Shareholders' Equity

3 Months Ended

Mar. 31, 2020

Shareholders’ Equity

At March 31, 2020 and December 31, 2019, 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.

ProAssurance declared cash dividends of $0.31 per share during the first quarter of both 2020 and 2019, totaling $16.7 million during each period.

At March 31, 2020, Board authorizations for the repurchase of common shares or the retirement of outstanding debt of $110 million remained available for use. ProAssurance did not repurchase any common shares during the three months ended March 31, 2020 and 2019.

Share-based compensation expense and related tax benefits were as follows:



	Three Months Ended March 31
(In thousands)	2020		2019
Share-based compensation expense	$	1,011	$	1,228
Related tax benefits	$	212	$	258

ProAssurance awarded approximately 112,000 restricted share units and 39,000 base performance share units to employees in February 2020. The fair value of each unit awarded was estimated at $29.18, equal to the market value of a ProAssurance common share on the date of grant less the estimated present value of expected dividends during the vesting period. The majority of awards are charged to expense as an increase to additional paid-in capital over the service period (generally the vesting period) associated with the award. However, a nominal amount of awards are recorded as a liability as they are structured to be settled in cash. Restricted share units and performance share units vest in their entirety at the end of a three-year period following the grant date based on a continuous service requirement and, for performance share units, achievement of a performance objective. Partial vesting is permitted for retirees. For equity classified awards, a ProAssurance common share is issued for each unit once vesting requirements are met, except that units sufficient to satisfy required tax withholdings are paid in cash. The number of common shares issued for performance share units varies from 50% to 200% of base awards depending upon the degree to which stated performance objectives are achieved. ProAssurance issued approximately 47,000 common shares to employees in February 2020 related to restricted share units granted in 2017. Liability classified awards, which are nominal in amount, are settled in cash at the end of the vesting period.

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

The following tables provide a detailed breakout of the components of AOCI and the amounts reclassified from AOCI to net income (loss). The tax effects of all amounts in the table below, except for an immaterial amount of unrealized gains and losses on available-for-sale securities held at the Company's U.K. subsidiary, were computed using the enacted U.S. federal corporate tax rate of 21%. For the three months ended March 31, 2020 and 2019, OCI included a deferred tax benefit of $11.0 million and a deferred tax expense of $6.8 million, respectively.

The changes in the balance of each component of AOCI for the three months ended March 31, 2020 and 2019 were as follows:



(In thousands)	Unrealized Investment Gains (Losses)			Non-credit Impairments		Unrecognized Change in Defined Benefit Plan Liabilities*		Accumulated Other Comprehensive Income (Loss)
Balance December 31, 2019	$	36,577		$	300	$	78	$	36,955
OCI, before reclassifications, net of tax	$	(42,497	)	$	517	$	—	$	(41,980	)
Amounts reclassified from AOCI, net of tax	115			—		—		115
Net OCI, current period	$	(42,382	)	$	517	$	—	$	(41,865	)
Balance March 31, 2020	$	(5,805	)	$	817	$	78	$	(4,910	)



(In thousands)	Unrealized Investment Gains (Losses)			Non-credit Impairments		Unrecognized Change in Defined Benefit Plan Liabilities*		Accumulated Other Comprehensive Income (Loss)
Balance December 31, 2018	$	(17,089	)	$	121	$	57	$	(16,911	)
OCI, before reclassifications, net of tax	$	25,477		$	69	$	7	$	25,553
Amounts reclassified from AOCI, net of tax	13			—		—		13
Net OCI, current period	$	25,490		$	69	$	7	$	25,566
Balance March 31, 2019	$	8,401		$	190	$	64	$	8,655
* Represents the reestimation of the defined benefit plan liability assumed in the Eastern acquisition. The defined benefit plan is frozen as to the earnings of additional benefits and the benefit plan liability is reestimated annually.