PR Newswire | Nov 9, 2020 04:21PM EST

11/09 15:20 CST

ProSight Reports 2020 Third Quarter ResultsThird Quarter Net Income from Continuing Operations and Adjusted Operating Income (1) of $1.5 million, $0.03 per Diluted Share. MORRISTOWN, N.J., Nov. 9, 2020

MORRISTOWN, N.J., Nov. 9, 2020 /PRNewswire/ -- ProSight Global, Inc. (New York Stock Exchange ("NYSE"): PROS) (ProSight) today reported results for the third quarter of 2020.

Highlights for the three months ended September 30, 2020 include:?

* Fully diluted book?value per share ("BVPS") of $13.34,?an increase of 3.9%?from $12.84 on?June 30, 2020?and?11.1% from?$12.01?on?December 31, 2019.?? * Rate execution of 11.8%, excluding workers compensation, and 10.9%, including workers compensation, with acceleration throughout the quarter.?? * Net investment income?of $20.3 million in the current quarter,?an increase?of 19.6% from the third quarter of 2019?driven by?growth of the portfolio and strong?investment results.?? ?? * Pre-tax impact of catastrophes of $22.0 million?in the current quarter, including?$16.9 million of net losses and?$5.1 million of related reinstatement premiums on reinsurance contracts.??Most of the?loss?activity stems from?Hurricane Laura?and the?California?and Oregon wildfires.?? ? * Combined?ratio?of?108.3%?compared to 98.3%?in the third quarter of 2019, reflecting 11.6 points of catastrophe losses and the impact of related reinstatement premiums in the current quarter compared to?0.0 points?in the third quarter of 2019.?The combined?ratio?excluding the impact of catastrophes is?96.7%?for the current period?compared to 98.3% for the?third?quarter of 2019.??? * Current accident year loss ratio?excluding the impact of catastrophes of 59.9% compared to 60.1%?for the?third?quarter of 2019.???? * Strong?expense management which resulted in $23.0 million of general and administrative expenses in the?current quarter, a decrease of $3.0?million?or 11.5% compared to the?third quarter of 2019.???? ??

Larry Hannon, President & CEO:??? ??

"We extend our sympathies to all of those impacted by the events that caused so much damage on both coasts and in the Gulf this quarter. I'd like to thank our employees and distribution partners for responding quickly to our customers in their time of need.

"The third quarter was the largest catastrophe quarter in ProSight's history. Despite the cat losses and the ongoing impact of COVID-19 in the quarter, we did generate positive net income, grow our book value per share, and post a 59.9% loss ratio excluding cats and related items.

"We saw an increase in submissions along with strong rate execution, both of which continue into the fourth quarter. Overall, we are executing well in this environment, providing exceptional service to our insureds and distribution partners, and setting the stage for profitable growth in the years ahead." ???

Results of Operations for the three months ended September 30, 2020:??? ???

Net income from continuing operations was?$1.5 million,?or $0.03 per diluted share, for the third quarter of 2020 compared to $8.4 million,?or $0.19?per diluted share, for the third quarter of 2019. Adjusted operating income?(1)?was $1.5 million, or $0.03 per diluted share, for the third quarter of 2020 compared to $13.8 million, or $0.32 per diluted share, for the third quarter of 2019.???

Gross written premium ("GWP") including Other(2), decreased 10.4% for the third quarter of 2020 when compared to the third quarter of 2019. GWP(2)?from customer segments was?$201.9 million?for the third quarter of 2020 compared to?$223.9 million?for the third quarter of 2019, a decrease of 9.8%, primarily due to the impact of COVID-19 on our Transportation and Media & Entertainment customer segments, and a contraction in the Consumer Services customer segment from a decision to reduce monoline workers' compensation.???

Underwriting?loss?(1)?was?$14.2 million?for the third quarter of 2020 compared to?an underwriting income of $3.3 million?for the third quarter of 2019. The combined ratio for the third quarter of 2020 was 108.3% compared to 98.3% for the third quarter of 2019.? Excluding the impact of catastrophes, the combined ratio for the third quarter of 2020 was 96.7% compared to 98.3% in the third quarter of 2019.?? ???

The loss ratio was 71.5% for the third?quarter?of 2020 compared to 62.8% for the third?quarter?of 2019.?? The current accident year loss ratio was 71.5% for the third quarter of 2020 compared to 60.1% for the third quarter of 2019.? The current accident year loss ratio, excluding the impact of catastrophes was 59.9%.?? ???

The loss ratio for the third quarter of 2020 included?no?prior accident year loss impact compared to 2.7 percentage points ($5.5 million) of unfavorable prior accident year loss development in the third quarter of 2019.??? ???

The expense ratio was 36.8% for the third quarter of 2020 compared to 35.5% in the third quarter of 2019 (36.3%?adjusted for the effect of Whole Account Quota Share ("WAQS")(3)), with the increase?from?reduced earned premium?driven by COVID-19,?reinsurance reinstatement premiums in the current quarter, and a ceding commission benefit from?WAQS?in the third quarter of 2019. The policy acquisition expense ratio was 23.4% in the third quarter of 2020 compared to 22.7% in the third quarter of 2019 (23.5%?adjusted for the effect of WAQS?(3)). The general and administrative expense ratio was 13.4% in the third quarter of 2020 compared to 12.8% in the third quarter of 2019.????? ??

Net investment income increased by 19.6% to?$20.3 million?for the third quarter of 2020, compared to?$17.0 million for the third quarter of 2019.? The increase in net investment income was primarily driven by?year over year?growth in the book value of the investment portfolio of 12.4% to $2.4 billion and?unrealized gains from our limited partnerships, partially offset by a decline in investment yields on fixed maturity securities.??? ???

Realized investment gains, net of realized losses, for the third?quarter?of 2020 were $1.4 million compared to $0.2 million for the third?quarter?of 2019.??? ???

Total stockholders' equity was $607.9 million as of September 30, 2020, compared to $543.0 million as of December 31, 2019.? Tangible stockholders' equity?(4)?was?$578.7 million as of September 30, 2020, compared to $513.8 million as of December 31, 2019. The increases in total stockholders' equity and tangible stockholders' equity?(4)?were primarily driven by $26.1 million of net income in the first nine months of 2020 and an increase in other comprehensive income?of $33.6 million, driven by net unrealized gains on investment securities.???? ???

Fully diluted book value per share?at?September 30, 2020?was $13.34, a?11.1%?increase from?December 31, 2019. Fully diluted tangible book value per share(4)?was?$12.70?at?September 30, 2020,?a?11.7% increase from?December 31, 2019. ??

(1) Adjusted operating income and underwriting (loss) income are non-generallyaccepted accounting principles ("GAAP") measures. See "Reconciliation ofNon-GAAP Measures".

(2) Total GWP for the third quarter of 2020 including Other were $203.5million. Other includes GWP from certain niches that are no longer part of ourcustomer segments. "Other" includes GWP from (i) primary and excess workers'compensation coverage for exited Self-Insured Groups (ii) niches exited priorto 2018, many with a concentration in commercial auto, (iii) certain frontingarrangements in which all premium written is ceded to a third party, (iv)participation in industry pools, and (v) emerging new business.

(3) In connection with the divestment of our U.K. business, New York Marine asreinsured entered into the WAQS with third party reinsurers to maintainreasonable underwriting leverage within New York Marine and its subsidiaryinsurance companies during a transition period following the U.K. divestment.The effective date of the WAQS was April 1, 2017. During 2018 and following thetransition of the U.S. business back to New York Marine, the WAQS wereterminated. Effective January 1, 2020, the WAQS was commuted at an amount equalto ceded reserves. The effect of the WAQS on our results of operations isprimarily reflected in our ceded written premiums, losses and LAE, as well asour underwriting, acquisition and insurance expenses.

(4) Tangible stockholders' equity and fully diluted tangible book value pershare are non-GAAP measures. Tangible stockholders' equity is totalstockholders' equity excluding the value of goodwill and other intangibleassets. Fully diluted tangible book value per share is total stockholders'equity excluding the value of goodwill and other intangible assets divided bythe number of common?shares outstanding, unvested restricted?shares and vestednot issued shares. See "Reconciliation of Non-GAAP Measures".

Conference Call

As previously announced, on Tuesday, November 10, 2020 at 10:00 a.m. EST, ProSight senior management will host a conference call to discuss third quarter 2020 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) 312-2110 (international), using the passcode 6198537. A replay of the call will be available at 1:00 p.m. on Tuesday, November 10, 2020, until 11:59 p.m. Tuesday, November 17, 2020, and can be accessed by dialing (800) 585-8367 or (416) 621-4642, using the passcode 6198537. The webcast will be available one hour after the call concludes and will be archived on our 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 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's 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, including without limitation, the following: performance of, and our relationships with, third-party agents and vendors on which we rely to distribute certain business on our behalf, adequacy of our loss reserves including as a result of changes in the legal, regulatory, and economic environments in which the Company operates or the impacts of COVID-19, judicial, legislative, regulatory and other governmental developments, including in response to COVID-19, litigation tactics and developments, the effects of natural and man-made catastrophic events, the availability and affordability of reinsurance, changes in the business, financial condition or results of operations of the entities in which we invest, infection rates and severity and duration of pandemics, including COVID-19, and their direct and indirect effects on our investments, business operations, customers (including claims activity) and third parties, as well as management's response to these factors. 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"), including, but not limited to, the risks and uncertainties included under the captions "Risk Factors" in ProSight's Annual Report on Form 10-K/A for the period ended December 31, 2019 filed on March 10, 2020, as updated by ProSight's Quarterly Reports on Form 10-Q and its other periodic filings with the SEC. 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 Annual Report on Form 10-K/A for the period ended December 31, 2019 filed on March 10, 2020.

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. GAAP. Such measures, including underwriting income, adjusted operating income, adjusted operating return on equity, adjusted operating return on tangible equity, adjusted loss excluding WAQS, adjusted expense ratio excluding WAQS, adjusted combined ratio excluding WAQS, tangible stockholders' equity, tangible book value per share and fully diluted tangible book value per share 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.

Inquiries: Joe HathawayJHathaway@prosightspecialty.com973.532.1706

PROSIGHT GLOBAL, INC CONSOLIDATED BALANCE SHEETS (UNAUDITED) ($ in thousands, except share amounts)



September 30December 31

2020 2019

Assets

Investments:

Fixed maturity securities, available-for-sale at fair value (amortized cost $2,176,775 in 2020 and $2,260,193 $2,040,682$1,999,403 in 2019, allowance for credit losses $ (1,670) in 2020 and $0 in 2019)

Commercial levered loans at amortized cost (fair 13,433 14,069 value $12,991 in 2020 and $13,950 in 2019)

Non-redeemable preferred stock securities at fair 11,913 - value (cost $11,670 in 2020 and $0 in 2019)

Bond exchange-traded funds at fair value (cost 12,838 - $12,878 in 2020 and $0 in 2019)

Limited partnerships and limited liability companies at fair value (cost $73,358 in 2020 and 84,608 66,660 $62,226 in 2019)

Short-term investments 154 43,873

Total investments 2,383,139 2,165,284



Cash and cash equivalents 26,609 17,284

Restricted cash 7,625 10,213

Accrued investment income 13,967 13,610

Premiums and other receivables, net 134,915 190,004

Receivable from reinsurers on paid losses, net 2,571 3,481

Reinsurance receivables on unpaid losses, net 158,856 193,952

Deferred policy acquisition costs 93,298 98,812

Prepaid reinsurance premiums 60,392 42,861

Net deferred income taxes - 4,803

Goodwill and net intangible assets 29,166 29,189

Fixed assets and capitalized software, net 34,961 37,167

Funds withheld related to sale of affiliate 19,529 19,453

Other assets 27,708 29,537

Assets of discontinued operations 23,484 21,584

Total assets $3,016,220 $2,877,234



Liabilities

Reserve for unpaid losses and loss adjustment $1,589,162 $1,521,648expenses

Reserve for unearned premiums 443,528 483,223

Ceded reinsurance payable 34,693 17,768

Notes payable, net of debt issuance costs 199,947 164,693

Secured loan payable, net of debt issuance costs 24,243 -

Funds held under reinsurance agreements 21,895 58,855

Net deferred income taxes 4,976 -

Other liabilities 55,950 56,438

Liabilities of discontinued operations 33,954 31,578

Total liabilities 2,408,348 2,334,203



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; 43,436,134 and 43,071,186 shares 434 431 issued, 43,423,214 and 43,058,266 shares outstanding in 2020 and 2019, respectively

Paid-in capital 666,875 661,761

Accumulated other comprehensive income 71,029 37,453

Retained deficit (130,266) (156,414)

Treasury shares - at cost (12,920 shares) (200) (200)

Total stockholders' equity 607,872 543,031

Total liabilities and stockholders' equity $3,016,220 $2,877,234

PROSIGHT GLOBAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($ in thousands)



Three Months Ended September 30 Nine Months Ended September 30

2020 2019 2020 2019



Gross written premiums $ 203,539 $ 227,196 $ 603,717 $ 718,066



Revenues:

Net earned premiums 172,376 202,455 559,667 600,543

Net investment income 20,307 16,974 52,913 51,530

Realized investment gains, net 1,398 245 3,521 495

Other income 61 196 274 386

Total revenues 194,142 219,870 616,375 652,954



Expenses:

Net losses and loss adjustment expenses incurred 123,249 127,196 363,279 372,644

Policy acquisition expenses 40,387 45,953 129,406 138,059

General and administrative expenses 22,986 25,967 76,038 79,189

Interest expense 4,216 3,216 10,388 9,725

Other expense 1,394 7,162 4,521 14,332

Total expenses 192,232 209,494 583,632 613,949



Income from continuing operations before income 1,910 10,376 32,743 39,005 taxes



Income tax provision:

Current 407 146 6,154 369

Deferred 5 1,869 997 7,884

Total income tax expense 412 2,015 7,151 8,253



Net income from continuing operations 1,498 8,361 25,592 30,752

Discontinued operations:

Net income (loss) from discontinued operations 20 (49) 556 (382)

Net income $ 1,518 $ 8,312 $ 26,148 $ 30,370



Return on equity ^(1) 1.0 % 6.8 % 5.9 % 8.9 %



Adjusted operating income ^(2) $ 1,495 $ 13,825 $ 26,374 $ 41,683



Adjusted operating return on equity ^(3) 1.0 % 11.2 % 6.1 % 12.1 %

(1) Return on equity is net income from continuing operations expressed on anannualized 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 ofNon-GAAP Measures".

(3) Adjusted operating return on equity is a non-GAAP measure. Adjustedoperating return on equity is adjusted operating income expressed on anannualized basis as a percentage of average beginning and ending stockholders'equity during the period.

PROSIGHT GLOBAL, INC. FACTORS AFFECTING THE RESULTS OF OPERATIONS (WAQS) (UNAUDITED) ($ in thousands)



Three Months Ended September 30, 2020 Three Months Ended September 30, 2019

Including Effect of Excluding Including Effect of Excluding

WAQS WAQS WAQS WAQS WAQS WAQS

Gross written premiums $ 203,539 $ - $ 203,539 $227,196 $- $227,196

Ceded written premiums (44,135) - (44,135) (17,722) (6) (17,716)

Net written premiums $ 159,404 $ - $ 159,404 $209,474 $(6) $209,480

Net retention^(1) 78.3 % - 78.3 % 92.2 % - 92.2 %

Net earned premiums $ 172,376 $ - $ 172,376 $202,455 $- $202,455

Losses and LAE 123,249 - 123,249 127,196 1,632 125,564

Underwriting, acquisition and insurance expenses 63,373 - 63,373 71,920 (1,632) 73,552

Underwriting (loss) income ^(2) $ (14,246) $ - $ (14,246) $3,339 $- $3,339

Loss and LAE ratio 71.5 % - - 62.8 % - -

Expense ratio 36.8 % - - 35.5 % - -

Combined ratio 108.3 % - - 98.3 % - -

Adjusted loss and LAE ratio^(3) - - 71.5 % - - 62.0 %

Adjusted expense ratio^(3) - - 36.8 % - - 36.3 %

Adjusted combined ratio^(3) - - 108.3 % - - 98.3 %



Effect of prior year reserve development $ 52 $ - $ 52 $5,495 $1,632 $3,863 unfavorable ^(4)





Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Including Effect of Excluding Including Effect of Excluding

WAQS WAQS WAQS WAQS WAQS WAQS

Gross written premiums $ 603,717 $ - $ 603,717 $718,066 $- $718,066

Ceded written premiums (97,507) - (97,507) (88,122) (3) (88,119)

Net written premiums $ 506,210 $ - $ 506,210 $629,944 $(3) $629,947

Net retention^(1) 83.8 % - 83.8 % 87.7 % - 87.7 %

Net earned premiums $ 559,667 $ - $ 559,667 $600,543 $3 $600,540

Losses and LAE 363,279 - 363,279 372,644 3,839 368,805

Underwriting, acquisition and insurance expenses 205,444 - 205,444 217,248 (3,837) 221,085

Underwriting (loss) income ^(2) $ (9,056) $ - $ (9,056) $10,651 $1 $10,650

Loss and LAE ratio 64.9 % - - 62.1 % - -

Expense ratio 36.7 % - - 36.2 % - -

Combined ratio 101.6 % - - 98.3 % - -

Adjusted loss and LAE ratio^(3) - - 64.9 % - - 61.4 %

Adjusted expense ratio^(3) - - 36.7 % - - 36.8 %

Adjusted combined ratio^(3) - - 101.6 % - - 98.2 %



Effect of prior year development unfavorable $ 560 $ - $ 560 $2,367 $3,839 $(1,472) (favorable) ^(4)

(1) Net retention is a non-GAAP measure. We define net retention as the ratioof net written premiums to gross written premiums.

(2) Underwriting (loss) income is a non-GAAP measure. See "Reconciliation ofNon-GAAP Financial Measures".

(3) Adjusted loss ratio and adjusted expense ratio are non-GAAP financialmeasures. We define adjusted loss ratio and adjusted expense ratio as thecorresponding ratio excluding the effects of the WAQS. We use these adjustedratios as internal performance measures in the management of our operationsbecause we believe they give our management and other users of our financialinformation useful insight into our results of operations and our underlyingbusiness performance. Our adjusted loss and LAE ratio, adjusted expense ratioand adjusted combined ratio should not be viewed as substitutes for our lossand LAE ratio, expense ratio and combined ratio, respectively.

(4) The effect of prior year reserve development is included within losses andLAE.

PROSIGHT GLOBAL, INC. SUPPLEMENTARY UNDERWRITING INFORMATION (EXCLUDING WAQS) (UNAUDITED) ($ in thousands)



Three Months Ended September 30 Nine Months Ended September 30

2020 2019 2020 2019



Gross written premiums $ 203,539 $ 227,196 $ 603,717 $ 718,066

Net written premiums 159,404 209,480 506,210 629,947

Net earned premiums 172,376 202,455 559,667 600,540



Net losses and LAE 123,249 125,564 363,279 368,805

Catastrophe loss and LAE 16,893 - 20,526 3,000

Unfavorable (favorable) prior year reserve 52 3,863 560 (1,472) development

Underwriting, acquisition, and insurance 63,373 73,552 205,444 221,085 expenses

Policy acquisition expenses 40,387 47,585 129,406 141,896

General and administrative expenses 22,986 25,967 76,038 79,189



Underwriting (loss) income $ (14,246) $ 3,339 $ (9,056) $ 10,650



Adjusted underwriting ratios



Ex-cat current accident year loss and LAE 59.9 % 60.1 % 60.6 % 61.2 %ratio ^(1)

Catastrophe loss and LAE ratio 11.6 - 4.2 0.5

Unfavorable (favorable) prior year reserve - 1.9 0.1 (0.3) development ratio

Adjusted loss and LAE ratio 71.5 % 62.0 % 64.9 % 61.4 %



Policy acquisition expense ratio 23.4 % 23.5 % 23.1 % 23.6 %

General and administrative expense ratio 13.4 12.8 13.6 13.2

Adjusted expense ratio 36.8 % 36.3 % 36.7 % 36.8 %



Adjusted combined ratio 108.3 % 98.3 % 101.6 % 98.2 %

(1) Ex-cat current accident year loss and LAE ratio is adjusted to exclude theimpact of reinsurance reinstatement premiums related to catastrophe lossesincurred during the period from net earned premium.

PROSIGHT GLOBAL, INC. SUPPLEMENTARY UNDERWRITING INFORMATION (UNAUDITED) ($ in thousands)



Three Months Ended September 30 Nine Months Ended September 30

2020 2019 2020 2019



Gross written premiums $ 203,539 $ 227,196 $ 603,717 $718,066

Net written premiums 159,404 209,474 506,210 629,944

Net earned premiums 172,376 202,455 559,667 600,543



Net losses and LAE 123,249 127,196 363,279 372,644

Catastrophe loss and LAE 16,893 - 20,526 3,000

Unfavorable prior year reserve development 52 5,495 560 2,367

Underwriting, acquisition, and insurance expenses 63,373 71,920 205,444 217,248

Policy acquisition expenses 40,387 45,953 129,406 138,059

General and administrative expenses 22,986 25,967 76,038 79,189



Underwriting (loss) income $ (14,246) $ 3,339 $ (9,056) $10,651



Underwriting ratios



Ex-cat current accident year loss and LAE ratio ^(1) 59.9 % 60.1 % 60.6 % 61.2 %

Catastrophe loss and LAE ratio 11.6 - 4.2 0.5

Unfavorable prior year reserve development ratio - 2.7 0.1 0.4

Loss and LAE ratio 71.5 % 62.8 % 64.9 % 62.1 %



Policy acquisition expense ratio 23.4 % 22.7 % 23.1 % 23.0 %

General and administrative expense ratio 13.4 12.8 13.6 13.2

Expense ratio 36.8 % 35.5 % 36.7 % 36.2 %



Combined ratio 108.3 % 98.3 % 101.6 % 98.3 %

(1) Ex-cat current accident year loss and LAE ratio is adjusted to exclude theimpact of reinsurance reinstatement premiums related to catastrophe lossesincurred during the period from net earned premium.

PROSIGHT GLOBAL, INC. SHARE AND PER SHARE INFORMATION (UNAUDITED)



September 30 December 31

2020 2019

Shares outstanding 43,423,214 43,058,266

Fully diluted shares outstanding 45,573,410 45,196,716



Book value per share^(1) $14.00 $12.61

Book value per share (fully diluted)^(1) $13.34 $12.01

Tangible book value per share^(1) $13.33 $11.93

Tangible book value per share (fully diluted)^(1) $12.70 $11.37





Three Months Ended Nine Months Ended September 30 September 30

(share amounts in thousands) 2020 2019 2020 2019

Weighted average basic shares outstanding 43,916 42,642 43,879 40,120

Weighted average diluted shares outstanding 44,018 43,060 44,030 40,661



Earnings per share - basic:

Net income from continuing operations $0.03 $ 0.20 $0.58 $0.77

Adjusted operating income^(2) $0.03 $ 0.32 $0.60 $1.04



Earnings per share - diluted:

Net income from continuing operations $0.03 $ 0.19 $0.58 $0.76

Adjusted operating income^(2) $0.03 $ 0.32 $0.60 $1.03



Adjusted operating return on equity ("ROE") ^(3) 1.0 % 11.2 % 6.1 % 12.1 %

Adjusted operating return on tangible equity ("ROTE")^(3) 1.1 % 11.9 % 6.4 % 12.9 %

(1) Book value per share is total stockholders' equity divided by the number ofcommon shares outstanding. Fully diluted book value per share is totalstockholders' equity divided by the number of common shares outstanding,unvested restricted shares and vested non issued shares. Tangible book valueper share and fully diluted tangible book value per share are non-GAAPmeasures. Tangible book value per share is total stockholders' equity excludingthe value of goodwill and other intangible assets divided by the number ofcommon shares outstanding. Fully diluted tangible book value per share istotal stockholders' equity excluding the value of goodwill and other intangibleassets divided by the number of common shares outstanding, unvestedrestricted shares, and vested non-issued shares. See "Reconciliation ofNon-GAAP Financial Measures".

(2) Adjusted operating income is a non-GAAP measure. See "Reconciliation ofNon-GAAP Financial Measures".

(3) Adjusted operating return on equity and adjusted operating return ontangible equity are non-GAAP measures. Adjusted operating return on equity isadjusted operating income expressed on an annualized basis as a percentage ofaverage beginning and ending stockholders' equity during the period. Adjustedoperating return on tangible equity is adjusted operating income expressed onan annualized basis as a percentage of average beginning and endingstockholders' equity, excluding goodwill and other intangible assets, duringthe period.

PROSIGHT GLOBAL, INC. GROSS WRITTEN PREMIUM BY CUSTOMER SEGMENT (UNAUDITED) ($ in millions)



Three Months Ended September 30 Nine Months Ended September 30

2020 2019 % Change 2020 2019 % Change

Construction $ 27.4 $27.3 0.4 %$ 79.6 $ 83.1 (4.2) %

Consumer Services 23.7 35.5 (33.2) 95.0 100.9 (5.8)

Marine and Energy 27.7 26.1 6.1 87.3 71.5 22.1

Media and Entertainment 17.3 28.7 (39.7) 65.3 90.8 (28.1)

Professional Services 34.7 27.0 28.5 96.3 85.7 12.4

Real Estate 34.9 41.6 (16.1) 115.4 116.9 (1.3)

Sports 5.4 8.1 (33.3) 19.6 22.8 (14.0)

Transportation 30.8 29.6 4.1 39.9 79.4 (49.7)

Customer segments subtotal 201.9 223.9 (9.8) 598.4 651.1 (8.1)

Other 1.6 3.3 (51.5) 5.3 67.0 (92.1)

Total $ 203.5 $227.2 (10.4) %$ 603.7 $ 718.1 (15.9) %

Reconciliation of Non-GAAP Financial Measures

Underwriting (loss) 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 (loss) 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 (loss) income should not be considered in isolation or viewed as a substitute for net income calculated in accordance with GAAP. Other companies may calculate underwriting (loss) income differently.

Net income from continuing operations for the three months and nine months ended September 30, 2020 and 2019 reconciles to underwriting income as follows:



Three Months Ended September 30Nine Months Ended September 30

($ in thousands) 2020 2019 2020 2019

Net income from continuing operations $1,498 $8,361 $25,592 $30,752

Income tax expense 412 2,015 7,151 8,253

Income from continuing operations before taxes 1,910 10,376 32,743 39,005



Net investment income 20,307 16,974 52,913 51,530

Realized investment gains, net 1,398 245 3,521 495

Interest and other expense, net 5,549 10,182 14,635 23,671

Underwriting (loss) income $(14,246) $3,339 $(9,056) $10,651

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 net income from continuing operations calculated in accordance with GAAP. Other companies may calculate adjusted operating income differently.

Net income from continuing operations for the three months and nine months ended September 30, 2020 and 2019 reconciles to adjusted operating income as follows:



Three Months Ended September 30 Nine Months Ended September 30

($ in thousands) 2020 2019 2020 2019

Net income from continuing operations $ 1,498 $ 8,361 $25,592 $30,752

Income tax expense 412 2,015 7,151 8,253

Income from continuing operations before taxes 1,910 10,376 32,743 39,005



Other expense ^(1) 1,394 7,162 4,521 14,332

Realized investment gains, net (1,398) (245) (3,521) (495)

Adjusted operating income before taxes 1,906 17,293 33,743 52,842

Less: income tax expense on adjusted operating income 411 3,468 7,369 11,159

Adjusted operating income $ 1,495 $ 13,825 $26,374 $41,683

(1) Other expense within the adjusted operating income includes non-recurringgrants of restricted stock units in connection with the initial public offeringand costs associated with the transition of our former Chief Executive Officer.

Tangible stockholders' equity is a non-GAAP financial measure that we use as an internal performance measure to evaluate the strength of our balance sheet and to compare returns relative to this measure. We define tangible stockholders' equity as stockholders' equity less goodwill and net intangible assets. Tangible stockholders' equity should not be considered in isolation or viewed as a substitute for stockholders' equity calculated in accordance with GAAP. Other companies may calculate tangible stockholders' equity differently.

Stockholders' equity at September 30, 2020 and December 31, 2019 reconciles to tangible stockholders' equity as follows:



September 30, 2020December 31, 2019

($ in thousands except per share amounts)

Stockholders' equity $ 607,872 $ 543,031

Less: goodwill and net intangible 29,166 29,189 assets

Tangible stockholders' equity $ 578,706 $ 513,842

Book value per share $ 14.00 $ 12.61

Book value per share (fully diluted) $ 13.34 $ 12.01

Tangible book value per share $ 13.33 $ 11.93

Tangible book value per share (fully $ 12.70 $ 11.37 diluted)

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SOURCE ProSight Global, Inc.