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ProAssurance (PRA) Up 4.7% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for ProAssurance (PRA). Shares have added about 4.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ProAssurance due for a pullback? 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 Q2 Earnings Lag Estimates, Tumble Y/Y

ProAssurance’s second-quarter 2019 operating earnings per share of 8 cents missed the Zacks Consensus Estimate by 33.3% due to lower revenues generated by the company. Moreover, the bottom line plunged 75% year over year.

The company’s quarterly operating revenues declined 5.2% year over year to $235 million quarter’s level due to lower premiums. Also, the top line missed the Zacks Consensus Estimate by 2.5%.

Quarterly Operational Update

Gross premiums written declined 8.9% year over year to $221 million due to weak performances by its Workers' Compensation segments. Also, net premiums earned fell 6.5% year over year.

Net investment income increased 5.2% year over year on the back of improved yields in some asset classes and an uptick in its average investment in fixed maturity securities. Total expenses inched up marginally by 0.1% year over year to $228 million.

Quarterly Segment Results

Specialty P&C Insurance Segment


Total revenues of $127 million dropped 11.4% year over year. Gross premiums written were $127.9 million, unchanged year over year excluding the effect of one-time premium and the increase in physician policy premium.  Total expenses of $135.8 million dipped 2% year over year owing to net loss and loss adjustment expenses.

Workers' Compensation Segment

Total revenues of $47 million rose 3.2% year over year.

Gross premiums written were $64.2 million, down 9.4% from the year-earlier number.

Total expenses of $44.9 million increased 6.1% year over year.

Lloyd's Syndicate Segment

Total revenues of $18.7 million improved 6.4% year over year.

Gross premiums written were $29.2 million, up 20.8% year over year, led by new businesses in property insurance and also volume growth on renewal business.

Total expenses of $19.3 million decreased 5.7% year over year.

Corporate Segment

Total revenues of $26.7 million deteriorated 14% year over year.

Operating expenses of $5.4 million slid 3.5% from the year-ago level on the back of a decline in share-based compensation costs and other compensation expenses.

Interest expense of $4.2 million increased 7.3% year over year.

Financial Position

As of Jun 30, 2019, ProAssurance’s total investments were $3.4 billion, up 3.5% from the number registered at 2018 end.

At second-quarter end, the company’s total assets were $4.8 billion, up 4% from the count at 2018 end.

As of Jun 30, 2019, the insurer’s shareholder equity increased 3.8% 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 Jul 31, 2019, it had approximately $110 million of shares available under its board-authorized stock repurchase program. In May 2019, the company’s board members approved a regular dividend of 31 cents, paid in July.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, ProAssurance has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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