Back to top

ProAssurance (PRA) Q2 Earnings Beat, Revenues Miss Estimates

Read MoreHide Full Article

ProAssurance Corporation’s (PRA - Free Report) second-quarter 2017 operating earnings per share of 40 cents surpassed the Zacks Consensus Estimate by 2.6%. The bottom line, however, declined 40% year over year.

Operational Update

ProAssurance’s second-quarter operating revenues declined 41.3% to $205.6 million from the prior-year quarter. Lower investment income led to the downside. The top line also missed the Zacks Consensus Estimate.

Gross premiums written grew 5.8% year over year to $206.2 million, primarily driven by Specialty P&C and Workers' Compensation segments.

Net premiums earned increased 2% from the prior-year quarter to $180.3 million due to gains in its three operating segments, particularly Workers' Compensation and Lloyd's.

Net investment income, however, decreased 7.8% year over year to $22.7 million.

Total expenses increased 12.1% year over year to $186.4 million. The rise in costs mainly stemmed from net losses and loss adjustment expenses as well as underwriting, policy acquisition and operating expenses.

Segment Results

Specialty P&C Insurance Segment

Total revenue of $110.5 million rose 0.6% year over year on the back of higher net premiums earned.

Gross premiums written were $125 million, up 7.6% from the year-ago quarter, primarily due to increased physician premiums.

Total expenses of $102 million grew 16.4% year over year.

Workers' Compensation Segment

Total revenue of $57 million rose 3.3% year over year on the back of higher net premiums earned.

Gross premiums written were $59 million, 5% higher than the year-ago quarter, primarily driven by an increase in new business writings and solid premium retention.

Total expenses of $53 million grew 2% year over year.

Lloyd's Syndicate Segment

Total revenue of $15 million grew 5.3% year over year on the back of higher net premiums earned.

Gross premiums written in the segment were $23.3 million, down 6.8% from the year-ago quarter, primarily driven by a reduction in the Syndicate's quota share reinsurance arrangement with the Specialty P&C Segment.

Total expenses of $17.6 million grew 28% year over year.

Corporate Segment

Total revenue of $23 million declined 35% year over year due to lower net investment income

Interest expenses of $4.1 million grew 7.6% year over year.

Financial Ratios for the Quarter

Net loss ratio deteriorated 360 basis points (bps) from the prior-year quarter to 64.1%.

Expense ratio deteriorated 150 bps year over year to 32.1%.

Combined ratio deteriorated 510 bps from the year-ago quarter to 96.2%.

Operating ratio also deteriorated 640 bps to 83.6% from the year-earlier quarter.

Return on equity deteriorated 430 bps to 4.3% from the year-ago quarter.

ProAssurance Corporation Price, Consensus and EPS Surprise
 

Financial Position

As of Jun 30, 2017, ProAssurance’s total investments were $3.7 billion, down 4.5% from year-end 2016.

As of Jun 30, 2017, the company’s total assets were $4.9 billion, down 3.8% from year-end 2016.

As of Jun 30, 2017, the insurer’s shareholder equity was $1.8 billion, up 1.5% from Dec 31, 2016.

Book value per share increased 1.9% to $34.41 as of Jun 30, 2017 from $33.78 as of Dec 31, 2016.

Share Repurchase & Dividend Update

The company did not repurchase any shares during the first half of 2017. As of Jul 31, 2017, it had approximately $110 million available in its board-authorized stock repurchase program.

Its regular dividend, declared in May 2017 and paid in Jul 2017, was $16.5 million, bringing the total capital returned to shareholders in the form of regular and special dividends to $1.7 billion.

Zacks Rank Performances of Other P&C Insurers

ProAssurance currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Among other players from the same space that have reported their second-quarter earnings so far, the bottom lines of The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) missed their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) beat the same.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.See the pot trades we're targeting>>



More from Zacks Analyst Blog

You May Like