Good morning, everyone. We shared our third quarter results in a news release dated November 8, 2023, along with our quarterly report on Form 10-Q filed the same day. These documents contain important cautionary statements about significant risks, uncertainties, and other factors beyond the company's control that could impact ProAssurance's business and affect expected results. Please review these statements carefully. During this call, our management team will discuss selected aspects of their quarterly results, and we encourage investors to consult the Form 10-Q and the accompanying press release for comprehensive information. We anticipate making statements regarding projections, estimates, and expectations, which we will clearly identify as forward-looking statements in accordance with U.S. federal securities laws and applicable safe harbor provisions. The accuracy of this call's content is valid only as of November 9, 2023, and except as mandated by law or regulation, ProAssurance will not take on and explicitly disclaims any requirement to update or revise information provided in these forward-looking statements. Our management team will also discuss non-GAAP items during today's call. The recent news release includes a reconciliation of these non-GAAP figures to their GAAP equivalents. Joining me on the call today are Ned Rand, President and CEO; Dana Hendricks, our Chief Financial Officer; and executive team members Rob Francis, Kevin Shook, Ross Taubman, and Karen Murphy. Now, I will hand the call over to Ned.

Thank you, Frank. And it's nice to have you back. Thanks for coming out of retirement briefly while we try to fill a vacancy in our IR role. I really appreciate that. And good morning to everybody. In reporting our results for the third quarter, we note both the realities of current market conditions and are resolved to respond appropriately. Dana and I look forward to providing insights into the evolving market. I want to address the $0.07 operating loss upfront. Unfavorable development in our Workers' Compensation book of business is the primary reason for the loss. And while disappointing, our actions are consistent with our historical practice of recognizing negative trends as they present themselves. While that reserve development resulted in the headline loss number, it also masked positive trends that I think point to better results ahead. Gross written premiums were up 4% quarter-over-quarter and new business was significantly higher, while retention remained strong. This signals not only an appreciation for the quality of the service and strength we provide to our insureds, but is a testament to the dedication and effectiveness of our team members and distribution partners who are helping us earn new business and retain insureds in these extremely competitive market conditions. I suppose the legitimate question would be why are we growing given current market conditions. Our strategy in both lines of business relies on individual underwriting and pricing, and we strive to only write and retain business we believe will meet our profitability goals. Thus, we believe we can grow our book profitably as long as we remain disciplined in pricing and underwriting. Inflationary trends continue to affect the market conditions in which we operate, and we continue to see higher-than-anticipated loss severity trends as well. Those trends seem to be affecting insurers active in the Specialty P&C lines we write, which we believe will hasten a return to more rational pricing. Within work comp, because of our proactive claims handling, we believe we are seeing these inflationary trends earlier than others. And while some work comp writers have begun to talk about it, it's not being universally recognized. But it's coming and should have a profound effect on pricing in the work comp market. We have been decreasing our participation at Lloyd's over the past several years. And as we look forward to 2024, have made the decision to discontinue any further participation. In addition, we entered into an agreement to sell our remaining ownership interest in the underwriting and operations entity associated with Syndicate 1729 to an unrelated third party, which is contingent upon certain approvals. This decision also led us to reorganize our segment reporting beginning this quarter, which Dana will discuss later. Now looking at each segment at high level, I want to highlight two important items in Specialty P&C. First, even in this competitive environment, we wrote $24 million in new business that we believe meets our pricing and underwriting standards. This speaks volumes about our ability to write business based on our quality of coverage and our service and defense commitment. A further positive sign was the overall increase in renewal pricing of 7% in the quarter, amplifying those premium gains with strong retention in the segment of 87%, led by retention of 89% in our Standard Physician business, again, being renewed at prices we believe support our return to profitability goals and meet our strict underwriting standards. Overall, a good result given the competitive market conditions we face. We continue to monitor increased severity trends in a handful of our legacy jurisdictions. As I mentioned, we'll see both social and medical inflation as key drivers here, and we are wary of the increased severity of judgments and settlements in large complex cases and the downstream impact this can have on settlement values for all claims. Total underwriting expenses in the segment were down $4 million, resulting in an underwriting expense ratio of 25%, down just under 2 points quarter-over-quarter. The expense ratio decrease compared to last year was driven by a decrease in amounts accrued for performance-related incentive compensation plans in the current quarter as well as the impact of one-time expenses in the prior year quarter, partially offset by lower levels of earned premium. Moving now to our Workers' Compensation Insurance segment, gross written premium was essentially level with the third quarter 2022 at $63.6 million. During the third quarter, audit premium decreased by approximately $1 million quarter-over-quarter. To the upside, new business was $5 million, $1.3 million higher than last year's third quarter, and our premium renewal retention was 87%. However, renewal rates were down 3% over the same period, driven by continued rate pressure from prescribed state loss cost adjustments. While Workers' Compensation rates continue to be pressured, the third quarter rate change was an improvement over the second quarter decrease, which we believe offers some encouragement. As I mentioned, we are seeing the impacts of inflationary trends in our Workers' Comp book. During the third quarter, we observed higher-than-anticipated loss trends in our average medical cost per claim as compared to what we observed during the first two quarters of the year. While we continue to experience reductions in claim frequency, our average medical cost per claim is higher in both the 2023 and 2022 accident years. With medical expenses representing approximately 65% of our total claims costs, we attribute this trend to an increased cost of care for injured workers, driven by healthcare wage inflation and medical advancements. In response to these trends, we increased our full year 2023 accident year net loss ratio to 76%, and recorded $8 million of unfavorable loss reserve development, primarily in the 2022 accident year. Our short-tailed claim strategies that we've discussed in the past result in compensable injuries being reported real-time, with healthcare professionals assessing treatment upfront to get the injured workers appropriate medical treatment and back to productivity quickly. As with Specialty P&C, underwriting expenses were down quarter-over-quarter. The 34% underwriting expense ratio was just slightly higher than the prior quarter as a result of lower net earned premiums and the continuation of competitive market conditions. Finally, our Segregated Portfolio Cell Reinsurance segment contributed a profit of just under $1 million to operating results, driven by strong underwriting results and net investment income for those cells where we take an economic interest. The combined ratio in our Segregated Portfolio Cell Reinsurance segment increased approximately 33 points to 128.2%, with 26 points of that increase due to the cancellation of the tail coverage related to a program in which we do not participate in the underwriting results, and therefore, had no impact on operating results in the quarter.

Thanks, Ned. Let's go next to Dana who will review consolidated results and provide highlights from the balance sheet and investment returns. Dana?

Thanks, Frank. At the start, I want to call attention to two items. First, let me expand a bit on the segment reorganization Ned mentioned. Given our decision to no longer participate in Syndicate 1729, our participation will essentially be in runoff after this year as activity for open underwriting years prior to 2024 continues to earn out as scheduled. Remember, there is one-quarter reporting lag, so our participation will not be reflected in our results until the second quarter of next year. As a result of these changes, beginning this quarter, we reorganized our segment reporting. We are now reporting the underwriting results from the syndicate in our Specialty P&C segment and the investment results of allocated assets as well as U.K. income tax in our Corporate segment. More detail on these segment changes can be found in our current Form 10-Q. Secondly, during the quarter, we recognized a $44 million non-cash goodwill impairment related to our Workers' Compensation Insurance reporting unit, which had the largest impact to our net results, however, had no impact on our operating results. We review our goodwill for potential impairment at least annually and more frequently if circumstances arise that indicate impairment may exist. As we reported in our second quarter 10-Q, we performed an interim goodwill impairment assessment on our Workers' Compensation Insurance reporting unit during the previous quarter, and that analysis then indicated goodwill was not impaired by a margin of approximately 3%. Given the actions taken in the current quarter in our Workers' Compensation Insurance segment in response to inflationary trends as outlined in Ned's remarks, we performed an updated assessment which indicated full impairment of goodwill. And accordingly, we recorded a goodwill charge in the current quarter. Now moving to operating results. Our operating loss in the quarter was $3.7 million or $0.07 per diluted share, with the difference between the net and operating loss being almost entirely due to the goodwill impairment. In terms of underwriting results, our consolidated combined ratio increased almost 9 points from the year-ago quarter, primarily due to the unfavorable loss development in our Workers' Compensation Insurance business coupled with a higher current accident year loss ratio in both of our core lines of business, the drivers of which Ned covered in his remarks. The consolidated expense ratio decreased again in the quarter driven mostly by a reduction in amounts accrued for performance-related incentive compensation plans. Our investment results continue to be a highlight as net investment income increased 32% to $33 million due to rising interest rates, which drove higher average book yields on our fixed income portfolio. Our new purchase yields in the quarter were 5.3% or 210 basis points higher than the average book yield in the quarter. Our average investment balances were down approximately 1.5% since year-end, as we have reduced the rate of reinvestment in order to provide more cash for operating needs and to return capital to shareholders through the repurchase of our stock. Equity and earnings from our investments in LPs and LLCs, which are typically reported to us on a one-quarter lag, reflected a small gain of about $400,000 in the quarter, yet a significant improvement over the almost $5 million loss in the third quarter of 2022. In total, earnings generated from our LPs and LLCs did not exceed the tax-deductible partnership operating losses, leading to a small loss of $60,000 from unconsolidated subsidiaries for the quarter. Other income was $3 million in the quarter, down $2 million from the third quarter of last year, with $1.4 million of the decrease due to lower foreign currency exchange rate gains related to euro-denominated loss reserves in our Specialty P&C segment. Since resuming share repurchases in late May, we have repurchased 3 million shares at a cost of $51 million, including 2 million shares at a total cost of $31 million during the third quarter. We have not repurchased any shares since the end of the quarter. And as of today, our remaining share repurchase authorization is around $56 million. Our book value per share at quarter end was $19.85, down 3% from year-end, driven by the goodwill impairment which had no effect on tangible book value. Adjusted book value per share, which excludes $5.82 of accumulated other comprehensive loss, primarily from unrealized holding losses on our fixed maturity portfolio, is $25.67 as of September 30. We continue to consider these unrealized losses to be temporary as we have both the intent and ability to hold to maturity. Our share repurchases year-to-date have contributed $0.59 to adjusted book value per share.

Thank you, Dana and Ned. Bailey, that concludes our prepared remarks, and we're ready for questions.

Our first question today comes from Jon Newsome from Piper Sandler.

Good morning. Thanks for the call. I want to ask you about a little bit more detail on your view about improvement in the outlook for this core Specialty businesses. And you look at the accident year results for the Specialty business and you look at the reserve development, both are deteriorated from a year-over-year basis. So that would suggest that, assuming that your core book reflects most of the market, that the environment is actually worse, not better. Maybe you could sort of contrast that and why you think the environment actually is better when your own results are actually worse?

Yes, Paul, that's a great question. I want to emphasize that one thing that hasn't changed in the marketplace is the level of uncertainty and the variability in claims results. As a result, we maintain a very cautious approach in setting reserves due to this unpredictability. On a positive note, we are seeing gains in rates as we renew business, and while there are exceptions, competitors appear to be behaving better by not just cutting prices to unsustainable levels to win new business. This is where we are seeing improvements. However, on the loss front, the environment remains tough and filled with uncertainty.

Great. On the Workers' Comp side, I want to just better understand it. There are obviously rates, many of them are sort of statutorily created. But there's also pricing. And my understanding is, at Workers' Comp, there are lots of things that companies do in terms of reducing discounts and other factors that can change the pricing materially. Given that your Workers' Comp business, even if we exclude the reserve charge this quarter, has been less profitable than most of your peers for the last several years, could you talk about whether or not there's a disconnect there between what you're talking about with rate and price, and whether or not there's some adjustments that you're making to suggest that maybe we could see better underwriting performance in the future? Because I mean, I think the conclusion of lower rates plus inflation means that you're just going to see worse results prospectively on Workers' Comp. But obviously, there's a lot more going on there as well.

There's a lot to unpack in that question, Paul, and I'll try to address it while allowing Kevin to add his thoughts afterward. Yes, there is indeed a difference between rate and pricing. However, the promulgated rates do influence the pricing in the market. We believe we do a very good job of pricing according to the exposure rather than just relying on these promulgated rates. If you examine the rate declines in the broader work comp industry, these can be justified by the reduced frequency that we have observed. When comparing this to the reduced rates over the same time frame for our business, you'll find that we have managed quite effectively. Our rate declines have not been as significant as those in the broader market and certainly not as significant as the compounded rate decline suggested by the promulgated rates. We are addressing this issue and are seeing a decrease in claim frequency. Balancing the reduction in claim frequency with inflationary pressures will be the challenge moving forward. It is a tough market, generally overshooting on the downside due to these promulgated rates, which many competitors rely on heavily. While we are influenced by them as they impact the market, the inflationary trends we are experiencing differ. Additionally, we feel that we recognize these trends sooner since we close claims faster, allowing us to know the final cost and resolution of a claim within a couple of years. This may not be the case for many in the industry. Therefore, how they incorporate inflation into future payments on claims they have open currently is uncertain for me. I can only speak to how we are managing it, which involves resolving claims more quickly than the industry. Kevin, do you have anything to add?

No, I think that's right. I do think when the industry starts to recognize the medical inflation trends that we're seeing earlier, that is going to be a market changer. I would note that we have a three-company tiered structure from an underwriting perspective with different LCMs. Our book of business makeup is the same, our regions are the same and the market segments in which we write are largely the same, just to add those to Ned's comments.

The next question today comes from the line of Maxwell Fritscher from Truist Securities.

Good morning. I'm calling in for Mark Hughes today. Kind of just an add-on to the last question. You had mentioned last quarter that inflation in Workers' Comp was being driven more by wage inflation as opposed to medical inflation. It sounds like that's kind of flipped this quarter. What are you seeing there?

This quarter, we definitely experienced significant medical inflation. However, wage inflation hasn't entirely vanished. While it seems to be moderating somewhat, I believe this isn't fully reflected in the payment rates across all states. Therefore, we can expect continued upward pressure on wages, but the standout issue this quarter has been medical inflation.

And then for the large claims, you'd mentioned in the first quarter that it had a big impact, relatively muted in the second quarter. Was there any impact from large claims in 3Q?

Yes, it's a good question. First off, the industry is continuing to see a higher frequency of large claims. According to the analysis by TransRe, they have introduced a new chart in their latest report that tracks the trend for claims exceeding $100 million. This trend is still present in the industry. In the recent quarter, we did experience larger claims, but nothing compared to the significant impacts of those in the first quarter. To remind you, in the first quarter, we encountered resolutions of some claims at levels that were higher than we expected, which exceeded our established reserves for some older accident years with limited IBNR.

Our next question comes from the line of Bob Farnam from Janney Montgomery Scott.

Thanks. Good morning. A few questions. One is more broad for the workers' comp sector. So Ned, you're talking about the fact that the industry is probably going to miss on the downside. So I'm just trying to get a feel for what kind of time lag is there for the rating bureaus to update their loss costs to incorporate the higher loss trend. I'm just trying to figure out, all right, are rates going to continue to go down for three more years before the states kind of catch up? Is that something you're having to face?

Yes, that's a great question, Bob. Overall, those states have released their loss projections for 2024, and generally, these show reductions of over $23 million. This is perplexing given the current inflation situation. The data they rely on has a 12 to 18-month lag, and they seem to be heavily relying on the decline in frequency to justify these rate reductions. Therefore, 2024 will be a tough year for us. We will maintain our emphasis on individual account underwriting to ensure that the pricing aligns with the risks we take on. However, unless there are unexpected changes, I don't anticipate seeing any improvements before 2025. Kevin, do you have anything to add?

No, I think that's spot on. The models are more frequency-based, and what's driving our results quarter is certainly on the medical side, which I don't think anyone is going to be immune to. But totally agree, Ned.

Okay. Kevin, you mentioned having multiple tiers for writing the Workers' Comp business with different loss-cost multipliers. Have you noticed any shifts in moving classes to higher tiers? I'm curious about the kind of movement you're observing to improve performance in terms of rates.

Yes, we are seeing shifts and things moving to the upper tier companies. And quite frankly, we have a bunch of business that's priced in the highest tier company at maximum debit. We cannot get the price any higher. So it's been a challenge. Loss costs, as Ned said, have been down since 2015. And having the three-tier company structure has been incredibly helpful, but a lot of business in the higher, a fair amount of business in the mid and then less business in the preferred company, obviously.

Okay. And while you're still on the line, could you provide a bit more detail on the medical inflation? Are you observing it in specific classes of business, certain regions, or types of injuries? I'm trying to determine if this is a widespread issue or if there are specific areas experiencing this instead of a general trend.

So I would describe the higher medical trends as being pervasive. So we looked at our entire book of business, we looked at our regions, we looked at states, we looked at market segments, and it is pervasive across the book of business. There are obviously some market segments that are being impacted more than others. Restaurants are one. Hospitality. We write a lot of health care, and that was kind of right down the middle. We really write a lot of education, and that performed a little bit better. But pervasive across the book of business in all regions, in all market segments, which, again, points to medical inflation now making its way through the book.

Right. Okay. From our perspective, we can assess medical inflation through the CPI and related metrics. Are you observing that actual medical inflation is exceeding the CPI version? If so, what are the main factors driving this?

Yes, we are experiencing a quarter where I would suggest we proceed. I'm sorry, Ned. Please continue.

Yes, go ahead, Kevin.

This is the quarter where I would say medical inflation is outpacing CPI and wage inflation by a pretty wide margin. So if you think about a workers' comp claim, you've got the indemnity piece, which is going to increase commensurate with payroll. And that, in theory, in a perfect world should be in your premium. But when medical starts outpacing indemnity, that's when it has an unfavorable result to a workers' compensation carrier.

And then, Bob, the other part of your question is really about medical inflation, which is being driven by rising labor costs in the medical field that are now catching up. Additionally, as new therapies that are life-saving and transformative become available, they tend to be very expensive. It's a combination of these factors, leading to price pressure within the healthcare system and increased costs for services.

All right. And just one more question, Ned. Sorry to take up time on the call here. But 65% of your business losses are related to the medical side. Is that typical for the industry? Or do you face more medical trends because you have a higher portion of medical costs in your typical claim?

I think one thing, Bob, that probably skews that on a comparison basis is because we do have a shorter tail book of business. The wage component is resolved much faster, and so as a percent of total cost may be lower overall. That's more about the duration of the claims than the actual dollars being spent on medicine. Kevin, what would you add to that?

No, I agree with that. I would say 65% medical is more or less in line with the industry, which is the inverse of what it was 12, 15 years ago when it was higher indemnity. So medical is the driver. For ProAssurance, medical is also the driver for the industry. I can't quote a specific number for the industry, but would certainly suggest that it's in and around the 65%. And to Ned's point, maybe a couple of percentage points lower.

The next question today comes from the line of Matt Carletti from JMP Securities.

Hey, thanks. Good morning. Ned, I wanted to shift our attention back to the medical professional liability part of the business. Can you provide us with an update on the competitive landscape? Pricing has been fluctuating for some time, but you've mentioned that some of the larger and smaller competitors who lack profit initiatives are slower to respond to this trend. Is there any change in that situation? Could you also update us on the current state of the market?

Yes. Good question, Matt, and I'll let Rob add to this. I would say that regarding competitors and their motivations, nothing is really changing. The mutual companies still have significant excess capital, which they use to influence pricing and are willing to write at a fairly high combined ratio as a result. I do think we observe some behavior from certain peers on individual accounts as we compete for new business, but there will always be those who don't follow that trend. Rob, do you have anything to add?

The reinsurance market is definitely creating more pressure on companies as reinsurance rates are increasing. Smaller organizations with less capital are experiencing tighter business plan allowances from reinsurers, which limits what they can do under their reinsurance contracts. As a result, we've noticed some of the more aggressive smaller carriers pulling back. On the other hand, larger carriers are acting more responsibly and are focused on achieving suitable returns, albeit not as high as what we aim for as a public company. The mid-level mutual carriers remain well-capitalized and are willing, as mentioned, to write at higher combined ratios. Many of them have growth goals and are looking to enhance their relevance in a changing market where the average account size is increasing and accounts are spanning multiple states. Therefore, they are actively pursuing that business. We are taking a selective approach towards this type of business while concentrating more on our standard operations in core states where we see greater potential for returns.

There are no additional questions waiting at this time. So I'd like to pass the call back over to the management team for any closing remarks. Thank you, Bailey. And I think that concludes our conference and our remarks. We look forward to speaking with you again on next quarter's call.

This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.