) reported second-quarter operating earnings per share of 72
cents that missed the Zacks Consensus Estimate of 90 cents per
share by 20% as well as the year-ago quarter's earnings of 96
cents per share by 25%. Operating earnings stood at $44.9
million, compared with $59.5 million in the prior-year
Operating income excludes the effects of net realized
investment gains or losses, guaranty fund assessment or
recoupment, gain on acquisition and confidential settlements.
These items led to a negative adjustment of 9 cents per share to
net income in the reported quarter against a positive adjustment
of 1 cent in the year-ago quarter.
Including non-recurring items, ProAssurance's net income was
reported at $50.5 million or 81 cents per share, decreasing from
$58.5 million or 95 cents per share in the year-ago quarter.
Substantial increase in expenses during the second quarter of
2013 that resulted from higher loss and loss adjustment expenses,
mainly led to the decline.
During the quarter under review, total revenue of ProAssurance
increased 4.2% to $170.8 million from $163.9 million in the
year-ago quarter. Revenues also surpassed the Zacks Consensus
Estimate of $168 million by 1.7%. The company's mergers and
acquisitions have added $14 million to the top line results dring
the quarter and led to the upside.
Gross premiums written by ProAssurance increased 20.6% year
over year to $123 million. Contribution from healthcare
professional liability and legal professional liability mainly
led to the upside. The company garnered $38.5 million of net
favorable reserve development in the reported quarter versus
$60.1 million a year ago. Total expenses amounted to $105.96
million, up from $84.3 million in the year-ago quarter. Higher
expenses were driven by higher losses and loss adjustment
Net investment income of ProAssurance in the quarter was $33.3
million, down 3.6% year over year mainly due to the impact of
consistent lower yields on the company's fixed income portfolio.
Net investment result (sum of net investment income and equity in
earnings of unconsolidated subsidiaries) amounted to $30.3
million, inching down 6.2% from $32.3 million in the year-ago
quarter. However, net realized investment gains stood at $8.5
million in the reported quarter, compared to net realized
investment losses of $1.5 million in the year-ago quarter.
In the reported quarter, ProAssurance witnessed net cash
outflow from operating activities of $12.3 million, compared to
an inflow of $32.7 million in the prior-year quarter. Total
assets of the company at the end of the quarter were $5.1
billion, decreasing from $5.2 billion as of Mar 31, 2013.
Meanwhile, ProAssurance's shareholder equity was $2.3 billion,
reflecting a decrease from $2.4 billion as of Mar 31, 2013. Book
value per share also declined 1% to $37.79 from $38.19 as of Mar
31, 2013 due to a decline in fair value of securities available
ProAssurance's net loss ratio for the reported quarter came in
at 54.2%, compared with 36.6% in the prior-year quarter. Expense
ratio improved slightly to 26.8% from 27% in the prior-year
The combined ratio of ProAssurance deteriorated to 81% from
63.6% in the comparable quarter last year, while operating ratio
increased to 55.5% from 37.3% in the prior-year quarter. Return
on equity (ROE) for the reported quarter was 8.6%, deteriorating
from 10.4% in the second quarter of 2012.
In May 2013, ProAssurance declared a quarterly cash dividend
of 25 cents per share which was paid on Jul 12, 2013 to
shareholders of record as of Jun 27, 2013.
Performance of Other Insurers
On Jul 25, 2013,
) reported second-quarter operating earnings of $1.77 per share,
significantly ahead of the Zacks Consensus Estimate of $1.38 per
share. Earnings also increased 29% year over year.
On Jul 29, 2013,
American Financial Group Inc.
) reported second quarter adjusted earnings of 96 cents that
breezed past the Zacks Consensus Estimate of 85 cents by 12.9%.
Results were also up 5.5% year over year from 91 cents earned in
the year-ago quarter.
On Jul 23, 2013,
) reported second quarter 2013 operating net income of $2.29 per
share, up 19.3% from the Zacks Consensus Estimate of $1.92.
Results improved 5.5% from $2.17 earned in the year-ago quarter.
Operating income was $790 million, up 6.3% over the prior-year
ProAssurance currently carries a Zacks Rank #2 (Buy).
ACE LIMITED (ACE): Free Stock Analysis Report
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PROASSURANCE CP (PRA): Free Stock Analysis
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