.

But we’re open to look at – to looking at opportunities in all of our segments and as I say we have an awful lot of things come to us from time-to-time most of them are not the right fit. But we continue to be active in that area.

Matt Carletti – JMP Securities

And then I have another question just to be on Lloyd, I know its early days, it’s been my guess, four gone five months now that it’s been live. But what’s been the – the early reception and I think, year early take on, success?

Howard Friedman

Hi, Matt, it’s Howard. The reception in the one that market to the Syndicate and to Duncan Dale, the lead underwriter of the Syndicate has been very good. He believes that he is getting great opportunities to see a wide range of submissions has written some and has turned down a lot based on the market pricing. But is basically pleased with what you’ve seen in terms of both the variety and the quality of the submission from the brokers. And in terms of the overall plan that include selling through the year and as the Syndicate develops as some of the members who joined in the underwriting side served out their non-compete periods with the increasing amount of activity in the remaining quarters.

Matt Carletti – JMP Securities

Thanks a lot, thanks very much for the answers. And congrats on a very nice start to the year.

Frank O’Neil

Thanks Matt.

Operator

And we’ll go next to Mark Hughes with SunTrust.

Mark Hughes – SunTrust

Thank you very much. Could you talk about the seasonal pattern of gross written premium at Eastern just to general sense of how it does spreads out through the year?

Frank O’Neil

Mike?

Mike Boguski

I’m happy to comment on that. First of all the, January is by far our largest month of the year. So, your first quarter is always pretty strong report roughly $45 million in premium in that month alone. So January and July are two largest months and you open July our book of business is roughly $25 million to $30 million. And then all the other months are fairly consistent as you look at it across the 12 month calendar period.

Mark Hughes – SunTrust

Is that $45 million in January and then the February and March would be more normal run rate?

Mike Boguski

Exactly.

Mark Hughes – SunTrust

Right, okay and then similar distribution in 2Q or 3Q. Could you talk about the – the pricing trends in workers’ comp I see its up about 2%, how is that where do we stand in the cycle is that going to zero soon, is it – is it stabilizing here 2% what do you think?

Mike Boguski

Well, from Eastern’s perspective, I think we continue to really focus on being an individual cap underwriter and that will continue to reflect that strategy. From a pricing perspective 2011 rates were up 2.5%, 2012 3.7%, 2013 4.8% and as you noted the first quarter was roughly 2%. So it is definitely, it’s definitely stabilized, I would say this as compared to those years 2011 to 2013, we had some larger players in the market become less attractive with workers’ comp with some larger players and dumped a couple of billion dollars of premium amount into the marketplace. And then there was some pretty good opportunity, we have seen a reemergence of some of the stock carriers going back into workers’ comp which is a pressure, a pressure point.

We’ve also seen some trends with respect to healthcare providers starting workers’ compensation operations and that particularly in Pennsylvania that’s added some competitive pressure. We believe that from the rate increases that we’re chatting about in the first quarter here are sustainable throughout the remainder of the year.

Mark Hughes – SunTrust

And then are those going to be enough to offset inflation and losses?

Mike Boguski

We’re pretty fortunate on that front. We from a medical inflation perspective, we’ve always believe that the best strategy is to have our claims closed. And as you can see, in our information, we only have 18 open claims 2007 prior in our traditional book of business. And our five year weighted average medical inflation is about 0.6% within our book of business. And again that we also have a really strong stable of medical cost claim and in initiatives surrounding our book of business with preferred, provided networks and pharmaceutical networks and such. So yes, the answer here to question directly the 2% based on our book of business will continue to be adequate for us.

Mark Hughes – SunTrust

Net of those, unusual expenses in the quarter, I guess 1.9 related to the Eastern amortization and one-timers and then half a point for Lloyd’s, if I heard you correctly. How much of those continue into to 2Q and beyond?

Howard Friedman

So the transaction expenses with Eastern more or less over in down west. The amortization will continue and this amortization the number we reference there is amortization related intangible assets from those transaction with Eastern. There are also some amortization of intangible that has been on our books related to our acquisition of API, in fact that’s a number of years ago. And those will continue and I think the life for those is around 7 years, 10 years. So I’ll get you a little more information on that in just a second.

The Lloyd’s we’ll continue have to start up cost around Lloyds as well. But in just a second I’ll give you a little more on the amortization expense. And there will be a little more information when we get our Q filed. On average of 13 years most of the stuff on the amortization and intangibles is 15 years.

Mark Hughes – SunTrust

Right, okay. So of the 1.9 points how much of that was the amortization that will persist?

Howard Friedman

The amortization of expense was 1.3 million.

Mark Hughes – SunTrust

1.3 okay. That’s good. And then is it possible on the future press release with the – the ceded premiums being more significant in terms of the P&L to maybe give some more of that detail in terms of gross premiums are and see the premium that sort of thing?

Howard Friedman

Yes. We’re going to take a look at it, we made a lot of changes to the structure of the press release, one because of the segmentation and also in the recognition that our 10-Q would be coming out not contemporaneous with the press release that it has over the last number of years. And so Frank, I will be looking at kind of the feedback we get on the constant format to that will make some adjustments.

Mike Boguski

[Indiscernible] Mark and we’ll take that into account as we format the next round.

Mark Hughes – SunTrust

Okay. Thank you.

Operator

And we’ll go next to Amit Kumar with Macquarie.

Amit Kumar – Macquarie

Thanks. And good morning, and congrats not only a strong quarter, but getting to that 35th wedding anniversary. Just I guess two quick questions for you. Most of my questions were asked, but I wanted to go back to the initial comment on the cross-selling opportunity and you alluded to that in the opening remarks to, can you sort of, expand that I know we talked about that a lot when the acquisition was happening. Maybe is there some sort of a metrics or in terms of a conversion rate or when you talk about the interest, I mean how should we – sort of think about that going forward?

Frank O’Neil

Howard.

Howard Friedman

Yes. I can talk about it on the Specialty P&C side and Mike have some comments on the workers’ comp side of it. I don’t know if we can talk about the conversion rate certainly not yet, what we do see a fair amount of interest in a number of areas there are existing workers’ comp clients that are in healthcare and we’ve already had significant discussion with two of them about bringing the healthcare professional liability part of their exposure into their existing capital structure that they have in place with Eastern Re.

We also have a number of agents that on the healthcare side that have an interest and being representing Eastern and at least a couple of them, but I am aware I have been appointed by Eastern and that have to fit in with Eastern’s distribution model which is very specialized and focused. So, I think the cross-selling opportunities are there, they are live, but in terms of metrics, we don’t have anything at this point. Mike, I don’t know if you have anything to add on that.

Mike Boguski

Now I agree with Howard’s [indiscernible] I really don’t have any further comments.

Amit Kumar – Macquarie

Okay. I guess the only other question I have, I know we talked briefly about the loss cost trends, can you sort of give out and despite before Howard an update on, I guess the two or three form challenges you might have seen recently? Thanks.

Howard Friedman

In loss cost trends, challenges right now are really just a matter of monitoring what’s going on and potentially in certain states where there have been changes. I think we talked – maybe we didn’t talk last time, remember the timing exactly, but in terms of Florida for example, the Florida Supreme Court recently struck down in part of these non-economic caps that had been put in place, so it struck down the portion of it that applies to your wrongful debt expectation is that if the payment suffering cap, when it comes up for review by the court, the same thing will happen.

So, issue there is predicting what effect that will have, we believe that will increase client frequency just from the perspective of more interest in bringing medical professional liability claims now that the cap is placed in part no longer in place. On a whole though, we’re not seeing much of a change, when you look at our overall book of business, frequency is very stable and severity is at a – also at a low end and stable level.

So the challenge is really, I think are more in terms of interpreting what happens as a result of particular court decisions or potential legislation in given states.

Mike Boguski

None of that was unexpected.

Howard Friedman

No it wasn’t unexpected, just a matter of timing and really now the question is what we’ll see over the next six months to a year.

Amit Kumar – Macquarie

Got it, okay. That’s all I have for now. Thanks for the answers and good luck for the future.

Operator

(Operator Instructions). And we’ll go next to Ryan Barnes with Janney Capital.

Ryan Barnes – Janney Capital

Great, thanks guys. I just had one question on the underlying loss ratio uptick; you know that part of that was from ceding more business. I guess, I think from a quarter share perspective, the underlying ratio – underlying loss ratio should really be affected, I’m guessing its being affected, because it’s a regional issue, maybe some of the states you’re ceding more business, ceding some of the business away as a better profile on the average, is that the right way to think about it?

Howard Friedman

I think there is a few things going on, one is – one or two of them relate more to what I would call sort of the fixed component, we have a increased amount of ceded premium, but the internal cost of handling claims were up slightly, you could say relatively, a small increase, but it’s against a smaller base of ceded premium. Now we still have to perform all those functions, this is the cost internal salaries, benefits, overhead and everything related to our claims department.

We also decided, determined that we should be booking the administrative claims, defense cost as I mentioned, we think that its more appropriate to book that accrual quarterly now than at year end. So that again was a – an item of increase and against a lower premium base, so would add maybe even a little bit more of an effect than you might expect.

I agree with your original comments that, the session of the premium generally should not affect the loss ratio, we do receive ceding commissions, we try to get those ceding commissions to match the cost of the business that we are ceding away. But some of this, sort of fixed cost versus declining net premium drove that loss ratio change.

Ryan Barnes – Janney Capital

Okay. Great. And then shifting to capital – the capital management a little bit, you guys showed the willingness clearly to buy you’re stock above book value, and also willingness you guys had purchased, in the quarter more than your net income. I guess in terms of buying more than net income is that something that you guys are comfortable continuing to do or is that more of a one-time issue it caught up from previous quarters just want to get your thoughts on that thought process?

Howard Friedman

Yes. I think we really do it more from a kind of total capital position rather than what we’ve earned in the given quarter. So, as long as we are comfortable with where our capital position is, where we think our capital position is headed, we’ll continue to buy back stock until we reach a time where we think we are leveraging our capital to its full extent.

Ryan Barnes – Janney Capital

Okay. Great. That’s all I had, thanks guys.

Operator

And our last question comes from Bob Farnam with KBW.

Bob Farnam – KBW

Hi. Thanks and good morning. Actually just one quick question from me, are you going to use the same outside actuary to look at the workers’ comp and the Specialty P&C books or you’re going to basically using the current actuary there?

Howard Friedman

We are changing actuaries at Eastern because, the firm that was doing their actuarial work is our auditor and so they know we can provide that service that service will be provided by a different firm than the firm that does our Specialty P&C work.

Bob Farnam – KBW

All right. So the workers’ comp and the P&C will have two separate actuaries looking at the different books?

Howard Friedman

The workers’ comp will be done by PricewaterhouseCoopers, the Specialty P&C is done by Towers Watson.

Bob Farnam – KBW

Okay. That’s it from me. Thanks.

Operator

And there are no further questions at this time, Mr. O’Neil, I’ll turn the call back over to you for any closing remarks.

Frank O’Neil

Thank you, Jessica. And thanks everyone for being with us. We will speak with again in August.

Operator

This does conclude today’s conference. Thank you for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: ProAssurance's (PRA) CEO Stan Starnes on Q1 2014 Results - Earnings Call Transcript
This Transcript
All Transcripts