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ProAssurance (PRA) Q2 Earnings Lag Estimates, Tumble Y/Y

Zacks Equity Research

ProAssurance Corporation’s PRA 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% to $235 million from the prior-year 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.

ProAssurance Corporation Price, Consensus and EPS Surprise

ProAssurance Corporation Price, Consensus and EPS Surprise

ProAssurance Corporation price-consensus-eps-surprise-chart | ProAssurance Corporation Quote

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, in line with the year-ago quarter’s figure excluding the effect of one-time premium and 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% from the figure acquired in comparable quarter last year. This upside can be attributed to 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.

Zacks Rank and Performance of Other Players

ProAssurance carries a Zacks Rank #4 (Sell).

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

Of the insurance industry players that have already reported second-quarter results, the bottom-line figures of The Progressive Corporation PGR and RLI Corp. RLI beat the respective Zacks Consensus Estimate. However, The Travelers Companies, Inc.’s TRV earnings missed the mark.

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