Shareholders' Equity

12 Months Ended

Dec. 31, 2019

Shareholders’ Equity

At December 31, 2019 and 2018, ProAssurance had 100 million shares of authorized common stock and 50 million shares of authorized preferred stock. The Board has the authority to determine provisions for the issuance of preferred shares, including the number of shares to be issued, the designations, powers, preferences and rights, and the qualifications, limitations or restrictions of such shares. To date, the Board has not approved the issuance of preferred stock.

The following is a summary of changes in common shares issued and outstanding during the years ended December 31, 2019, 2018 and 2017:



(In thousands)	2019	2018	2017
Issued and outstanding shares - January 1	53,637	53,457	53,251
Shares issued due to vesting of share-based compensation awards	132	135	132
Other shares issued for compensation and shares reissued to stock purchase plan*	23	45	74
Issued and outstanding shares - December 31	53,792	53,637	53,457
* Shares issued were valued at fair value (the market price of a ProAssurance common share on the date of issue).

As of December 31, 2019, approximately 1.8 million of ProAssurance's authorized common shares were reserved by the Board for award or issuance under the incentive compensation plans described in Note 14 and an additional 0.5 million of authorized common shares were reserved for the issuance of currently outstanding restricted share and performance share unit awards.

ProAssurance declared cash dividends during 2019, 2018 and 2017 as follows:



	Cash Dividends Declared, per Share
	2019		2018		2017
First Quarter	$	0.31	$	0.31	$	0.31
Second Quarter	$	0.31	$	0.31	$	0.31
Third Quarter	$	0.31	$	0.31	$	0.31
Fourth Quarter*	$	0.31	$	0.81	$	5.00

* Includes special dividends of $0.50 per share in 2018 and $4.69 per share 2017.

Quarterly dividends were paid in the month following the quarter in which they were declared. Dividends declared during 2019, 2018 and 2017 totaled $66.7 million, $94.3 million and $316.9 million, respectively.

ProAssurance's ability to pay dividends to its shareholders is limited by its holding company structure, to the extent of the net assets held by its insurance subsidiaries, as discussed in Note 19. Otherwise, there are no other regulatory restrictions on ProAssurance's retained earnings or net income that materially impact its ability to pay dividends. Based on shareholders' equity at December 31, 2019, total equity of $467.6 million was free of debt covenant restrictions regarding the payment of dividends. However, any decision to pay future cash dividends is subject to the Board’s final determination after a comprehensive review of financial performance, future expectations and other factors deemed relevant by the Board.

As of December 31, 2019, Board authorizations for the repurchase of common shares or the retirement of outstanding debt of $109.6 million remained available for use. The timing and quantity of purchases depends upon market conditions and changes in ProAssurance's capital requirements and is subject to limitations that may be imposed on such purchases by applicable securities laws and regulations as well as the rules of the NYSE.

Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)

For the years ended December 31, 2019, 2018 and 2017, OCI was almost entirely comprised of unrealized gains and losses, including non-credit impairment losses, arising during the period related to fixed maturity available-for-sale securities, less reclassification adjustments, as shown in the table that follows, net of tax. For the years ended December 31, 2019 and 2018, OCI also included changes related to the reestimation of the defined benefit plan liability assumed in the Eastern acquisition which were nominal in amount. The defined benefit plan is frozen as to the earnings of additional benefits and the benefit plan liability is reestimated annually.

At December 31, 2019 and 2018, AOCI was almost entirely comprised of accumulated unrealized gains and losses from fixed maturity available-for-sale securities, including accumulated non-credit impairments recognized through OCI of $0.3 million and $0.1 million, respectively, net of tax. At December 31, 2019 and 2018, accumulated changes in the defined benefit plan liability not yet recognized in earnings were nominal in amount. Due to the adoption of accounting guidance in the first quarter of 2018 related to certain impacts of the TCJA, ProAssurance increased AOCI by approximately $3.4 million with a corresponding decrease to retained earnings of the same amount as of the beginning of 2018. Except for an immaterial amount of unrealized gains and losses on available-for-sale securities held at the Company's U.K. subsidiary at December 31, 2019 and 2018, and an immaterial amount of unrealized gains and losses on available-for-sale securities held at the Company's Cayman Islands subsidiaries at December 31, 2018, tax effects of amounts in AOCI at December 31, 2019 and 2018 were computed using the enacted U.S. federal corporate tax rate of 21%.

Amounts reclassified from AOCI to net income and the amounts of deferred tax expense (benefit) included in OCI were as follows:



(In thousands)	2019			2018			2017
Reclassifications from AOCI to net income:
Realized investment gains (losses)	$	2,500		$	274		$	2,512
Non-credit impairment losses reclassified to earnings, due to sale of securities or reclassification as a credit loss	—			(621		)	(3		)
Total gains (losses) reclassified, before-tax effect	2,500			(347		)	2,509
Tax effect*	(525		)	73			(878		)
Net reclassification adjustments	$	1,975		$	(274	)	$	1,631

Deferred tax expense (benefit) included in OCI	$	14,150		$	(9,573	)	$	(4,676	)
* Tax effects were computed using a 21% rate for the years ended December 31, 2019 and 2018 and a 35% rate for the year ended December 31, 2017.