ProAssurance (PRA) Q4 Earnings Meet Estimates, Tumble Y/Y

ProAssurance Corporation’s (NYSE:PRA) fourth-quarter 2018 operating earnings per share of 18 cents were in line with the Zacks Consensus Estimate. Meanwhile, the bottom line plunged 67.3% year over year, mainly due to decrease in total revenues.

Quarterly operating revenues of ProAssurance reduced 14.2% to $179.5 million from the prior-year quarter’s level due to net realized investment losses. The top line missed the Zacks Consensus Estimate by 22.3%.

Quarterly Operational Update

Gross premiums written increased 10.4% year over year to $211.6 million, primarily banking on higher premiums across Segregated Portfolio Cell Reinsurance plus Lloyd's Syndicates and Workers' Compensation segments. Moreover, net premiums earned rose 10.4% year over year.

Net investment income declined nearly 7% year over year to $24.2 million.

Net realized investment losses of the company were $46.1 million, wider than the prior-year quarter’s figure of $2.4 million.

Total expenses escalated 24.7% year over year to $218 million. This rise in costs mainly stemmed from higher net loss and loss adjustment expenses.

ProAssurance Corporation Price, Consensus and EPS Surprise

Quarterly Segmental Results

Specialty P&C Insurance Segment

Total revenues of $115 million inched up 0.9% year over year.

Gross premiums written were $121 million, dipping 0.2% from the year-ago quarter’s figure.

Total expenses of $120 million mounted 23.9% year over year, primarily due to net loss and loss adjustment expenses.

Workers' Compensation Segment

Total revenues of $51.4 million rose 24.1% year over year, courtesy of higher premiums.

Gross premiums written were $65 million, up 7.7% from the year-earlier period’s number.

Total expenses of $44.8 million came in at an elevation of 23.3% year over year.

Lloyd's Syndicate Segment

Total revenues of $19.1 million soared 52.1% year over year.

Gross premiums written were $25.7 million, up 95% from the figure acquired in the comparable quarter last year.

Total expenses of $28.5 million skyrocketed 166.8% year over year.

Corporate Segment

The company reported revenues of ($22) million against the year-ago quarter's revenues of $22.1 million.

Operating expenses of $3.4 million decreased 58.4% from the prior-year quarter’s level. Interest expense of $4.8 million increased 9.3% year over year.

Financial Position

As of Dec 31, 2018, ProAssurance’s total investments were $3.3 billion, down 9.1% from the number registered at year-end 2017.

At fourth-quarter end, the company’s total assets were $4.6 billion, down 6.7% from the count at 2017 end.

As of Dec 31, 2018, the insurer’s shareholder equity slipped 4.5% to $1.5 billion from the tally as of Dec 31, 2017.

Share Repurchase & Dividend Update

The company’s board of directors approved a special dividend of 50 cents per share in addition to the regular dividend of 31 cents, payable Jan 9, 2019.

Full-Year Highlights

For 2018, consolidated gross premiums written totaled $957.3 million, up 9.4% year over year. Net premiums earned were $818.9 million, up 10.9% year over year.

For the full year, net realized investment losses were $43.5 million versus the net realized investments gains of $16.4 million, reflecting market volatility.

Zacks Rank

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 insurance industry, having already posted fourth-quarter earnings, the bottom-line results of RLI Corp. (NYSE:RLI) , Arch Capital Group Ltd. (NASDAQ:ACGL) and Cincinnati Financial Corporation (NASDAQ:CINF) surpassed the respective Zacks Consensus Estimate.

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