A month has gone by since the last earnings report for ProAssurance (PRA - Free Report) . Shares have added about 9.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ProAssurance due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
ProAssurance Q2 Earnings Beat Estimates, Improve Y/Y
ProAssurance Corporation’s second-quarter 2018 operating earnings per share of 48 cents beat the Zacks Consensus Estimate by 26.3%. Moreover, the bottom line improved 20% year over year, mainly driven by growth in its three operating segments along with overall renewal pricing.
ProAssurance’s quarterly operating revenues grew 21% to $248 million from the prior-year quarter’s level on the back of higher premiums. Also, the top line surpassed the Zacks Consensus Estimate by 12.7%.
Quarterly Operational Update
Gross premiums written increased 17.8% year over year to $242 million, primarily banking on higher premiums across Specialty P&C Insurance, Lloyd's Syndicates and Workers' Compensation segments. Also, net premiums earned rose 18.3% year over year.
Net investment income dipped nearly 1.3% year over year to $22 million.
Total expenses escalated 22.4% year over year to $228.1 million. This rise in costs mainly stemmed from higher net loss and loss adjustment expenses as well as underwriting, policy acquisition and operating expenses.
Quarterly Segment Results
Specialty P&C Insurance Segment
Total revenues of $140 million surged 31.4% year over year.
Gross premiums written were $147 million, up 18.5% from the year-ago quarter’s figure.
Total expenses of $140 million mounted 36.4% year over year, primarily due to net loss and loss adjustment expenses.
Workers' Compensation Segment
Total revenues of $62 million rose 9.5% year over year courtesy of gross premiums written as well as net premiums earned.
Gross premiums written were $70 million, up 19.2% over the year-earlier period’s number.
Total expenses of $58 million increased 9.1 % year over year.
Lloyd's Syndicate Segment
Total revenues of $17 million declined 19.2% year over year.
Gross premiums written were $24 million, up 3.8% from the figure acquired in comparable quarter last year.
Total expenses of $20 million rose 16.7% year over year.
Total revenues of $31 million increased 33.4% year over year.
Operating expenses of $5.6 million decreased 27.5% over the year-ago quarter’s level. Interest expense of $3.9 million declined 4.5% year over year.
As of Jun 30, 2018, ProAssurance’s total investments were $3.3 billion, down 9% from year-end 2017 level.
At second-quarter end, the company’s total assets were $4.5 billion, down 7% from Dec 31, 2017 level.
As of Jun 30, 2018, the insurer’s shareholder equity dipped 1.3% to $1.5 billion from Dec 31, 2017.
Share Repurchase & Dividend Update
The company did not buy back any shares in the reported quarter. As of Jul 31, 2018, it had approximately $110 million of shares available under its board-authorized stock repurchase program.
In May, the company’s board members approved a regular dividend of 31 cents, paid in July.
Notably, within a span of almost 11 years, the company has been able to return more than $2 billion to its shareholders through regular and special dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, ProAssurance has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, ProAssurance has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.