ProAssurance Corporation’s PRA shares gained 6.4% since it reported third-quarter 2024 results on Nov. 7, 2024. The strong quarterly earnings benefited from strong underwriting results in the Specialty P&C segment, significant growth in investment income, higher yields and a decline in expenses. Deteriorating profitability in the Segregated Portfolio Cell Reinsurance unit acted as a partial offset.
PRA reported a third-quarter 2024 adjusted operating income of 34 cents per share, which surpassed the Zacks Consensus Estimate of 12 cents. The bottom line rose significantly from a loss of 7 cents in the year-ago period.
Operating revenues declined by a whisker year over year to $278.2 million. However, the top line beat the consensus mark by 2.8%.
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ProAssurance Corporation Price, Consensus and EPS Surprise
ProAssurance Corporation price-consensus-eps-surprise-chart | ProAssurance Corporation Quote
Quarterly Operational Update
Gross premiums written of $307.9 million slipped 3.7% year over year. Net premiums earned rose 0.3% year over year to $243.2 million, resulting from renewal pricing increases in the medical professional liability business. The reported figure outpaced the Zacks Consensus Estimate of $231.3 million and our estimate of $231.9 million.
Net investment income was $37.3 million, which rose 13.8% year over year, aided by higher book yields on PRA’s fixed maturity investments. The metric beat the consensus mark of $36.6 million and our estimate of $36 million.
Total expenses of $264.2 million decreased 19.9% year over year and came lower than our estimate of $272.3 million. The year-over-year decrease resulted from a decline in net losses and loss adjustment expenses.
ProAssurance’s net income soared 133% year over year to $16.4 million. The combined ratio of 105.6% improved 1,110 basis points (bps) year over year.
Segmental Update
Specialty P&C Segment
Revenues from the segment declined 3.6% year over year to $189.7 million but came in higher than the Zacks Consensus Estimate of $186 million and our estimate of $181.1 million. Net premiums earned of $188.7 million declined 3.6% year over year due to PRA’s decision to discontinue participation in Lloyd. The metric outpaced the consensus mark of $185.5 million and our estimate of $180.1 million.
Total expenses dipped 11.4% year over year to $187.8 million. The unit reported a gain of $1.9 million, up 112% year over year. The combined ratio of 99.5% improved 880 bps year over year.
Workers' Compensation Insurance Segment
The segment’s revenues of $42.4 million rose 5.3% year over year, higher than Zacks Consensus Estimate of $40.8 million and our estimate of $41 million. Net premiums earned increased 4.9% year over year to $41.8 million, which beat the consensus mark of $40.2 million and our estimate of $40.5 million.
Total expenses declined 14.9% year over year to $46.6 million. The unit incurred a loss of $4.2 million, narrower than the prior-year quarter’s loss of $14.5 million. The combined ratio of 111.4% improved 2,590 bps year over year.
Segregated Portfolio Cell Reinsurance Segment
Gross premiums written amounted to $13.7 million, which surged 72.1% year over year and beat our estimate of $6.7 million. Net premiums earned rose 86.7% year over year to $12.6 million, which beat the Zacks Consensus Estimate of $11.4 million and our estimate of $11.3 million.
Underwriting, policy acquisition and operating expenses rose 12.9% year over year to $4.1 million. The unit reported a quarterly profit of $0.6 million, which plummeted 35.5% year over year due to increased loss activity, partially offset by favorable prior accident year development. The combined ratio improved 3,360 bps year over year to 94.6%.
Corporate Segment
The segment’s net investment income improved 12.8% year over year to $36.3 million and beat our estimate of $35 million. The metric gained on improved average book yields from PRA’s fixed maturity investments.
Operating expenses increased 35.9% year over year to $11.3 million. The unit’s profit of $18.2 million declined 17.3% year over year. Interest expenses increased 3.3% year over year to $5.7 million.
Financial Position (as of Sept. 30, 2024)
ProAssurance exited the third quarter with cash and cash equivalents of $45.3 million, which dropped 31.3% from the 2023-end level. Total investments were $4.5 billion, which rose 2.6% from the figure at 2023-end.
Total assets of $5.7 billion increased 1.8% from the 2023-end level.
Debt-less unamortized debt issuance costs amounted to $425.9 million, which reflects a slight decrease from the figure as of Dec. 31, 2023.
Total shareholders’ equity of $1.2 billion rose 10.7% from the level at 2023-end.
Net cash used in operating activities amounted to $10.5 million in the first nine months of 2024 compared with $46.6 million in the prior-year comparable period.
Book value per share was $24.07 as of Sept. 30, 2024, up 10.3% from the 2023-end level. Adjusted operating return on equity was 5.9%, which improved 780 bps year over year.
Share Repurchase Update
ProAssurance did not repurchase any common shares in the first nine months of 2024. A leftover capacity of $55.9 million remained in place to be utilized for common share repurchases or retirement of outstanding debt as of Sept. 30, 2024.
Zacks Rank
ProAssurance currently 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 Finance Sector Players
Marsh & McLennan Companies, Inc. MMC posted third-quarter 2024 adjusted earnings per share of $1.63, which beat the Zacks Consensus Estimate by 1.2%. The bottom line improved 3.8% year over year. Consolidated revenues rose 6% year over year to $5.7 billion. The figure also improved 5% on an underlying basis. The top line, however, fell 0.2% short of the consensus mark.
Marsh & McLennan’s adjusted operating income was $1.19 billion in the third quarter, which grew 12% year over year but missed our estimate of $1.21 billion.
Arthur J. Gallagher & Co. AJG reported third-quarter 2024 adjusted net earnings of $2.26 per share, meeting the Zacks Consensus Estimate. The bottom line increased 13% on a year-over-year basis. Total adjusted revenues of $2.7 billion missed the Zacks Consensus Estimate by 0.1%. However, the top line improved 11.1% year over year.
EBITDAC grew 14.3% from the prior-year quarter to $808.8 million.
Aon plc AON reported third-quarter 2024 adjusted earnings of $2.72 per share, which beat the Zacks Consensus Estimate by 11%. The bottom line increased 17% year over year. Total revenues of $3.72 billion improved 26% year over year. The top line beat the consensus mark by 0.5%. It consisted of organic revenue growth of 7% and a 19% revenue rise from acquisitions.
Revenues are expected to register mid-single-digit or higher organic growth for 2024 and beyond. The company anticipates the adjusted operating margin to expand in 2024.
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