) reported third-quarter operating earnings per share of $1.71,
striding ahead of the Zacks Consensus Estimate of $1.61 and the
year-ago quarter's earnings of $1.57. Operating earnings stood at
$52.9 million, compared with $48.4 million in the prior-year
Operating income excludes the effects of net realized
investment gains or losses, guaranty fund assessments or
recoupments, confidential settlements and debt retirement gains
or losses. These items led to a positive adjustment of 23 cents
per share to net income in the reported quarter against a
negative adjustment of 15 cents in the year-ago quarter.
Including non-recurring items, net income was reported at
$60.1 million or $1.94 per share, surging from $43.7 million or
$1.42 per share in the year-ago quarter.
During the quarter under review, total revenue of ProAssurance
increased 8.6% to $176 million from $162 million in the year-ago
quarter. Revenue also surpassed the Zacks Consensus Estimate of
Gross premiums written declined 10.4% year over year to $156.5
million. The year-over-year fall was largely attributable to high
competition, improved loss trends in the previous years and the
normal renewal pattern of ProAssurance's two-year policies.
Moreover, owing to the lower loss severity, arising from
accident years 2004 to 2010, the company garnered $50 million of
net favorable loss reserve development in the reported quarter
versus $52 million a year ago. Total expenses amounted to $92.4
million, declining from $99.1 million in the prior-year
Net investment income in the quarter was $33.9 million,
skidding 0.6% from $34.1 million in the prior-year quarter. Net
investment result (sum of net investment income and equity in
earnings of unconsolidated subsidiaries) amounted to $34.1
million, climbing 6.9% from $31.9 million in the year-ago
quarter. However, net realized investment gains stood at $13.2
million in the reported quarter as against net realized
investment losses of $12.0 million in the third-quarter of
In the reported quarter, ProAssurance generated net cash flow
from operating activities of $28.7 million, which plummeted from
$53.4 million in the prior-year quarter. Total assets of the
company at the end of the quarter were $4.97 billion, slightly
dropping from $5.0 billion as of December 31, 2011, while
shareholders' equity was $2.35 billion, reflecting an 8.8%
increase from $2.16 billion as of December 31, 2011. Book value
per share also hiked 7.95% to $76.47 from $70.84 as on December
ProAssurance's net loss ratio for the reported quarter came in
at 44.5%, compared with 46.9% in the prior-year quarter.
Additionally, expense ratio deteriorated slightly to 26.0% from
25.8% in the previous-year quarter.
The combined ratio improved to 70.5% from 72.7% in the
comparable quarter last year, while operating ratio contracted
360 basis points to 43.8% from 47.4% in the prior-year quarter.
Return on equity (ROE) for the reported quarter was 10.4%,
improving from 8.8% in the third quarter of 2011.
Debt Repayment Update
During the reported quarter, ProAssurance repaid its entire
outstanding long-term debt. Additionally, the company recognized
a loss of $22 million related to the debt retirement in the third
quarter of 2012.
Consistent with the company's dividend policy, ProAssurance
paid a quarterly cash dividend of 25 cents per share in October
Montpelier Re Holdings Ltd.
) reported its third quarter 2012 operating income of 85 cents
per share, surpassing the Zacks Consensus Estimate by 20 cents.
Earnings strongly rebounded from a loss of 40 cents incurred in
the prior-year quarter. Operating income of $48.5 million,
compared favorably with loss of $24.9 million in third quarter
We retain our long term 'Neutral' recommendation on
ProAssurance. Currently, it carries a Zacks #2 Rank, implying a
short-term Buy rating.
MONTPELIER RE (MRH): Free Stock Analysis
PROASSURANCE CP (PRA): Free Stock Analysis
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