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ProAssurance's (PRA) Q4 Earnings Beat Estimates, Improve Y/Y

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ProAssurance Corporation (PRA - Free Report) reported fourth-quarter 2020 operating earnings of 6 cents per share, beating the Zacks Consensus Estimate of 4 cents by 50%. The company’s bottom line rebounded from the year-ago quarter’s loss of $1.27 per share, mainly on the back of lower expenses.

Further, quarterly operating revenues of ProAssurance dropped 10.5% to $214 million from the prior-year quarter’s level, mainly due to lower premiums. Nonetheless, the top line beat the Zacks Consensus Estimate by 1.9%.

Quarterly Operational Update

Gross premiums written were down 19.4% year over year to $161.8 million, primarily due to decreased participation in Syndicate 1729 along with the strategy to strengthen rate levels in the Specialty P&C segment. Moreover, competitive conditions in the Workers Compensation Insurance and SPCR segments induced this downside.

Moreover, net premiums earned were down 12.8% year over year to $187 million.

Further, net investment income fell 30.6% year over year to $16.1 million due to lower allocation to equity, decline in corporate debt securities and weak yields from short-term investments.

Net realized investment gain of the company was $15.5 million, rising 21.2% year over year.

Total expenses declined 38.6% year over year to $208 million on the back of lower net losses and loss adjustment costs, SPC U.S. federal income tax expense and SPC dividend expense.

Combined ratio contracted 4840 basis points (bps) year over year to 105.8%.

ProAssurance Corporation Price, Consensus and EPS Surprise ProAssurance Corporation Price, Consensus and EPS Surprise

ProAssurance Corporation price-consensus-eps-surprise-chart | ProAssurance Corporation Quote

Quarterly Segmental Results

Specialty P&C Insurance Segment

Total revenues of $112.4 million declined 10% from the prior-year quarter’s figure.

Gross premiums written fell 13.7% year over year to $102.2 million, reflective of renewal timing differences, strategy to strengthen rate levels in the Standard Physicians business and the re-underwriting efforts in its Specialty business, etc.

Total expenses of $123.3 million decreased 49.1% year over year.

Combined ratio contracted 8590 basis points year over year to 110%.

Workers' Compensation Segment

Total revenues of $42.8 million decreased 10.2% year over year, mainly due to lower premiums earned.

Gross premiums written were $47.3 million, down 13.6% from the year-earlier period’s number, mainly due to reduction in renewal pricing and lower new business written along with weak audit premiums.

Total expenses of $40.7 million were down 3.6% year over year.

Combined ratio expanded 680 basis points year over year to 96.3%.

Lloyd's Syndicate Segment

Gross premiums written were $12.3 million, down 55.6% from the figure acquired in the comparable quarter last year due to less participation in the operating results of Syndicate 1729.

Combined ratio expanded 1560 basis points year over year to 109.4%.

Segregated Portfolio Cell Reinsurance Segment

Gross premiums written were $14.8 million, down 10.9% the year-earlier period’s number, mainly due to the premium retention for worker’s compensation business.

Combined ratio contracted 2410 basis points year over year to 66.1%.

Corporate Segment

Net investment income of $14.9 million declined 30.8% year over year due to softened allocation to equities and lower yields on short-term investments and corporate debt securities.

Operating expenses of $5.8 million decreased 10.4% from the prior-year quarter’s level. Interest expense of $3.8 million dipped 0.2% year over year.

Financial Position

As of Dec 31, 2020, ProAssurance’s total investments were $3.3 billion, down 0.03% from the number registered at 2019 end.

At fourth-quarter end, the company’s total assets were $4.7 billion, down 3.1% from the figure at 2019 end.

As of Dec 31, 2020, the insurer’s shareholder equity dropped 10.8% to $1.3 billion from the figure as of Dec 31, 2019.

Return on equity was 4.3% against the year-ago quarter’s return on equity of (15.3%).

Book value was $25.04 per share as of Dec 31, 2020, down 10.9% from the figure as of Dec 31, 2019.

Share Repurchase & Dividend Update

The board of directors declared a regular dividend of 5 cents per share, which was paid out on Jan 7, 2021.

The company did not repurchase any shares in 2019 and 2020. As of Feb 19, 2021, it has $110 million remaining under its board-authorized stock repurchase program.

2020 Update

The company reported an operating loss of 52 cents per share for the full year, narrower than the Zacks Consensus Estimate of a loss of 54 cents.

Total revenues for 2020 dropped 12.5% year over year to $874.9 million,  comparing favorably with the consensus estimate of $866.43 million.

Total expenses for the year shot up 6.2% year over year.

Zacks Rank and Performance of Other Insurers

ProAssurance currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies, Inc. (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Brown & Brown, Inc. (BRO - Free Report) beat on earnings.

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