1273397--3/9/2007--PROCENTURY

related topics

{loss, insurance, financial}

{condition, economic, financial}

{customer, product, revenue}

{personnel, key, retain}

{debt, indebtedness, cash}

{capital, credit, financial}

{operation, natural, condition}

{regulation, government, change}

{system, service, information}

A decline in our financial rating assigned by A.M. Best may result in a reduction of new or renewal business. We are subject to extensive regulation and judicial decisions affecting insurance and tort law, which may adversely affect our ability to achieve our business objectives. In addition, if we fail to comply with these regulations, we may be subject to penalties, including fines and suspensions, which may adversely affect our financial condition and results of operations. Our general agents may exceed their authority and bind us to policies outside our underwriting guidelines, and until we effect a cancellation, we may incur loss and loss expenses related to that policy. We may not be successful in developing our new specialty lines that could cause us to experience losses. If we lose key personnel or are unable to recruit qualified personnel, our ability to implement our business strategies could be delayed or hindered. Our investment results and, therefore, our financial condition may be impacted by changes in the business, financial condition or operating results of the entities in which we invest, as well as changes in government monetary policies, general economic conditions and overall capital market conditions, all of which impact interest rates. We distribute our products through a select group of general agents, five of which account for a significant part of our business, and such relationships could be discontinued or cease to be profitable. Our reinsurers may not pay claims made by us on losses in a timely fashion or may not pay some or all of these claims, in each case causing our costs to increase and our revenues to decline. If we are not able to renew our existing reinsurance or obtain new reinsurance, either our net exposure would increase or we would have to reduce the level of our underwriting commitment. Our business is cyclical in nature, which will affect our financial performance and may affect the price of our common shares. If we are unable to compete effectively with the large number of companies in the insurance industry for underwriting revenues, we may incur increased costs and our underwriting revenues and net income may decline. Severe weather conditions and other catastrophes may result in an increase in the number and amount of claims experienced by our insureds. As a holding company, we are dependent on the results of operations of our insurance subsidiaries and the regulatory and contractual capacity of our subsidiaries to pay dividends to us. Some states limit the aggregate amount of dividends our subsidiaries may pay to us in any twelve-month period, thereby limiting our funds to pay expenses and dividends. Managing technology initiatives and meeting new data security requirements present significant challenges to the Company.

Full 10-K form ▸

1273397--3/9/2007--PROCENTURY_CORP