ProAssurance (PRA) Q1 Earnings Beat, Revenues Miss Estimates

ProAssurance Corporation’s (NYSE:PRA) first-quarter 2017 operating earnings per share (EPS) of 62 cents surpassed the Zacks Consensus Estimate by 13%. The bottom line also improved 32% year over year.

Quarterly Operational Update

ProAssurance’s first-quarter operating revenues grew 1.3% to $207.9 million from $205.3 million generated in the prior-year quarter. Higher net premiums earned drove the upside. The top line, however, missed the Zacks Consensus Estimate by 1.4%.

Gross premiums written grew 5% year over year to $231.3 million, primarily driven by new business written in Lloyd's and Workers' Compensation segments, which increased 84.4% and 7.9%, respectively.

Net premiums earned increased 3% over the prior-year quarter to $183 million due to gains in all three operating segments, Specialty P&C and Lloyd's segments in particular.

Net investment income, however, decreased 8.9% year over year to $23.2 million.

Total expense increased 5.8% year over year to $182.8 million. The rise in costs mainly stemmed from a year-over-year increase of 7.4% in net losses and loss adjustment expenses.

Financial Ratios for the Quarter

Net loss ratio deteriorated 260 basis points (bps) from the prior-year quarter to 65.1%, primarily due to weak performance of the Lloyd's segment

Expense ratio improved 80 bps year over year to 31.2% due to the effect of a change the consideration and allocation of management fee for losses and loss adjustment expenses in the second quarter of 2016.

Combined ratio deteriorated 180 bps from the year-ago quarter to 96.3%.

Operating ratio also deteriorated 340 bps to 83.6% from the year-earlier quarter

Return on equity improved 520 bps to 9.1% from the year-ago quarter.

ProAssurance Corporation Price, Consensus and EPS Surprise

ProAssurance Corporation Price, Consensus and EPS Surprise | ProAssurance Corporation Quote

Financial Position

As of Mar 31, 2017, ProAssurance’s total investments were $3.7 billion, down 4.5% from year-end 2016.

As of Mar 31, 2017, the company’s total assets were $4.9 billion, down 3.8% from year-end 2016.

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

Book value per share increased 1.2% to $34.19 as of Mar 31, 2017 from $33.78 as of Dec 31, 2016.

Share Repurchase & Dividend Update

The company did not repurchase any share during the first quarter and it presently has approximately $110 million available in its board-authorized stock repurchase program

Since 2007, the company has returned $1.7 billion to investors through share repurchase and dividends, including $265.7 million in regular and special dividends declared in the first quarter and paid in Jan 2017.

The company declared a regular dividend of $16.5 million in Mar 2017, which was paid in April 2017.

Zacks Rank Performances of Other P&C Insurers

ProAssurance 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 same space that have reported first-quarter earnings so far, the bottom line at The Progressive Corporation (NYSE:PGR) , The Travelers Companies, Inc. (NYSE:TRV) and RLI Corp. (NYSE:RLI) missed their respective Zacks Consensus Estimate.

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