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ProAssurance Corporation (PRA - Free Report) reported first-quarter 2021 operating earnings of 4 cents per share, beating the Zacks Consensus Estimate of 2 cents by 100%. The company’s bottom line rebounded from the year-ago quarter’s loss of 2 cents per share, mainly on the back of lower expenses.
Further, quarterly operating revenues of ProAssurance dropped 10.1% to $204 million from the prior-year quarter’s level, mainly due to lower premiums. Nonetheless, the top line came in line with the Zacks Consensus Estimate.
ProAssurance Corporation Price, Consensus and EPS Surprise
Gross premiums written were down 14.4% year over year to $224.7 million. Moreover, net premiums earned were down 8.1% year over year to $187.3 million.
Further, net investment income fell 27.9% year over year to $15 million due to decline in corporate debt securities and weak yields from short-term investments along with lower allocation to equity. It also reflects capital planning in anticipation of the pending buyout of NORCAL.
Net realized investment losses of the company were $8.8 million, which came against the net realized investment gain of $28.6 million.
Total expenses declined 8.3% year over year to $211.5 million on the back of lower net losses and loss adjustment expenses, underwriting, policy acquisition and operating expenses, and lower interest expenses.
Combined ratio contracted 130 basis points (bps) year over year to 110%.
Quarterly Segmental Results
Specialty P&C Insurance Segment
Total revenues of $116 million declined 4.9% from the prior-year quarter’s figure.
Gross premiums written fell 11% year over year to $138.2 million, mainly due to the non-renewal of two major accounts in the Specialty Healthcare business.
Total expenses of $127.5 million decreased 9.2% year over year.
Combined ratio contracted 650 basis points year over year to 110.3%.
Workers' Compensation Segment
Total revenues of $40.4 million decreased 10.8% year over year, mainly due to lower premiums earned.
Gross premiums written were $72.3 million, down 8.7% from the year-earlier period’s number, mainly due to competitive workers’ compensation market conditions.
Total expenses of $38.4 million were down 12.4% year over year.
Combined ratio contracted 250 basis points year over year to 96.2%.
Lloyd's Syndicate Segment
Gross premiums written were $14.1 million, down 49.4% from the figure acquired in the comparable quarter last year due to higher losses from certain property and catastrophe-related events.
Combined ratio expanded 1460 basis points year over year to 123.4%.
Segregated Portfolio Cell Reinsurance Segment
Gross premiums written were $25.1 million, down 7.3% from the year-earlier quarter’s number, mainly due to the premium retention for worker’s compensation market conditions.
Combined ratio expanded 590 basis points year over year to 90.9%.
Corporate Segment
Net investment income of $14 million declined 27.6% year over year due to softer allocation to equities and lower yields on short-term investments and corporate debt securities. The investment income also reflected the effect of capital planning related to the pending NORCAL buyout.
Operating expenses of $7.1 million increased 48.6% from the prior-year quarter’s level. Interest expense of $3.2 million dropped 22.2% year over year.
Financial Position (as of Mar 31, 2021)
ProAssurance’s total investments were $3.4 billion, up 0.5% from the number registered at 2020 end.
At first-quarter end, the company’s total assets were $4.6 billion, up 0.4% from the figure at 2020 end.
The insurer’s shareholder equity dipped 2.1% to $1.3 billion from the figure as of Dec 31, 2020.
Return on equity was 2.3% against the year-ago quarter’s return on equity of (6.0%).
Book value was $24.49 per share, down 2.2% from the figure as of Dec 31, 2020.
Of the insurance industry players that have reported first-quarter results so far, earnings of The Travelers Companies, Inc. (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Brown & Brown, Inc. (BRO - Free Report) beat the respective Zacks Consensus Estimate.
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ProAssurance's (PRA) Q1 Earnings Beat Estimates, Surge Y/Y
ProAssurance Corporation (PRA - Free Report) reported first-quarter 2021 operating earnings of 4 cents per share, beating the Zacks Consensus Estimate of 2 cents by 100%. The company’s bottom line rebounded from the year-ago quarter’s loss of 2 cents per share, mainly on the back of lower expenses.
Further, quarterly operating revenues of ProAssurance dropped 10.1% to $204 million from the prior-year quarter’s level, mainly due to lower premiums. Nonetheless, the top line came in line with the Zacks Consensus Estimate.
ProAssurance Corporation Price, Consensus and EPS Surprise
ProAssurance Corporation price-consensus-eps-surprise-chart | ProAssurance Corporation Quote
Quarterly Operational Update
Gross premiums written were down 14.4% year over year to $224.7 million. Moreover, net premiums earned were down 8.1% year over year to $187.3 million.
Further, net investment income fell 27.9% year over year to $15 million due to decline in corporate debt securities and weak yields from short-term investments along with lower allocation to equity. It also reflects capital planning in anticipation of the pending buyout of NORCAL.
Net realized investment losses of the company were $8.8 million, which came against the net realized investment gain of $28.6 million.
Total expenses declined 8.3% year over year to $211.5 million on the back of lower net losses and loss adjustment expenses, underwriting, policy acquisition and operating expenses, and lower interest expenses.
Combined ratio contracted 130 basis points (bps) year over year to 110%.
Quarterly Segmental Results
Specialty P&C Insurance Segment
Total revenues of $116 million declined 4.9% from the prior-year quarter’s figure.
Gross premiums written fell 11% year over year to $138.2 million, mainly due to the non-renewal of two major accounts in the Specialty Healthcare business.
Total expenses of $127.5 million decreased 9.2% year over year.
Combined ratio contracted 650 basis points year over year to 110.3%.
Workers' Compensation Segment
Total revenues of $40.4 million decreased 10.8% year over year, mainly due to lower premiums earned.
Gross premiums written were $72.3 million, down 8.7% from the year-earlier period’s number, mainly due to competitive workers’ compensation market conditions.
Total expenses of $38.4 million were down 12.4% year over year.
Combined ratio contracted 250 basis points year over year to 96.2%.
Lloyd's Syndicate Segment
Gross premiums written were $14.1 million, down 49.4% from the figure acquired in the comparable quarter last year due to higher losses from certain property and catastrophe-related events.
Combined ratio expanded 1460 basis points year over year to 123.4%.
Segregated Portfolio Cell Reinsurance Segment
Gross premiums written were $25.1 million, down 7.3% from the year-earlier quarter’s number, mainly due to the premium retention for worker’s compensation market conditions.
Combined ratio expanded 590 basis points year over year to 90.9%.
Corporate Segment
Net investment income of $14 million declined 27.6% year over year due to softer allocation to equities and lower yields on short-term investments and corporate debt securities. The investment income also reflected the effect of capital planning related to the pending NORCAL buyout.
Operating expenses of $7.1 million increased 48.6% from the prior-year quarter’s level. Interest expense of $3.2 million dropped 22.2% year over year.
Financial Position (as of Mar 31, 2021)
ProAssurance’s total investments were $3.4 billion, up 0.5% from the number registered at 2020 end.
At first-quarter end, the company’s total assets were $4.6 billion, up 0.4% from the figure at 2020 end.
The insurer’s shareholder equity dipped 2.1% to $1.3 billion from the figure as of Dec 31, 2020.
Return on equity was 2.3% against the year-ago quarter’s return on equity of (6.0%).
Book value was $24.49 per share, down 2.2% from the figure as of Dec 31, 2020.
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 first-quarter results so far, earnings of The Travelers Companies, Inc. (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Brown & Brown, Inc. (BRO - Free Report) beat the respective Zacks Consensus Estimate.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>