MORRISTOWN, N.J., Nov. 6,
2019 /PRNewswire/ -- ProSight Global, Inc. (NYSE: PROS)
(ProSight) today reported results for the third quarter of
2019.
Highlights for the third quarter and year to date of 2019
include:
- Gross written premiums (GWP) for ongoing niches (2)
increased 27.1%, to $224.5 million,
as compared to the third quarter of 2018, with growth in GWP across
all customer segments. The growth in the third quarter
included $8.3 million of GWP from
niches added during 2019.
- The combined ratio was 98.3% for the third quarter of 2019,
compared to 95.8% for the third quarter of 2018.
- There were no catastrophe losses in either the
third quarter of 2019 or 2018.
- The loss and loss adjustment expense (LAE) ratio was 62.8% for
the third quarter of 2019, compared to 58.8% for the third quarter
of 2018. The adjusted loss and LAE ratio (3) was 62.0%
for the third quarter of 2019, compared to 59.2% for the third
quarter of 2018.
- The expense ratio was 35.5% for the third quarter of 2019,
compared to 37.0% for the third quarter of 2019. The adjusted
expense ratio (3) was 36.3% for the third quarter of
2019, compared to 36.6% for the third quarter of 2018.
- Net investment income increased 20.9% to $17.0 million, compared to the third quarter of
2018.
- Fully diluted book value per share grew by 18.7% to
$11.73, for the nine months ended
September 30, 2019.
- The annualized return on equity was 6.8% for the third quarter
of 2019 and 8.9% for the nine months ended September 30, 2019, and the annualized adjusted
operating return on equity (4) was 11.2% for the third
quarter of 2019 and 12.1% for the nine months ended September 30, 2019.
- On July 25, 2019 ProSight's
shares began trading on the New York Stock Exchange (NYSE) under
the ticker symbol PROS.
From ProSight CEO Larry
Hannon:
"I am very proud of the strong results that our employees were
able to produce in the third quarter and throughout 2019.
Supported by our outstanding distribution partners, our ability to
deliver a differentiated experience to our customers resulted in
strong top-line growth across all customer segments and solid
underwriting profitability for the quarter. We believe that
our continued efforts to provide unique, niche specific multi-line
coverages and services will enable us to achieve sustained
profitability over the long-term, allowing us to deliver true value
to our customers and shareholders."
Net income from continuing operations was $8.4
million, or $0.19 per diluted
share, for the third quarter of 2019, compared to $15.6 million, or $0.40 (5) per diluted share, for
the third quarter of 2018. The decrease in net income
resulted from an increase in other expenses of $7.2 million, primarily due to non-recurring
grants of restricted stock units in connection with the initial
public offering. Adjusted operating income
(1) was $13.8
million, or $0.32 per diluted
share for the third quarter of 2019, compared to $15.3 million, or $0.39 (5) per diluted share, for
the third quarter of 2018.
Total ongoing GWP (2) were $224.5
million for the third quarter of 2019, compared to $176.7
million for the third quarter of 2018, an increase of
27.1%. Ongoing GWP (2) growth was driven by strong
growth within the Real Estate (+113.3%), Construction (+21.3%), and
Consumer Services (+18.7%) customer segments. Other GWP
(2) were $2.7 million for
the third quarter of 2019, compared to $24.6
million for the third quarter of 2018, the decrease driven
by the exit from the excess workers compensation niche. GWP
including Other (2), increased 12.9% for the third
quarter of 2019 when compared to the third quarter of 2018.
Underwriting income (1) was $3.3
million for the third quarter of 2019, compared to $7.9
million for the third quarter of 2018. The combined
ratio for the third quarter of 2019 was 98.3%, compared to 95.8%
for the third quarter of 2018. The decrease in underwriting
income (1) was due to an increase in the loss and LAE
ratio, partially offset by a decrease in the expense ratio, as
discussed below:
- The loss and LAE ratio was 62.8% for the third quarter of
2019, compared to 58.8% for the third quarter of 2018.
Excluding the effect of the WAQS, the adjusted loss and LAE ratio
(3) was 62.0% for the third quarter of 2019,
compared to 59.2% for the third quarter of 2018. The adjusted
loss and LAE ratio (3) for the third quarter of
2019 included unfavorable prior period reserve development of
$3.9 million (1.9 percentage points)
due to unfavorable development in general liability and commercial
auto, partially offset by favorable development in workers
compensation and all other. This compares to $1.4 million (0.8 percentage points) of favorable
prior period reserve development in the third quarter of
2018. There were no catastrophe losses in either the
third quarter of 2019 or 2018.
- The expense ratio was 35.5% for the third quarter of 2019,
compared to 37.0% in the third quarter of 2018.
Excluding the effect of the WAQS, the adjusted expense
ratio (3) was 36.3% for the third quarter of
2019 compared to 36.6% in the third quarter of 2018.
Excluding the WAQS, the policy acquisition expense ratio was 23.5%
in the third quarter of 2019, compared to 23.2% in the third
quarter of 2018 and general & administrative expense ratio was
12.8% in the third quarter of 2019 compared to 13.4% in the third
quarter of 2018.
Net investment income increased by 20.9% to $17.0
million for the third quarter of 2019, from $14.0 million
for the third quarter of 2018. The increase in net investment
income was driven by an increase in the size of the investment
portfolio. Total invested assets at book value were
$2.1 billion at September 30, 2019, growth of 10.5%,
from $1.9 billion at December 31, 2018. The
net annualized yield on total cash and investments was 3.3% for the
third quarter of 2019 and 3.2% for the third quarter of 2018.
Realized investment gains for the third quarter of 2019 were
$0.2 million, compared to realized
investment gains of $0.4 million for
the third quarter of 2018.
Total stockholders' equity was $530.6 million as of
September 30, 2019, compared to
$389.8 million as of December 31, 2018. Tangible stockholders'
equity (6) was $501.4 million as of September 30, 2019, compared $360.6 million as of December 31, 2018. The increases in total
stockholders' equity and tangible stockholders' equity
(6) were driven by net unrealized gains on investment
securities of $56.2 million, proceeds
from common stock sold in initial public offering of $51.6 million, and net income of $30.4 million for the nine months ended
September 30, 2019.
Fully diluted book value per share grew by 18.7% to
$11.73 at September 30, 2019, compared
to $9.88 (5) at December 31, 2018. Fully diluted tangible book
value per share (6) increased by 21.3% to $11.09 at September 30,
2019, compared to $9.14
(5) at December 31,
2018.
(1). Adjusted
operating income and Underwriting Income are non-GAAP measures. See
"Reconciliation of Non-GAAP Measures".
|
(2). Total GWP for
the third quarter of 2019 including Other were $227.2 million.
Total GWP for the nine months ended September 30, 2019 including
Other were $718.1 million. Other includes GWP from certain niches
that are no longer part of our ongoing business. All GWP from
exited niches are included in "Other" which consists of (i) primary
and excess workers' compensation coverage for Self-Insured Groups
(ii) niches exited prior to 2018, many with a concentration in
commercial auto, (iii) fronting arrangements in which all premium
written is ceded to a third party, (iv) participation in industry
pools, and (v) emerging new business customer segments.
|
(3). Adjusted loss
and LAE ratio and adjusted expense ratio are non-GAAP financial
measures. We define adjusted loss and LAE ratio and adjusted
expense ratio as the corresponding ratio (calculated in accordance
with GAAP) excluding the effects of the WAQS. We use these adjusted
ratios as internal performance measures in the management of our
operations because we believe they give our management and other
users of our financial information useful insight into our results
of operations and our underlying business performance. Our adjusted
loss and LAE ratio and adjusted expense ratio should not be viewed
as substitutes for our loss and LAE ratio, expense ratio and
combined ratio, respectively.
|
(4). Adjusted
operating return on equity is a non-GAAP measure
Adjusted operating return on equity is adjusted operating income
expressed on an annualized basis as a percentage of average
beginning and ending stockholders' equity during the
period.
|
(5). All per share
amounts have been restated to give effect to the reorganization of
ProSight on July 25, 2019. See "Reorganization".
|
(6). Tangible
stockholders' equity and fully diluted tangible book value per
share are non-GAAP measures. Tangible stockholders' equity is total
common stockholders' equity excluding the value of goodwill and
other intangible assets. Fully diluted tangible book value
per share is total common stockholders' equity excluding the
after-tax value of goodwill and other intangible assets divided by
the number of common shares outstanding, unvested
restricted shares, and vested not issued shares. See
"Reconciliation of Non-GAAP Measures".
|
Conference Call
As previously announced, on Thursday,
November 7, 2019 at 10:00 a.m. EST, ProSight
senior management will host a conference call to discuss third
quarter 2019 financial results. The call will be available via
webcast at https://investors.prosightspecialty.com/ or by
dialing (866) 497-6416 (within the United States) or (825) 312-2248
(international), using the passcode 5050539. A replay of the
call will be available at 1:00 p.m.
on Thursday, November 7, 2019, until 11:59 p.m. Thursday,
November 14, 2019, and can be accessed by dialing (800) 585-8367 or
(416) 621-4642, using the passcode 5050539. The webcast will be
available one hour after the call concludes and will be archived on
ProSight's website for one year.
About ProSight
Founded in 2009 and headquartered in Morristown, New Jersey, ProSight Global, Inc.
is an innovative property and casualty insurance company that
designs unique insurance solutions to help customers improve their
business and realize value from their insurance purchasing
decision. The company focuses on select niche industries, deploying
differentiated underwriting and claims expertise with the goal of
enhancing each customer's operating performance. ProSight's
products are sold through a limited and select group of retail and
wholesale distribution partners. Each of ProSight's regulated
insurance company subsidiaries are rated "A-" (Excellent) by A.M.
Best. ProSight's shares trade on the New York Stock Exchange (NYSE)
under the ticker symbol PROS. To learn more about ProSight
visit www.prosightspecialty.com.
Forward-Looking Statements
This release contains forward-looking statements.
Forward-looking statements include statements relating to future
developments in ProSight business or expectations for ProSight's
future financial performance and any statement not involving a
historical fact. Forward-looking statements use words such as
"anticipate," "believe," "estimate," "expect," "intend," "plan,"
"should," "seek," "continue," and other words and terms of similar
meaning. ProSight's management believes that these
forward-looking statements are reasonable as of the time
made. However, caution should be taken not to place undue
reliance on any such forward-looking statements because such
statements speak only as of the date when made. Except as
required by law, ProSight undertakes no obligation to publicly
update any forward-looking statements, whether as a result of new
information, future events or otherwise. Forward-looking
statements are subject to known and unknown risks and
uncertainties, many of which may be beyond our control. ProSight
cautions you that forward-looking statements are not guarantees of
future performance or outcomes and that actual performance and
outcomes may differ materially from those made in or suggested by
the forward-looking statements contained in this release. For
a discussion of some of the risks and important factors that could
affect ProSight's future results and financial condition, see our
filings with the U.S. Securities and Exchange Commission (SEC)
filings, including, but not limited to, the risks and uncertainties
included under the captions "Risk Factors" in our ProSight's
Quarterly Report on Form 10-Q for the period ended September 30, 2019 filed on November 6, 2019. References to "we," "us,"
"our," the "Company" and "ProSight", refer to ProSight Global, Inc.
and its consolidated subsidiaries.
Reorganization
ProSight was incorporated in Delaware in 2010. Prior to July 25, 2019, ProSight was a wholly-owned
subsidiary of ProSight Global Holdings Limited ("PGHL"), a
Bermuda holding company.
Effective July 25, 2019, PGHL merged
with and into ProSight, with ProSight surviving the merger. As a
result of the merger, all shares of PGHL then outstanding were
converted into the right to receive, without interest, 6.46 shares
of ProSight for each share of PGHL. The historical share and
per share figures contained in this release relating to periods
prior to and including June 30,
2019 have been restated to give effect to this conversion,
including reclassifying an amount equal to the change in value of
common stock to additional paid-in capital, as of the stated period
or date. Further details regarding this merger and related
reorganization transactions are included in ProSight' s Quarterly
Report on Form 10-Q for the period ended September 30, 2019 filed on November 6, 2019
Non-GAAP Financial Measures
In presenting ProSight Global, Inc.'s results, management
has included financial measures that are not calculated under
standards or rules that comprise of U.S. generally accepted
accounting principles (GAAP). Such measures, including underwriting
income, adjusted operating income, adjusted operating return on
equity, adjusted loss and LAE excluding WAQS, adjusted expense
ratio excluding WAQS, adjusted combined ratio excluding WAQS, and
tangible stockholders' equity are referred to as non-GAAP measures.
These non-GAAP measures may be defined or calculated differently by
other companies. These measures should not be viewed as a
substitute for those measures determined in accordance with
GAAP. Reconciliations of these non-GAAP financial measures to
the most comparable GAAP figures are included at the end of this
press release.
|
|
|
|
Media:
|
|
|
Institutional
Investors:
|
Joe
Hathaway
|
|
|
Dean
Evans
|
JHathaway@prosightspecialty.com
|
|
|
DEvans@prosightspecialty.com
|
973.532.1706
|
|
|
973.532.1440
|
PROSIGHT GLOBAL,
INC.
CONSOLIDATED
BALANCE SHEETS
($ in thousands,
except per share data)
|
|
|
|
|
(Unaudited)
|
|
(As Restated)
(1)
|
|
|
September 30
|
|
December 31
|
|
|
2019
|
|
2018
|
Assets
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
Fixed income
securities, available-for-sale at fair value (amortized cost
$1,985,250 in 2019 and $1,729,755 in 2018)
|
|
$
|
2,025,955
|
|
$
|
1,693,382
|
Commercial levered
loans at amortized cost (fair value $14,323 in 2019 and $15,858 in
2018)
|
|
|
14,601
|
|
|
16,915
|
Limited partnerships
and limited liability companies at fair value (cost $61,015 in 2019
and $51,903 in 2018)
|
|
|
65,322
|
|
|
53,432
|
Short-term
investments
|
|
|
14,398
|
|
|
36,661
|
Total
investments
|
|
|
2,120,276
|
|
|
1,800,390
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
24,577
|
|
|
22,279
|
Restricted
cash
|
|
|
7,451
|
|
|
7,621
|
Accrued investment
income
|
|
|
13,452
|
|
|
12,279
|
Premiums and other
receivables, net
|
|
|
179,920
|
|
|
200,347
|
Receivable from
reinsurers on paid losses
|
|
|
5,849
|
|
|
12,428
|
Reinsurance
receivables on unpaid losses
|
|
|
213,977
|
|
|
185,295
|
Deferred policy
acquisition costs
|
|
|
103,542
|
|
|
93,613
|
Prepaid reinsurance
premiums
|
|
|
47,285
|
|
|
44,626
|
Net deferred income
taxes
|
|
|
9,361
|
|
|
33,239
|
Goodwill and net
intangible assets
|
|
|
29,196
|
|
|
29,219
|
Fixed assets and
capitalized software, net
|
|
|
37,679
|
|
|
39,001
|
Funds withheld
related to sale of affiliate
|
|
|
19,566
|
|
|
19,397
|
Other
assets
|
|
|
31,255
|
|
|
57,653
|
Assets of
discontinued operations
|
|
|
20,098
|
|
|
19,719
|
Total
assets
|
|
$
|
2,863,484
|
|
$
|
2,577,106
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Reserve for unpaid
losses and loss adjustment expenses
|
|
$
|
1,515,224
|
|
$
|
1,396,812
|
Reserve for unearned
premiums
|
|
|
472,761
|
|
|
435,933
|
Ceded reinsurance
payable
|
|
|
4,099
|
|
|
13,281
|
Notes payable, net of
debt issuance costs
|
|
|
164,609
|
|
|
182,355
|
Funds held under
reinsurance agreements
|
|
|
68,243
|
|
|
63,165
|
Other
liabilities
|
|
|
81,029
|
|
|
73,474
|
Liabilities of
discontinued operations
|
|
|
26,936
|
|
|
22,256
|
Total
liabilities
|
|
|
2,332,901
|
|
|
2,187,276
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Preferred stock,
$0.01 par value; 50,000,000 shares authorized; no shares issued or
outstanding
|
|
|
—
|
|
|
—
|
Common stock, $0.01
par value; 200,000,000 shares authorized; 43,034,220 and 38,864,289
shares issued and
43,021,300 and 38,851,369 shares outstanding in 2019 and 2018,
respectively
|
|
|
430
|
|
|
389
|
Paid-in
capital
|
|
|
661,357
|
|
|
607,260
|
Accumulated other
comprehensive income (loss)
|
|
|
33,930
|
|
|
(22,315)
|
Retained
deficit
|
|
|
(164,934)
|
|
|
(195,304)
|
Treasury shares - at
cost (12,920 shares)
|
|
|
(200)
|
|
|
(200)
|
Total
stockholders' equity
|
|
|
530,583
|
|
|
389,830
|
Total liabilities
and stockholders' equity
|
|
$
|
2,863,484
|
|
$
|
2,577,106
|
|
(1). All share
amounts have been restated to give effect to the reorganization of
ProSight on July 25, 2019. See "Reorganization".
|
PROSIGHT GLOBAL,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
($ in
thousands)
|
|
|
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Written
Premiums
|
|
$
|
227,196
|
|
$
|
201,296
|
|
$
|
718,066
|
|
$
|
673,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
|
|
202,455
|
|
|
187,108
|
|
|
600,543
|
|
|
537,687
|
|
Net investment
income
|
|
|
16,974
|
|
|
14,044
|
|
|
51,530
|
|
|
43,301
|
|
Realized investment
gains, net
|
|
|
245
|
|
|
406
|
|
|
495
|
|
|
805
|
|
Other income
|
|
|
196
|
|
|
168
|
|
|
386
|
|
|
504
|
|
Total
revenues
|
|
|
219,870
|
|
|
201,726
|
|
|
652,954
|
|
|
582,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses and loss
adjustment expenses incurred
|
|
|
127,196
|
|
|
109,976
|
|
|
372,644
|
|
|
321,763
|
|
Policy acquisition
expenses
|
|
|
45,953
|
|
|
44,195
|
|
|
138,059
|
|
|
125,819
|
|
General and
administrative expenses
|
|
|
25,967
|
|
|
25,051
|
|
|
79,189
|
|
|
75,153
|
|
Interest
expense
|
|
|
3,216
|
|
|
3,092
|
|
|
9,725
|
|
|
9,207
|
|
Other
expense
|
|
|
7,162
|
|
|
—
|
|
|
14,332
|
|
|
—
|
|
Total
expenses
|
|
|
209,494
|
|
|
182,314
|
|
|
613,949
|
|
|
531,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
|
|
10,376
|
|
|
19,412
|
|
|
39,005
|
|
|
50,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
146
|
|
|
184
|
|
|
369
|
|
|
(220)
|
|
Deferred
|
|
|
1,869
|
|
|
3,625
|
|
|
7,884
|
|
|
10,310
|
|
Total income tax
expense
|
|
|
2,015
|
|
|
3,809
|
|
|
8,253
|
|
|
10,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
|
|
8,361
|
|
|
15,603
|
|
|
30,752
|
|
|
40,265
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income from
discontinued operations
|
|
|
(49)
|
|
|
(429)
|
|
|
(382)
|
|
|
158
|
|
Net
income
|
|
$
|
8,312
|
|
$
|
15,174
|
|
$
|
30,370
|
|
$
|
40,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on equity
(1)
|
|
|
6.8
|
%
|
|
16.6
|
%
|
|
8.9
|
%
|
|
14.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
income (2)
|
|
$
|
13,825
|
|
$
|
15,282
|
|
$
|
41,683
|
|
$
|
39,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
return on equity (3)
|
|
|
11.2
|
%
|
|
16.2
|
%
|
|
12.1
|
%
|
|
13.9
|
%
|
|
(1). Return on equity
is net income expressed on an annualized basis as a percentage of
average beginning and ending stockholders' equity during the
period.
|
(2). Adjusted
operating income is a non-GAAP measure. See "Reconciliation of
Non-GAAP Measures".
|
(3). Adjusted
operating return on equity is adjusted operating income expressed
on an annualized basis as a percentage of average beginning and
ending stockholders' equity during the period.
|
PROSIGHT GLOBAL,
INC.
SUPPLEMENTARY
UNDERWRITING INFORMATION
(1) (UNAUDITED)
($ in
thousands)
|
|
|
|
|
|
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross written
premiums
|
|
$
|
227,196
|
|
$
|
201,296
|
|
$
|
718,066
|
|
$
|
673,271
|
|
Net written
premiums
|
|
|
209,474
|
|
|
179,516
|
|
|
629,944
|
|
|
653,903
|
|
Net premiums
earned
|
|
|
202,455
|
|
|
187,108
|
|
|
600,543
|
|
|
537,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses and
LAE
|
|
|
127,196
|
|
|
109,976
|
|
|
372,644
|
|
|
321,763
|
|
Catastrophe loss and
LAE
|
|
|
—
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
Unfavorable/(favorable)
prior period reserve
development
|
|
|
5,495
|
|
|
(1,442)
|
|
|
2,367
|
|
|
(4,047)
|
|
Underwriting,
acquisition, and insurance expenses
|
|
|
71,920
|
|
|
69,246
|
|
|
217,248
|
|
|
200,972
|
|
Policy acquisition
expenses
|
|
|
45,953
|
|
|
44,195
|
|
|
138,059
|
|
|
125,819
|
|
General and
administrative expenses
|
|
|
25,967
|
|
|
25,051
|
|
|
79,189
|
|
|
75,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting
income
|
|
$
|
3,339
|
|
$
|
7,886
|
|
$
|
10,651
|
|
$
|
14,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ex-Cat current accident
year loss and LAE ratio
|
|
|
60.1
|
%
|
|
59.5
|
%
|
|
61.2
|
%
|
|
60.6
|
%
|
Catastrophe loss and
LAE ratio
|
|
|
—
|
%
|
|
—
|
%
|
|
0.5
|
%
|
|
—
|
%
|
Unfavorable/(favorable)
prior period reserve
development ratio
|
|
|
2.7
|
%
|
|
(0.7)
|
%
|
|
0.4
|
%
|
|
(0.8)
|
%
|
Loss and LAE
ratio
|
|
|
62.8
|
%
|
|
58.8
|
%
|
|
62.1
|
%
|
|
59.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy acquisition
expense ratio
|
|
|
22.7
|
%
|
|
23.6
|
%
|
|
23.0
|
%
|
|
23.4
|
%
|
General and
administrative expense ratio
|
|
|
12.8
|
%
|
|
13.4
|
%
|
|
13.2
|
%
|
|
14.0
|
%
|
Expense
ratio
|
|
|
35.5
|
%
|
|
37.0
|
%
|
|
36.2
|
%
|
|
37.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
ratio
|
|
|
98.3
|
%
|
|
95.8
|
%
|
|
98.3
|
%
|
|
97.2
|
%
|
|
(1). The
Supplementary Underwriting Information includes the impact of "the
WAQS." See "Factors Affecting Our Results of Operations" on the
following page excluding the impact of "the WAQS."
|
PROSIGHT GLOBAL,
INC.
FACTORS AFFECTING
THE RESULTS OF OPERATIONS (WAQS) (UNAUDITED)
($ in
thousands)
|
|
|
|
|
Nine Months Ended
September 30, 2019
|
|
Nine Months Ended
September 30, 2018
|
|
|
|
Including
|
|
Effect of
|
|
Excluding
|
|
Including
|
|
Effect of
|
|
Excluding
|
|
($ in
thousands)
|
|
WAQS
|
|
WAQS
|
|
WAQS
|
|
WAQS
|
|
WAQS
|
|
WAQS
|
|
Gross written
premiums
|
|
$
|
718,066
|
|
$
|
—
|
|
$
|
718,066
|
|
$
|
673,271
|
|
$
|
—
|
|
$
|
673,271
|
|
Ceded written
premiums
|
|
|
(88,122)
|
|
|
(3)
|
|
|
(88,119)
|
|
|
(19,368)
|
|
|
68,745
|
|
|
(88,113)
|
|
Net written
premiums
|
|
$
|
629,944
|
|
$
|
(3)
|
|
$
|
629,947
|
|
$
|
653,903
|
|
$
|
68,745
|
|
$
|
585,158
|
|
Net
retention(1)
|
|
|
87.7
|
%
|
|
—
|
|
|
87.7
|
%
|
|
97.1
|
%
|
|
—
|
|
|
86.9
|
%
|
Net earned
premiums
|
|
$
|
600,543
|
|
$
|
3
|
|
$
|
600,540
|
|
$
|
537,687
|
|
$
|
(14,600)
|
|
$
|
552,287
|
|
Losses and
LAE
|
|
|
372,644
|
|
|
3,839
|
|
|
368,805
|
|
|
321,763
|
|
|
(9,422)
|
|
|
331,185
|
|
Underwriting,
acquisition and insurance expenses
|
|
|
217,248
|
|
|
(3,837)
|
|
|
221,085
|
|
|
200,972
|
|
|
(4,083)
|
|
|
205,055
|
|
Underwriting income
(loss)(2)
|
|
$
|
10,651
|
|
$
|
1
|
|
$
|
10,650
|
|
$
|
14,952
|
|
$
|
(1,095)
|
|
$
|
16,047
|
|
Loss and LAE
ratio
|
|
|
62.1
|
%
|
|
—
|
|
|
—
|
|
|
59.8
|
%
|
|
64.5
|
%
|
|
—
|
|
Expense
ratio
|
|
|
36.2
|
%
|
|
—
|
|
|
—
|
|
|
37.4
|
%
|
|
28.0
|
%
|
|
—
|
|
Combined
ratio
|
|
|
98.3
|
%
|
|
—
|
|
|
—
|
|
|
97.2
|
%
|
|
92.5
|
%
|
|
—
|
|
Adjusted loss and LAE
ratio(3)
|
|
|
—
|
|
|
—
|
|
|
61.4
|
%
|
|
—
|
|
|
—
|
|
|
60.0
|
%
|
Adjusted expense
ratio(3)
|
|
|
—
|
|
|
—
|
|
|
36.8
|
%
|
|
—
|
|
|
—
|
|
|
37.1
|
%
|
Adjusted combined
ratio(3)
|
|
|
—
|
|
|
—
|
|
|
98.2
|
%
|
|
—
|
|
|
—
|
|
|
97.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of prior year
development
unfavorable/(favorable) (4)
|
|
|
2,367
|
|
|
3,839
|
|
|
(1,472)
|
|
|
(4,047)
|
|
|
—
|
|
|
(4,047)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2019
|
|
Three Months Ended
September 30, 2018
|
|
|
|
Including
|
|
Effect of
|
|
Excluding
|
|
Including
|
|
Effect of
|
|
Excluding
|
|
($ in
thousands)
|
|
WAQS
|
|
WAQS
|
|
WAQS
|
|
WAQS
|
|
WAQS
|
|
WAQS
|
|
Gross written
premiums
|
|
$
|
227,196
|
|
$
|
—
|
|
$
|
227,196
|
|
$
|
201,296
|
|
$
|
—
|
|
$
|
201,296
|
|
Ceded written
premiums
|
|
|
(17,722)
|
|
|
(6)
|
|
|
(17,716)
|
|
|
(21,780)
|
|
|
(55)
|
|
|
(21,725)
|
|
Net written
premiums
|
|
$
|
209,474
|
|
$
|
(6)
|
|
$
|
209,480
|
|
$
|
179,516
|
|
$
|
(55)
|
|
$
|
179,571
|
|
Net
retention(1)
|
|
|
92.2
|
%
|
|
—
|
|
|
92.2
|
%
|
|
89.2
|
%
|
|
—
|
|
|
89.2
|
%
|
Net earned
premiums
|
|
$
|
202,455
|
|
$
|
—
|
|
$
|
202,455
|
|
$
|
187,108
|
|
$
|
(56)
|
|
$
|
187,164
|
|
Losses and
LAE
|
|
|
127,196
|
|
|
1,632
|
|
|
125,564
|
|
|
109,976
|
|
|
(874)
|
|
|
110,850
|
|
Underwriting,
acquisition and insurance expenses
|
|
|
71,920
|
|
|
(1,632)
|
|
|
73,552
|
|
|
69,246
|
|
|
823
|
|
|
68,423
|
|
Underwriting income
(loss)(2)
|
|
$
|
3,339
|
|
$
|
—
|
|
$
|
3,339
|
|
$
|
7,886
|
|
$
|
(5)
|
|
$
|
7,891
|
|
Loss and LAE
ratio
|
|
|
62.8
|
%
|
|
—
|
|
|
—
|
|
|
58.8
|
%
|
|
—
|
%
|
|
—
|
|
Expense
ratio
|
|
|
35.5
|
%
|
|
—
|
|
|
—
|
|
|
37.0
|
%
|
|
—
|
%
|
|
—
|
|
Combined
ratio
|
|
|
98.3
|
%
|
|
—
|
|
|
—
|
|
|
95.8
|
%
|
|
—
|
%
|
|
—
|
|
Adjusted loss and LAE
ratio(3)
|
|
|
—
|
|
|
—
|
|
|
62.0
|
%
|
|
—
|
|
|
—
|
|
|
59.2
|
%
|
Adjusted expense
ratio(3)
|
|
|
—
|
|
|
—
|
|
|
36.3
|
%
|
|
—
|
|
|
—
|
|
|
36.6
|
%
|
Adjusted combined
ratio(3)
|
|
|
—
|
|
|
—
|
|
|
98.3
|
%
|
|
—
|
|
|
—
|
|
|
95.8
|
%
|
|
(1). Net retention is
the ratio of net written premiums to gross written
premiums.
|
(2). Underwriting
income is a non-GAAP measure. See "Reconciliation of Non-GAAP
Financial Measures"
|
(3). Adjusted loss
and LAE ratio, adjusted expense ratio and adjusted combined ratio
are non-GAAP financial measures. We define adjusted loss and LAE
ratio, adjusted expense ratio and adjusted combined ratio as the
corresponding ratio (calculated in accordance with GAAP) excluding
the effects of the WAQS. We use these adjusted ratios as internal
performance measures in the management of our operations because we
believe they give our management and other users of our financial
information useful insight into our results of operations and our
underlying business performance. Our adjusted loss and LAE ratio,
adjusted expense ratio and adjusted combined ratio should not be
viewed as substitutes for our loss and LAE ratio, expense ratio and
combined ratio, respectively.
|
(4). The effect of
prior year development is included within losses and LAE.
|
PROSIGHT GLOBAL,
INC.
SHARE AND PER
SHARE INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(As Restated)
|
|
|
|
|
|
|
|
|
|
September 30
|
|
December 31
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
(4)
|
|
Shares
Outstanding
|
|
|
|
|
|
|
|
|
43,021,300
|
|
|
38,851,369
|
|
Fully Diluted Shares
Outstanding
|
|
|
|
|
|
|
|
|
45,224,899
|
|
|
39,454,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Value Per
Share(2)
|
|
|
|
|
|
|
|
$
|
12.33
|
|
$
|
10.03
|
|
Book Value Per Share
(Fully Diluted)(2)
|
|
|
|
|
|
|
|
$
|
11.73
|
|
$
|
9.88
|
|
Tangible Book Value
Per Share(2)
|
|
|
|
|
|
|
|
$
|
11.65
|
|
$
|
9.28
|
|
Tangible Book Value
Per Share (Fully Diluted)(2)
|
|
|
|
|
|
|
|
$
|
11.09
|
|
$
|
9.14
|
|
|
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Weighted Average
Basic Shares Outstanding
|
|
|
42,642
|
|
|
38,743
|
|
|
40,120
|
|
|
38,743
|
|
Weighted Average
Diluted Shares Outstanding
|
|
|
43,060
|
|
|
39,441
|
|
|
40,661
|
|
|
39,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share
- Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
|
$
|
0.20
|
|
$
|
0.40
|
|
$
|
0.77
|
|
$
|
1.04
|
|
Adjusted operating
income(1)
|
|
$
|
0.32
|
|
$
|
0.39
|
|
$
|
1.04
|
|
$
|
1.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share
- Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
|
$
|
0.19
|
|
$
|
0.40
|
|
$
|
0.76
|
|
$
|
1.02
|
|
Adjusted operating
income(1)
|
|
$
|
0.32
|
|
$
|
0.39
|
|
$
|
1.03
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
return on equity (ROE)(3)
|
|
|
11.2
|
%
|
|
16.2
|
%
|
|
12.1
|
%
|
|
13.9
|
%
|
Adjusted operating
return on tangible equity (ROTE)(3)
|
|
|
11.9
|
%
|
|
17.6
|
%
|
|
12.9
|
%
|
|
15.1
|
%
|
|
(1). Adjusted
operating income is a non-GAAP measure. See "Reconciliation of
Non-GAAP Financial Measures".
|
(2). Book value per
share is total common stockholders' equity divided by the number of
common shares outstanding. Tangible book value per share is total
common stockholders' equity excluding value of goodwill and other
intangible assets divided by the number of common shares
outstanding. Fully diluted book value per share is total
common stockholders' equity divided by the number of common shares
outstanding, unvested restricted shares, and vested not issued
shares. Fully diluted tangible book value per share is total
common stockholders' equity excluding the after-tax value of
goodwill and other intangible assets divided by the number of
common shares outstanding, unvested restricted shares,
and vested not issued shares.
|
(3). Adjusted
operating return on equity is the annualized value of adjusted
operating income divided by average total stockholders' equity for
the two most recent sequential periods. Adjusted operating
return on tangible equity is the annualized value of adjusted
operating income divided by average total stockholders' equity
excluding goodwill and other intangible assets for the two most
recent sequential periods.
|
(4). All share and
per share amounts have been restated to give effect to the
reorganization of ProSight on July 25, 2019.
|
PROSIGHT GLOBAL,
INC.
GROSS WRITTEN
PREMIUM BY CUSTOMER SEGMENT (UNAUDITED)
($ in
millions)
|
|
|
|
|
Three Months Ended
September 30
|
|
|
|
Nine Months Ended
September 30
|
|
|
|
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
|
Construction
|
|
$
|
27.3
|
|
$
|
22.5
|
|
21.3
|
%
|
$
|
83.1
|
|
$
|
72.0
|
|
15.4
|
%
|
Consumer
Services
|
|
|
35.5
|
|
|
29.9
|
|
18.7
|
%
|
|
100.9
|
|
|
80.1
|
|
26.0
|
%
|
Marine and
Energy
|
|
|
18.1
|
|
|
15.4
|
|
17.5
|
%
|
|
54.9
|
|
|
49.6
|
|
10.7
|
%
|
Media and
Entertainment
|
|
|
36.8
|
|
|
31.6
|
|
16.5
|
%
|
|
113.6
|
|
|
109.8
|
|
3.5
|
%
|
Professional
Services
|
|
|
27.0
|
|
|
24.7
|
|
9.3
|
%
|
|
85.7
|
|
|
82.3
|
|
4.1
|
%
|
Real
Estate
|
|
|
41.6
|
|
|
19.5
|
|
113.3
|
%
|
|
116.9
|
|
|
91.5
|
|
27.8
|
%
|
Transportation
|
|
|
38.2
|
|
|
33.1
|
|
15.4
|
%
|
|
95.7
|
|
|
83.5
|
|
14.6
|
%
|
Customer Segments
Subtotal
|
|
|
224.5
|
|
|
176.7
|
|
27.1
|
%
|
|
650.8
|
|
|
568.8
|
|
14.4
|
%
|
Other
|
|
|
2.7
|
|
|
24.6
|
|
(89.0)
|
%
|
|
67.3
|
|
|
104.5
|
|
(35.6)
|
%
|
Total
GWP
|
|
$
|
227.2
|
|
$
|
201.3
|
|
12.9
|
%
|
$
|
718.1
|
|
$
|
673.3
|
|
6.7
|
%
|
Reconciliation of
Non-GAAP Financial Measures
|
|
(1). Underwriting
income is a non-GAAP financial measure that we believe is useful in
evaluating our underwriting performance without regard to
investment income. Underwriting income represents the pre-tax
profitability of our insurance operations and is derived by
subtracting losses and LAE and underwriting, acquisition and
insurance expenses from net earned premiums. We use underwriting
income as an internal performance measure in the management of our
operations because we believe it gives us and users of our
financial information useful insight into our results of operations
and our underlying business performance. Underwriting income should
not be considered in isolation or viewed as a substitute for net
income calculated in accordance with GAAP, and other companies may
calculate underwriting income differently.
|
|
Net income for the
three and nine months ended September 30, 2019 and 2018 reconciles
to underwriting income as follows:
|
|
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
($ in
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income from
continuing operations
|
|
$
|
8,361
|
|
$
|
15,603
|
|
$
|
30,752
|
|
$
|
40,265
|
Income tax
expense
|
|
|
2,015
|
|
|
3,809
|
|
|
8,253
|
|
|
10,090
|
Income before
taxes
|
|
|
10,376
|
|
|
19,412
|
|
|
39,005
|
|
|
50,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
16,974
|
|
|
14,044
|
|
|
51,530
|
|
|
43,301
|
Net investment
gains
|
|
|
245
|
|
|
406
|
|
|
495
|
|
|
805
|
Interest and other
expense, net
|
|
|
10,182
|
|
|
2,924
|
|
|
23,671
|
|
|
8,703
|
Underwriting
income
|
|
$
|
3,339
|
|
$
|
7,886
|
|
$
|
10,651
|
|
$
|
14,952
|
|
(2). Adjusted
operating income is a non-GAAP financial measure that we use as an
internal performance measure in the management of our operations
because we believe it gives our management and other users of our
financial information useful insight into our results of operations
and underlying business performance, by excluding items that are
not part of our underlying profitability drivers or likely to
re-occur in the foreseeable future. Adjusted operating income
should not be considered in isolation or viewed as a substitute for
our net income calculated in accordance with GAAP. Other companies
may calculate adjusted operating income differently.
|
|
Adjusted operating
income for the three and nine months ended September 30, 2019 and
2018 reconciles to net income as follows:
|
|
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
($ in
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income from
continuing operations
|
|
$
|
8,361
|
|
$
|
15,603
|
|
$
|
30,752
|
|
$
|
40,265
|
Income tax
expense
|
|
|
2,015
|
|
|
3,809
|
|
|
8,253
|
|
|
10,090
|
Income before
taxes
|
|
|
10,376
|
|
|
19,412
|
|
|
39,005
|
|
|
50,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Expense
(1)
|
|
|
7,162
|
|
|
—
|
|
|
14,332
|
|
|
—
|
Realized investment
(gains)
|
|
|
(245)
|
|
|
(406)
|
|
|
(495)
|
|
|
(805)
|
Adjusted operating
income before taxes
|
|
|
17,293
|
|
|
19,006
|
|
|
52,842
|
|
|
49,550
|
Less: income tax
expense on adjusted operating income
|
|
|
3,468
|
|
|
3,724
|
|
|
11,159
|
|
|
9,921
|
Adjusted operating
income
|
|
$
|
13,825
|
|
$
|
15,282
|
|
$
|
41,683
|
|
$
|
39,629
|
|
(1). Other Expense
within the adjusted operating income includes non-recurring grants
of restricted stock units in connection with the initial public
offering and costs associated with the transition of our former
Chief Executive Officer.
|
(3). Tangible
stockholders' equity is a non-GAAP financial measure. We define
tangible stockholders' equity as stockholders' equity less goodwill
and intangible assets. Our definition of tangible stockholders'
equity may not be comparable to that of other companies, and it
should not be viewed as a substitute for stockholders' equity
calculated in accordance with GAAP. We use tangible stockholders'
equity internally to evaluate the strength of our balance sheet and
to compare returns relative to this measure.
|
|
Stockholders' equity
at September 30, 2019 and December 31, 2018 reconciles to
tangible stockholders' equity as follows:
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
$
|
530,583
|
|
$
|
389,830
|
Less: goodwill and
net intangible assets
|
|
|
|
|
|
|
|
|
29,196
|
|
|
29,219
|
Tangible
stockholders' equity
|
|
|
|
|
|
|
|
$
|
501,387
|
|
$
|
360,611
|
Book value per
share
|
|
|
|
|
|
|
|
$
|
12.33
|
|
$
|
10.03
|
Book value per share
(Fully Diluted)
|
|
|
|
|
|
|
|
$
|
11.73
|
|
$
|
9.88
|
Tangible book value
per share
|
|
|
|
|
|
|
|
$
|
11.65
|
|
$
|
9.28
|
Tangible book value
per share (Fully Diluted)
|
|
|
|
|
|
|
|
$
|
11.09
|
|
$
|
9.14
|
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SOURCE ProSight Global, Inc.