Back to top

Image: Bigstock

ProAssurance (PRA) Misses Q1 Earnings & Revenue Estimates

Read MoreHide Full Article

ProAssurance Corporation (PRA - Free Report) reported first-quarter 2020 operating loss per share of 2 cents against the Zacks Consensus Estimate of operating income of 5 cents. In the year-ago quarter, operating income was 8 cents.

Quarterly operating revenues of ProAssurance were down 2.6% to $227 million from the prior-year quarter’s level, mainly due to lower premiums. The top line also missed the Zacks Consensus Estimate by 3.4%.

ProAssurance Corporation Price, Consensus and EPS Surprise

Quarterly Operational Update

Gross premiums written were down 6.2% year over year to $262 million, primarily due to lower premiums across the Specialty P&C segment, Workers’ Compensation Insurance segment and Segregated Portfolio Cell Reinsurance segments. Moreover, net premiums earned were down 2.1% year over year to $204 million.

Net investment income decreased 8.7% year over year to $20.8 million.

Net realized investment loss of the company was $28.7 million against the prior-year quarter’s income of $36.6 million.

Total expenses inched up 0.2% year over year to $230.7 million. This rise in costs mainly stemmed from higher net loss and loss adjustment expenses and underwriting, policy acquisition and operating expenses.

Combined ratio deteriorated 500 basis points (bps) year over year to 111.3% due to increase in consolidated underwriting expense and net loss ratios.

Quarterly Segmental Results

Specialty P&C Insurance Segment

Total revenues of $122 million decreased 2.6% from the prior-year quarter figure due to lower premiums earned.

Gross premiums written declined 6.6% year over year to $155.4 million, indicating the company’s strategy to strengthen rate levels in the physician’s book of business and continued re-underwriting efforts related to their national accounts, excess and surplus lines and healthcare facilities business.

Total expenses of $140 million increased 2.4% year over year, primarily due to net loss and loss adjustment expenses.

Combined ratio deteriorated 610 basis points year over year to 116.8%.

Workers' Compensation Segment

Total revenues of $45.3 million decreased 3% year over year, mainly due to lower premiums earned.

Gross premiums written were $79.2 million, down 11.3% from the year-earlier period’s number, mainly due to reduction in renewal pricing and premium retention of 83%, partially offset by an increase in new business written.

Total expenses of $43.9 million were down 1.6% year over year.

Combined ratio deteriorated 150 basis points year over year to 98.7%.

Lloyd's Syndicate Segment

Total revenues of $23 million increased 16.9% year over year on the back of higher premiums and net investment income.

Gross premiums written were $27.9 million, up 18.1% from the figure acquired in the comparable quarter last year, primarily driven by volume increases on renewal business and renewal pricing increases, primarily property insurance coverage as well as new business written, primarily casualty coverage.

Total expenses of $23.9 million rose 23.4% year over year due to higher net losses and loss adjustment expenses and underwriting, policy acquisition and operating expenses.

Combined ratio deteriorated 490 basis points year over year to 108.8%.

Segregated Portfolio Cell Reinsurance segment

Total revenues of $68 million decreased 23.1% year over year mainly due to lower premiums earned and net investment income.

Gross premiums written were $27.1 million, down 25.4% the year-earlier period’s number, mainly due to the reduction in premium funding for a large workers’ compensation alternative market program.

Combined ratio deteriorated 310 basis points year over year to 85%.

Corporate Segment

The company reported negative revenues of $7.1 million against year-ago quarter revenues of $55 million.

Operating expenses of $4.8 million increased 5.6% from the prior-year quarter’s level. Interest expense of $4.1 million decreased 4.6% year over year.

Financial Position

As of Mar 31, 2020, ProAssurance’s total investments were $3.2 billion, down 4.4% from the number registered at year-end 2019.

At first-quarter end, the company’s total assets were $4.7 billion, down 1.6% from the count at 2019 end.

As of Mar 31, 2020, the insurer’s shareholder equity decreased 5.6% to $1.4 billion from the figure as of Dec 31, 2019.

Return on equity was (6%) against the year-ago quarter return on equity of 8%.

Book value was $26.51 per share as of Mar 31, 2020, down 5.7% 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 will be paid out to its shareholders on Jul 8, 2020. This dividend reflects reduction from 31 cents paid earlier given uncertainties introduced by the COVID-19 pandemic.

The company has not repurchased any shares of the stock in 2020 and 2019. As of May 1, 2020, it has $110 million remaining under its Board-authorized stock repurchase program.

Zacks Rank

ProAssurance currently carries a Zacks Rank #3 (Hold).

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

Performance of Other Insurers

Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) and Assurant, Inc. (AIZ - Free Report) beat the Zacks Consensus Estimate while that of RLI Corp. (RLI - Free Report) missed the same.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


RLI Corp. (RLI) - free report >>

ProAssurance Corporation (PRA) - free report >>

Assurant, Inc. (AIZ) - free report >>

Brown Brown, Inc. (BRO) - free report >>

Published in