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ProAssurance (PRA) Q2 Earnings Beat, Surge Y/Y on Lower Costs
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ProAssurance Corporation (PRA - Free Report) reported second-quarter 2024 adjusted operating income of 23 cents per share, which surpassed the Zacks Consensus Estimate of 8 cents. The bottom line soared 64.3% year over year.
Operating revenues dipped 1.1% year over year to $279 million. The top line beat the consensus mark by 1.8%.
ProAssurance's quarterly performance was bolstered by strong underwriting results in the Specialty P&C segment, significant growth in investment income driven by a higher interest rate environment and a decline in overall expenses. However, the upside was partly offset by lower profitability in the Segregated Portfolio Cell Reinsurance unit and a deterioration in the overall combined ratio, which impacted overall profitability.
ProAssurance Corporation Price, Consensus and EPS Surprise
Gross premiums written of $223.9 million slipped 5.9% year over year. Net premiums earned fell 3.2% year over year to $239.9 million, resulting from renewal pricing increases in the medical professional liability business. The reported figure outpaced the Zacks Consensus Estimate of $235 million and our estimate of $232.7 million.
Net investment income was $36.6 million, which advanced 15.5% year over year, aided by a higher interest rate environment, The metric beat the consensus mark of $34.5 million and our estimate of $34.2 million.
Total expenses of $272.4 million decreased 2.1% year over year were higher than our estimate of $268.7 million. The year-over-year decrease resulted from a decline in net losses and loss adjustment expenses, SPC U.S. federal income tax expenses and SPC dividend expenses.
ProAssurance’s net income soared 45.9% year over year to $15.5 million. The combined ratio of 110.9% deteriorated 270 basis points (bps) year over year.
Segmental Update
Specialty P&C Segment
Revenues from the segment inched up 1% year over year to $185.6 million, higher than the Zacks Consensus Estimate of $183.4 million and our estimate of $175.6 million. Net premiums earned of $184.55 million grew 1% year over year on the back of strong customer retention rates and renewal pricing increases. The metric outpaced the consensus mark of $184.45 million and our estimate of $174.3 million.
Total expenses dipped marginally year over year to $196.1 million. The unit incurred a loss of $10.5 million, narrower than the prior-year quarter’s loss of $12.6 million. The combined ratio of 106.3% improved 110 bps year over year.
Workers' Compensation Insurance Segment
The segment’s revenues of $42.2 million rose 1.4% year over year, higher than Zacks Consensus Estimate of $41.7 million and our estimate of $41.6 million. Net premiums earned advanced 1.8% year over year to $41.8 million, which beat the consensus mark of $41 million and our estimate of $41.1 million.
Total expenses escalated 7.1% year over year to $47.3 million. The unit incurred a loss of $5 million, wider than the prior-year quarter’s loss of $2.5 million. The combined ratio of 113.2% deteriorated 550 bps year over year.
Segregated Portfolio Cell Reinsurance Segment
Gross premiums written amounted to $15.9 million, which plunged 36.8% year over year and fell short of our estimate of $22.2 million. Net premiums earned dropped 43.8% year over year to $13.6 million, which missed the Zacks Consensus Estimate of $14.6 million and our estimate of $17.3 million.
Underwriting, policy acquisition and operating expenses decreased 19.7% year over year to $5.3 million. The unit reported a quarterly profit of $0.2 million, which plummeted 79% year over year due to increased loss activity, decline in favorable prior accident year development and higher allowance for credit losses on a lower earned premium base. The combined ratio deteriorated 1,790 bps year over year to 102.3%.
Corporate Segment
The segment’s net investment income improved 14.6% year over year to $35.6 million and beat our estimate of $33.5 million. The metric gained on improved average book yields from PRA’s fixed maturity investments.
Operating expenses increased 18.2% year over year to $9.8 million. The unit’s profit of $24.4 million advanced 6.7% year over year. Interest expenses increased 2.7% to $5.6 million.
Financial Position (as of Jun 30, 2024)
ProAssurance exited the second quarter with cash and cash equivalents of $36.9 million, which dropped 44% from the 2023-end level. Total investments were $4.4 billion, which inched up marginally from the figure at 2023-end.
Total assets of $5.6 billion dipped 0.3% from the 2023-end level.
Debt-less unamortized debt issuance costs amounted to $426.9 million, which reflects a slight decrease from the figure as of Dec 31, 2023.
Total shareholders’ equity of $1.1 billion rose 1.8% from the level at 2023-end.
Net cash used in operating activities amounted to $24.5 million in the first half of 2024 compared with $61.8 million in the prior-year comparable period.
Book value per share was $22.15 as of Jun 30, 2024, up 1.5% from the 2023-end level. Adjusted operating return on equity was 4.1%, which improved 140 bps year over year.
Share Repurchase Update
ProAssurance did not repurchase any common shares in the first half of 2024. A leftover capacity of $55.9 million remained in place to be utilized for common share repurchases or retirement of outstanding debt as of Jun 30, 2024.
Of the insurance industry players that have reported second-quarter 2024 results so far, the bottom-line results of Unum Group (UNM - Free Report) , The Hartford Financial Services Group, Inc. (HIG - Free Report) and RenaissanceRe Holdings Ltd. (RNR - Free Report) beat the respective Zacks Consensus Estimate.
Unum Group’s second-quarter 2024 operating net income of $2.16 per share beat the Zacks Consensus Estimate by 6.9%. The bottom line increased 4.8% year over year. Total operating revenues were $3.2 billion, up 4.2% year over year. The top line beat the consensus estimate by 0.5%. Premiums increased 4.7% from the prior-year quarter to $2.6 billion. The Unum U.S segment’s premium income was $1.7 billion, up 5.5% year over year. Adjusted operating income rose 4.2% year over year to $357.5 million.
The Unum International unit’s premium income of $228.8 million increased 10.1% year over year. Adjusted operating income was $42.5 million, down 2.3% year over year. Our estimate was $37.4 million. The benefit ratio was 69.5, which improved 280 bps. The Colonial Life segment’s premium income increased 3.6% from the prior-year figure to $446.2 million. Sales increased 0.7% from the year-ago figure to $122.9 million. Adjusted operating income increased 1.2% from the prior-year period to $116.9 million.
Hartford Financial’s second-quarter adjusted operating earnings of $2.50 per share beat the Zacks Consensus Estimate by 10.6%. The bottom line climbed 33% year over year. Operating revenues of HIG amounted to $4.46 billion, which improved 9.4% year over year. However, the top line missed the consensus mark of $4.49 billion. Earned premiums rose 6.9% to $5.6 billion. Pre-tax net investment income of $602 million grew 11.5% year over year. Pretax income of $912 million increased 35.7%.
The Commercial Lines segment’s revenues amounted to $3.5 billion, which rose 8.5% year over year. Core earnings of $551 million climbed 11.8% year over year. Meanwhile, the Personal Lines unit recorded revenues of $924 million, which improved 12.7%. The underlying combined ratio of 96.7% improved 500 bps year over year. The Group Benefits segment’s revenues grew 2.6% to $1.8 billion.
RenaissanceRe reported second-quarter 2024 operating income of $12.41 per share, which outpaced the Zacks Consensus Estimate by 14.1%. The bottom line climbed nearly 40% year over year. Total operating revenues of around $3 billion surged 41.8% year over year. The top line beat the consensus mark by 0.8%. Gross premiums written improved 29.2% to $3.4 billion. Net premiums earned were $2.54 billion, which soared 42.3% year over year. Net investment income of $410.8 million rose 40.4% year over year.
RenaissanceRe generated an underwriting income of $479.3 million, which advanced 36.6% year over year in the second quarter. The combined ratio of 81.1% deteriorated 80 bps year over year. The Property segment recorded gross premiums written of $1.75 billion, which grew 25% year over year. The Casualty and Specialty unit’s gross premiums written rose 33.9% to $1.67 billion.
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ProAssurance (PRA) Q2 Earnings Beat, Surge Y/Y on Lower Costs
ProAssurance Corporation (PRA - Free Report) reported second-quarter 2024 adjusted operating income of 23 cents per share, which surpassed the Zacks Consensus Estimate of 8 cents. The bottom line soared 64.3% year over year.
Operating revenues dipped 1.1% year over year to $279 million. The top line beat the consensus mark by 1.8%.
ProAssurance's quarterly performance was bolstered by strong underwriting results in the Specialty P&C segment, significant growth in investment income driven by a higher interest rate environment and a decline in overall expenses. However, the upside was partly offset by lower profitability in the Segregated Portfolio Cell Reinsurance unit and a deterioration in the overall combined ratio, which impacted overall profitability.
ProAssurance Corporation Price, Consensus and EPS Surprise
ProAssurance Corporation price-consensus-eps-surprise-chart | ProAssurance Corporation Quote
Quarterly Operational Update
Gross premiums written of $223.9 million slipped 5.9% year over year. Net premiums earned fell 3.2% year over year to $239.9 million, resulting from renewal pricing increases in the medical professional liability business. The reported figure outpaced the Zacks Consensus Estimate of $235 million and our estimate of $232.7 million.
Net investment income was $36.6 million, which advanced 15.5% year over year, aided by a higher interest rate environment, The metric beat the consensus mark of $34.5 million and our estimate of $34.2 million.
Total expenses of $272.4 million decreased 2.1% year over year were higher than our estimate of $268.7 million. The year-over-year decrease resulted from a decline in net losses and loss adjustment expenses, SPC U.S. federal income tax expenses and SPC dividend expenses.
ProAssurance’s net income soared 45.9% year over year to $15.5 million. The combined ratio of 110.9% deteriorated 270 basis points (bps) year over year.
Segmental Update
Specialty P&C Segment
Revenues from the segment inched up 1% year over year to $185.6 million, higher than the Zacks Consensus Estimate of $183.4 million and our estimate of $175.6 million. Net premiums earned of $184.55 million grew 1% year over year on the back of strong customer retention rates and renewal pricing increases. The metric outpaced the consensus mark of $184.45 million and our estimate of $174.3 million.
Total expenses dipped marginally year over year to $196.1 million. The unit incurred a loss of $10.5 million, narrower than the prior-year quarter’s loss of $12.6 million. The combined ratio of 106.3% improved 110 bps year over year.
Workers' Compensation Insurance Segment
The segment’s revenues of $42.2 million rose 1.4% year over year, higher than Zacks Consensus Estimate of $41.7 million and our estimate of $41.6 million. Net premiums earned advanced 1.8% year over year to $41.8 million, which beat the consensus mark of $41 million and our estimate of $41.1 million.
Total expenses escalated 7.1% year over year to $47.3 million. The unit incurred a loss of $5 million, wider than the prior-year quarter’s loss of $2.5 million. The combined ratio of 113.2% deteriorated 550 bps year over year.
Segregated Portfolio Cell Reinsurance Segment
Gross premiums written amounted to $15.9 million, which plunged 36.8% year over year and fell short of our estimate of $22.2 million. Net premiums earned dropped 43.8% year over year to $13.6 million, which missed the Zacks Consensus Estimate of $14.6 million and our estimate of $17.3 million.
Underwriting, policy acquisition and operating expenses decreased 19.7% year over year to $5.3 million. The unit reported a quarterly profit of $0.2 million, which plummeted 79% year over year due to increased loss activity, decline in favorable prior accident year development and higher allowance for credit losses on a lower earned premium base. The combined ratio deteriorated 1,790 bps year over year to 102.3%.
Corporate Segment
The segment’s net investment income improved 14.6% year over year to $35.6 million and beat our estimate of $33.5 million. The metric gained on improved average book yields from PRA’s fixed maturity investments.
Operating expenses increased 18.2% year over year to $9.8 million. The unit’s profit of $24.4 million advanced 6.7% year over year. Interest expenses increased 2.7% to $5.6 million.
Financial Position (as of Jun 30, 2024)
ProAssurance exited the second quarter with cash and cash equivalents of $36.9 million, which dropped 44% from the 2023-end level. Total investments were $4.4 billion, which inched up marginally from the figure at 2023-end.
Total assets of $5.6 billion dipped 0.3% from the 2023-end level.
Debt-less unamortized debt issuance costs amounted to $426.9 million, which reflects a slight decrease from the figure as of Dec 31, 2023.
Total shareholders’ equity of $1.1 billion rose 1.8% from the level at 2023-end.
Net cash used in operating activities amounted to $24.5 million in the first half of 2024 compared with $61.8 million in the prior-year comparable period.
Book value per share was $22.15 as of Jun 30, 2024, up 1.5% from the 2023-end level. Adjusted operating return on equity was 4.1%, which improved 140 bps year over year.
Share Repurchase Update
ProAssurance did not repurchase any common shares in the first half of 2024. A leftover capacity of $55.9 million remained in place to be utilized for common share repurchases or retirement of outstanding debt as of Jun 30, 2024.
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
Of the insurance industry players that have reported second-quarter 2024 results so far, the bottom-line results of Unum Group (UNM - Free Report) , The Hartford Financial Services Group, Inc. (HIG - Free Report) and RenaissanceRe Holdings Ltd. (RNR - Free Report) beat the respective Zacks Consensus Estimate.
Unum Group’s second-quarter 2024 operating net income of $2.16 per share beat the Zacks Consensus Estimate by 6.9%. The bottom line increased 4.8% year over year. Total operating revenues were $3.2 billion, up 4.2% year over year. The top line beat the consensus estimate by 0.5%. Premiums increased 4.7% from the prior-year quarter to $2.6 billion. The Unum U.S segment’s premium income was $1.7 billion, up 5.5% year over year. Adjusted operating income rose 4.2% year over year to $357.5 million.
The Unum International unit’s premium income of $228.8 million increased 10.1% year over year. Adjusted operating income was $42.5 million, down 2.3% year over year. Our estimate was $37.4 million. The benefit ratio was 69.5, which improved 280 bps. The Colonial Life segment’s premium income increased 3.6% from the prior-year figure to $446.2 million. Sales increased 0.7% from the year-ago figure to $122.9 million. Adjusted operating income increased 1.2% from the prior-year period to $116.9 million.
Hartford Financial’s second-quarter adjusted operating earnings of $2.50 per share beat the Zacks Consensus Estimate by 10.6%. The bottom line climbed 33% year over year. Operating revenues of HIG amounted to $4.46 billion, which improved 9.4% year over year. However, the top line missed the consensus mark of $4.49 billion. Earned premiums rose 6.9% to $5.6 billion. Pre-tax net investment income of $602 million grew 11.5% year over year. Pretax income of $912 million increased 35.7%.
The Commercial Lines segment’s revenues amounted to $3.5 billion, which rose 8.5% year over year. Core earnings of $551 million climbed 11.8% year over year. Meanwhile, the Personal Lines unit recorded revenues of $924 million, which improved 12.7%. The underlying combined ratio of 96.7% improved 500 bps year over year. The Group Benefits segment’s revenues grew 2.6% to $1.8 billion.
RenaissanceRe reported second-quarter 2024 operating income of $12.41 per share, which outpaced the Zacks Consensus Estimate by 14.1%. The bottom line climbed nearly 40% year over year. Total operating revenues of around $3 billion surged 41.8% year over year. The top line beat the consensus mark by 0.8%. Gross premiums written improved 29.2% to $3.4 billion. Net premiums earned were $2.54 billion, which soared 42.3% year over year. Net investment income of $410.8 million rose 40.4% year over year.
RenaissanceRe generated an underwriting income of $479.3 million, which advanced 36.6% year over year in the second quarter. The combined ratio of 81.1% deteriorated 80 bps year over year. The Property segment recorded gross premiums written of $1.75 billion, which grew 25% year over year. The Casualty and Specialty unit’s gross premiums written rose 33.9% to $1.67 billion.