Yahoo Finance ProAssurance (PRA) Q1 Earnings Beat on Specialty P&C Unit
ProAssurance Corporation PRA reported a first-quarter 2024 adjusted operating income of 8 cents per share, which outpaced the Zacks Consensus Estimate by a whopping 100%. An adjusted operating loss of 14 cents per share was incurred in the prior-year quarter.
Operating revenues of $282 million improved 4.1% year over year. The top line surpassed the consensus mark by 4.7%.
The results benefited on the back of strong underwriting results in the Specialty P&C segment and robust growth in investment income. A decline in the overall expense level also contributed to the upside. However, the upside was partly offset by a lower profit level generated by the Segregated Portfolio Cell Reinsurance unit as well as continued average claim costs in the Workers' Compensation Insurance segment.
ProAssurance Corporation Price, Consensus and EPS Surprise
ProAssurance Corporation price-consensus-eps-surprise-chart | ProAssurance Corporation Quote
Quarterly Operational Update
Gross premiums written amounted to $311.3 million, which dipped 1.4% year over year. Net premiums earned advanced 1.8% year over year to $244.2 million on the back of new business growth and solid renewal pricing increases in the medical professional liability business. The reported figure came higher than the Zacks Consensus Estimate of $232 million and our estimate of $225.9 million.
Net investment income of $33.9 million advanced 11.8% year over year but fell short of the consensus mark of $34.5 million and our estimate of $34.6 million.
Total expenses dipped 0.6% year over year to $279.4 million but came higher than our estimate of $262.9 million. The year-over-year decline resulted from a decline in net losses and loss adjustment expenses.
The net income of ProAssurance was $4.6 million against the prior-year’s quarter’s loss of $6.2 million. The combined ratio of 111.6% improved 230 basis points (bps) year over year.
Segmental Update
Specialty P&C Segment
The segment generated revenues of $190.2 million in the first quarter, which grew 3% year over year and beat the Zacks Consensus Estimate of $179 million and our estimate of $172 million. Net premiums earned increased 2.8% year over year to $188.9 million, higher than the consensus mark of $182 million. The metric was aided by prudent pricing decisions, new business growth and strong customer retention rates.
Total expenses of $204 million slid 2.2% year over year. The segment incurred a loss of $13.8 million, narrower than the prior-year quarter’s loss of $24 million but wider than our estimate of $12.6 million. The combined ratio improved 560 bps year over year to 108%.
Workers' Compensation Insurance Segment
Revenues of the unit inched up 0.5% year over year to $41.6 million and beat the Zacks Consensus Estimate and our estimate of $41 million. Net premiums earned were $41.1 million, up 0.7% year over year on the back of new business writings and strong retention rates in its traditional business. The reported figure surpassed the consensus mark of $40.5 million and our estimate of $40.6 million.
Total expenses of $46.1 million increased 5.3% year over year. The unit incurred a loss of $4.6 million, wider than the prior-year quarter’s loss of $2.4 million. The combined ratio deteriorated 490 bps to 112.3% due to elevated average claim costs.
Segregated Portfolio Cell Reinsurance Segment
The segment recorded gross premiums written of $15.9 million, which dropped 30.4% year over year due to the non-renewal of two Segregated Portfolio Cell programs and declining renewal rates. The metric also lagged our estimate of $20.4 million. Net premiums earned of $14.2 million fell 7.4% year over year, lower than the Zacks Consensus Estimate of $15.1 million and our estimate of $14.9 million.
Underwriting, policy acquisition and operating expenses declined 6.4% to $4.7 million. The unit witnessed a quarterly profit of $0.5 million, which plunged 44.4% year over year. The combined ratio of 104.3% deteriorated 1,630 bps year over year.
Corporate Segment
Net investment income in the unit amounted to $33.2 million, which improved 11.1% year over year but fell short of our estimate of $34 million. Improved average book yields from PRA’s fixed maturity investments benefited investment results.
Operating expenses of $8.7 million escalated 5.9% year over year due to elevated compensation-related costs. The segment’s profit of $22.5 million rose 22.3% year over year. Interest expenses increased 3.6% to $5.7 million.
Financial Position (as of Mar 31, 2024)
ProAssurance exited the first quarter with cash and cash equivalents of $65.4 million, which dipped 0.8% from the 2023-end level. Total investments of $4.3 billion slid 0.4% from the figure at 2023 end. Total assets were $5.7 billion, up 0.3% from the 2023-end level.
Debt-less unamortized debt issuance costs amounted to $427.8 million, which inched up 0.2% from the figure as of Dec 31, 2023.
Total shareholders’ equity of $1.1 billion inched up marginally from the level at 2023 end.
Net cash used in operating activities amounted to $11.6 million compared with $29.8 million of cash usage in the prior-year quarter.
Book value per share was $21.82, which remained flat from the 2023-end level. Adjusted operating return on equity was 1.5% while the metric was a negative 2.6% in the prior-year quarter.
Share Repurchase Update
ProAssurance did not repurchase any common shares in the first quarter. A leftover capacity of $55.9 million remained in place to be utilized for common share repurchases or retirement of outstanding debt as of Mar 31, 2024.
Zacks Rank
PRA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported first-quarter 2024 results so far, the bottom-line results of American International Group, Inc. AIG, AXIS Capital Holdings Limited AXS and Arch Capital Group Ltd. ACGL beat the respective Zacks Consensus Estimate.
AIG reported first-quarter 2024 adjusted earnings per share of $1.77, which beat the Zacks Consensus Estimate by 6.6%. The bottom line improved 8.6% year over year. Operating revenues amounted to $12.5 billion, which inched up 0.8%. The top line surpassed the consensus mark by 3.6%. Premiums of $8.2 billion declined 3.7% year over year. Total net investment income advanced 11% to $3.9 billion.
The General Insurance segment recorded net premiums written of $4.5 billion, which plunged 35% year over year. Yet, underwriting income of $596 million rose 19% for the unit. The combined ratio of 89.8% improved 210 bps, attributable to an improved loss ratio. Adjusted revenues in the Life & Retirement unit rose 10.2% to $5.9 billion. The unit’s adjusted pre-tax income of $991 million improved 12% year over year.
AXIS Capital’s first-quarter operating income of $2.57 per share beat the Zacks Consensus Estimate by 1.2%. The bottom line increased 10.3% year over year. Total operating revenues of $1.4 billion missed the consensus estimate by 2.8%. The top line, however, rose 5% year over year. Net investment income jumped 25% year over year to $167 million. Pre-tax catastrophe and weather-related losses, and net of reinsurance were $20 million.
AXIS Capital’s underwriting income of $145.6 million increased 4.5% year over year. The combined ratio deteriorated 20 bps to 91.1. The Insurance segment’s gross premiums written improved 11.2% to $1.5 billion. Net premiums earned increased 12.4% to $917.9 million. Meanwhile, gross premiums written in the Reinsurance unit rose 11.8% year over year to $1 billion. Net premiums earned declined 17.8% year over year to $340 million. Our estimate was $352.1 million.
Arch Capital reported first-quarter operating income of $2.45 per share, which beat the Zacks Consensus Estimate by 18.9%. The bottom line jumped 41.6% year over year. Gross premiums written improved 24.1% to $5.9 billion. Net premiums written climbed 19.3% year over year to $4.1 billion on higher premiums. Net investment income surged 64.3% to $327 million.
Operating revenues of $3.8 billion rose 21.7% year over year. It missed the consensus estimate by 0.2%. ACGL’s underwriting income climbed 29.1% year over year to $736 million. The combined ratio improved 180 bps to 78.8. Net premiums written in the Insurance climbed 19.1% $1.4 billion. Underwriting income was $379 million in the Reinsurance unit, which surged 77.9% year over year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American International Group, Inc. (AIG) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
ProAssurance Corporation (PRA) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
