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Why Is ProAssurance (PRA) Down 7.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for ProAssurance (PRA - Free Report) . Shares have lost about 7.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ProAssurance due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
ProAssurance Q3 Earnings Beat Estimates, Drop Y/Y
ProAssurance Corporation’s third-quarter 2019 operating earnings per share of 30 cents beat the Zacks Consensus Estimate of 12 cents by 150%, primarily driven by higher revenues. However, the bottom line declined 28.6% year over year. The company’s quarterly operating revenues rose 5.7% to $242 million from the prior-year period on the back of premium growth. The top line also surpassed the Zacks Consensus Estimate by 0.8%.
Quarterly Operational Update
Gross premiums written inched up 2.2% year over year to $265 million, riding on the company’s Workers’ Compensation Insurance segment, Segregated Portfolio Cell Reinsurance and Lloyd’s Syndicates segments.
Also, net premiums earned rose 4.7% year over year on solid segmental performances, especially Specialty P&C segment.
Net investment income increased 1.8% year over year.
Total expenses rose 6% year over year to $231 million due to higher net losses and loss adjustment expenses.
Quarterly Segment Results
Specialty P&C Segment
Total revenues of $127 million improved 4% year over year. Gross premiums written were $164.9 million, down 1.6% year over year due to decline in healthcare facilities premium and the pending renewal of a $3.6-million physician policy. Total expenses of $137 million rose 8.7% year over year due to net loss and loss adjustment expenses.
Workers' Compensation Segment
Total revenues of $49.9 million rose 4.8% year over year. Gross premiums written were $70.1 million in the quarter under review, up 6.6% year over year. This was on the back of new business additions and a hike in audit premium. Total expenses of $47.2 million increased 2.6% year over year.
Segregated Portfolio Cell Reinsurance Segment
Gross premiums of $17.3 million were up 29% year over year owing to new business and 96% renewal retention rate.
Lloyd's Syndicate Segment
Total revenues of $22.5 million improved 12.1% year over year. Gross premiums written were $30.4 million, up 15.3% from the figure acquired in the comparable quarter last year. This upside can be attributed to volume expansion on renewal business and renewal pricing increases, new business written, etc. Total expenses of $21.3 million increased 15.4% year over year due to higher net losses and loss adjustment expenses and higher underwriting, policy acquisition and operating expenses.
Corporate Segment
Total revenues of $22.8 million deteriorated 41.7% year over year. Operating expenses of $2.6 million declined 46.9% from the year-ago level on the back of some lower compensation-related expenses. Interest expense of $4.2 million increased 17.3% year over year.
Financial Position
As of Sep 30, 2019, ProAssurance’s total investments of $3.4 billion were up 4.4% from the number registered at 2018 end.
At third-quarter end, the company’s total assets were $4.8 billion, up 4.9% from the level at 2018 end.
As of Sep 30, 2019, the insurer’s shareholder equity increased 4.3% to $1.5 billion from the tally on Dec 31, 2018.
Share Repurchase & Dividend Update
The company did not buy back any shares in the reported quarter. As of Oct 31, 2019, it had approximately $110 million of shares available under its board-authorized stock repurchase program. In August 2019, the company’s board members approved a regular dividend of 31 cents, paid out in October.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 8.33% due to these changes.
VGM Scores
Currently, ProAssurance has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, ProAssurance has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is ProAssurance (PRA) Down 7.4% Since Last Earnings Report?
It has been about a month since the last earnings report for ProAssurance (PRA - Free Report) . Shares have lost about 7.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ProAssurance due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
ProAssurance Q3 Earnings Beat Estimates, Drop Y/Y
ProAssurance Corporation’s third-quarter 2019 operating earnings per share of 30 cents beat the Zacks Consensus Estimate of 12 cents by 150%, primarily driven by higher revenues. However, the bottom line declined 28.6% year over year. The company’s quarterly operating revenues rose 5.7% to $242 million from the prior-year period on the back of premium growth. The top line also surpassed the Zacks Consensus Estimate by 0.8%.
Quarterly Operational Update
Gross premiums written inched up 2.2% year over year to $265 million, riding on the company’s Workers’ Compensation Insurance segment, Segregated Portfolio Cell Reinsurance and Lloyd’s Syndicates segments.
Also, net premiums earned rose 4.7% year over year on solid segmental performances, especially Specialty P&C segment.
Net investment income increased 1.8% year over year.
Total expenses rose 6% year over year to $231 million due to higher net losses and loss adjustment expenses.
Quarterly Segment Results
Specialty P&C Segment
Total revenues of $127 million improved 4% year over year. Gross premiums written were $164.9 million, down 1.6% year over year due to decline in healthcare facilities premium and the pending renewal of a $3.6-million physician policy. Total expenses of $137 million rose 8.7% year over year due to net loss and loss adjustment expenses.
Workers' Compensation Segment
Total revenues of $49.9 million rose 4.8% year over year. Gross premiums written were $70.1 million in the quarter under review, up 6.6% year over year. This was on the back of new business additions and a hike in audit premium. Total expenses of $47.2 million increased 2.6% year over year.
Segregated Portfolio Cell Reinsurance Segment
Gross premiums of $17.3 million were up 29% year over year owing to new business and 96% renewal retention rate.
Lloyd's Syndicate Segment
Total revenues of $22.5 million improved 12.1% year over year. Gross premiums written were $30.4 million, up 15.3% from the figure acquired in the comparable quarter last year. This upside can be attributed to volume expansion on renewal business and renewal pricing increases, new business written, etc. Total expenses of $21.3 million increased 15.4% year over year due to higher net losses and loss adjustment expenses and higher underwriting, policy acquisition and operating expenses.
Corporate Segment
Total revenues of $22.8 million deteriorated 41.7% year over year. Operating expenses of $2.6 million declined 46.9% from the year-ago level on the back of some lower compensation-related expenses. Interest expense of $4.2 million increased 17.3% year over year.
Financial Position
As of Sep 30, 2019, ProAssurance’s total investments of $3.4 billion were up 4.4% from the number registered at 2018 end.
At third-quarter end, the company’s total assets were $4.8 billion, up 4.9% from the level at 2018 end.
As of Sep 30, 2019, the insurer’s shareholder equity increased 4.3% to $1.5 billion from the tally on Dec 31, 2018.
Share Repurchase & Dividend Update
The company did not buy back any shares in the reported quarter. As of Oct 31, 2019, it had approximately $110 million of shares available under its board-authorized stock repurchase program. In August 2019, the company’s board members approved a regular dividend of 31 cents, paid out in October.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 8.33% due to these changes.
VGM Scores
Currently, ProAssurance has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, ProAssurance has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.