ProAssurance Reports Results for Second Quarter 2024
ProAssurance (NYSE: PRA) reported Q2 2024 results with net income of $15.5 million, or $0.30 per diluted share, and operating income of $11.5 million, or $0.23 per diluted share. Key highlights include:
Revenue: $290.4 million, a slight decrease of 0.5% YoY. Net premiums written: $202.9 million, a decline of 5.2% YoY. Net investment income increased by 16%.
Key Metrics: Book value per share at $22.15 and non-GAAP adjusted book value at $26.18. Combined ratio improved slightly to 110.9% from 108.2%. Return on equity was 5.5%, and non-GAAP operating return on equity was 4.1%.
Specialty P&C Segment: Combined ratio improved to 106.3%, with a 9% renewal pricing increase.
Workers' Compensation Insurance Segment: Combined ratio increased to 113.2% due to rising medical costs per claim.
Segregated Portfolio Cell Reinsurance Segment: Profit decreased to $167,000.
CEO Ned Rand emphasized a focus on disciplined underwriting and navigating challenging market conditions.
ProAssurance (NYSE: PRA) ha riportato i risultati del secondo trimestre 2024 con un utile netto di 15,5 milioni di dollari, ossia 0,30 dollari per azione diluita, e un utile operativo di 11,5 milioni di dollari, ossia 0,23 dollari per azione diluita. I principali punti salienti includono:
Ricavi: 290,4 milioni di dollari, con una leggera diminuzione dello 0,5% rispetto all'anno precedente. Premi netti emessi: 202,9 milioni di dollari, in calo del 5,2% rispetto all'anno precedente. Utile netto da investimenti aumentato del 16%.
Indicatori Chiave: Valore contabile per azione a 22,15 dollari e valore contabile rettificato non-GAAP a 26,18 dollari. Il rapporto combinato è migliorato leggermente, passando dal 108,2% al 110,9%. Il ritorno sul capitale è stato del 5,5%, mentre il ritorno operativo non-GAAP sul capitale è stato del 4,1%.
Segmento P&C Speciality: Il rapporto combinato è migliorato al 106,3%, con un aumento del 9% nei prezzi di rinnovo.
Segmento Assicurazione contro gli Infortuni sul Lavoro: Il rapporto combinato è aumentato al 113,2% a causa dell'aumento dei costi medici per sinistro.
Segmento Riassicurazione Cell del Portafoglio Segregato: Il profitto è diminuito a 167.000 dollari.
Il CEO Ned Rand ha sottolineato l'importanza di una sottoscrizione disciplinata e della navigazione in condizioni di mercato difficili.
ProAssurance (NYSE: PRA) informó los resultados del segundo trimestre de 2024, con un ingreso neto de 15.5 millones de dólares, o 0.30 dólares por acción diluida, y un ingreso operativo de 11.5 millones de dólares, o 0.23 dólares por acción diluida. Los aspectos más destacados incluyen:
Ingresos: 290.4 millones de dólares, una ligera disminución del 0.5% interanual. Primas netas suscritas: 202.9 millones de dólares, una disminución del 5.2% interanual. Ingreso neto por inversiones aumentó un 16%.
Métricas Clave: Valor contable por acción de 22.15 dólares y valor contable ajustado no-GAAP de 26.18 dólares. La relación combinada mejoró ligeramente, pasando del 108.2% al 110.9%. El retorno sobre el capital fue del 5.5%, y el retorno operativo no-GAAP sobre el capital fue del 4.1%.
Segmento de P&C Especialidad: La relación combinada mejoró al 106.3%, con un aumento del 9% en los precios de renovación.
Segmento de Seguro de Compensación para Trabajadores: La relación combinada aumentó al 113.2% debido al aumento de los costos médicos por reclamo.
Segmento de Reaseguro de Celda de Portafolio Segregado: Las ganancias disminuyeron a 167,000 dólares.
El CEO Ned Rand enfatizó la importancia de una suscripción disciplinada y la navegación en condiciones de mercado desafiantes.
ProAssurance (NYSE: PRA)는 2024년 2분기 결과를 보고하며 순이익이 1,550만 달러, 즉 희석 주당 0.30 달러, 영업이익이 1,150만 달러, 즉 희석 주당 0.23 달러라고 밝혔습니다. 주요 하이라이트는 다음과 같습니다:
수익: 2억 9,040만 달러로, 전년 대비 약 0.5% 감소했습니다. 순보험료: 2억 0,290만 달러로, 전년 대비 5.2% 감소했습니다. 순 투자 수익은 16% 증가했습니다.
핵심 지표: 주당 장부가 22.15 달러, 비 GAAP 조정 장부가는 26.18 달러입니다. 결합 비율은 108.2%에서 110.9%로 약간 개선되었습니다. 자기 자본 이익률은 5.5%, 비 GAAP 운영 자기 자본 이익률은 4.1%였습니다.
전문 P&C 부문: 결합 비율이 106.3%로 향상되었으며, 갱신 가격이 9% 상승했습니다.
근로자 보상 보험 부문: 각 청구에 따른 의료비 상승으로 결합 비율이 113.2%로 증가했습니다.
분리된 포트폴리오 셀 재보험 부문: 이익이 167,000 달러로 감소했습니다.
CEO 네드 랜드는 규율 있는 보험 인수와 어려운 시장 환경을 헤쳐 나가는 것에 중점을 두었다고 강조했습니다.
ProAssurance (NYSE: PRA) a communiqué les résultats du deuxième trimestre 2024, avec un bénéfice net de 15,5 millions de dollars, soit 0,30 dollar par action diluée, et un bénéfice d'exploitation de 11,5 millions de dollars, soit 0,23 dollar par action diluée. Les points saillants comprennent :
Revenus : 290,4 millions de dollars, une légère baisse de 0,5 % par rapport à l'année précédente. Primes nettes émises : 202,9 millions de dollars, une baisse de 5,2 % par rapport à l'année précédente. Revenu net d'investissement a augmenté de 16 %.
Métriques clés : Valeur comptable par action à 22,15 dollars et valeur comptable ajustée non-GAAP à 26,18 dollars. Le ratio combiné s'est légèrement amélioré, passant de 108,2 % à 110,9 %. Le retour sur fonds propres était de 5,5 %, et le retour sur fonds propres ajusté non-GAAP était de 4,1 %.
Segment P&C spécial : Le ratio combiné s'est amélioré à 106,3 %, avec une augmentation de 9 % des prix de renouvellement.
Segment de l'assurance contre les accidents du travail : Le ratio combiné a augmenté à 113,2 % en raison de l'augmentation des coûts médicaux par sinistre.
Segment de réassurance de cellule de portefeuille séparé : Le bénéfice a diminué à 167 000 dollars.
Le PDG Ned Rand a souligné l'importance d'une souscription disciplinée et de la navigation dans des conditions de marché difficiles.
ProAssurance (NYSE: PRA) berichtete über die Ergebnisse des 2. Quartals 2024 mit einem Nettogewinn von 15,5 Millionen Dollar oder 0,30 Dollar pro verwässerter Aktie und einem Betriebsgewinn von 11,5 Millionen Dollar oder 0,23 Dollar pro verwässerter Aktie. Zu den wichtigsten Highlights gehören:
Einnahmen: 290,4 Millionen Dollar, ein leichter Rückgang von 0,5 % im Vergleich zum Vorjahr. Netto-Prämien: 202,9 Millionen Dollar, ein Rückgang von 5,2 % im Vergleich zum Vorjahr. Netto-Anlageerträge stiegen um 16 %.
Wichtige Kennzahlen: Buchwert pro Aktie bei 22,15 Dollar und nicht-GAAP-adjustierter Buchwert bei 26,18 Dollar. Die kombinierte Quote verbesserte sich leicht von 108,2 % auf 110,9 %. Die Eigenkapitalrendite betrug 5,5 % und die nicht-GAAP-Betriebsrendite 4,1 %.
Spezial P&C-Segment: Die kombinierte Quote verbesserte sich auf 106,3 %, mit einem Preisanstieg von 9 % bei der Erneuerung.
Segment der Arbeitsunfallversicherung: Die kombinierte Quote stieg auf 113,2 % aufgrund steigender medizinischer Kosten pro Schadensfall.
Segment der segregierten Portfoliozelle Rückversicherung: Der Gewinn sank auf 167.000 Dollar.
CEO Ned Rand betonte den Fokus auf disziplinierte Underwriting-Prozesse und die Navigation in herausfordernden Marktbedingungen.
- Net income of $15.5 million, up 45.9% YoY.
- Operating income of $11.5 million, up 49.4% YoY.
- Net investment income increased by 16%.
- Book value per share increased to $22.15.
- Non-GAAP adjusted book value per share increased to $26.18.
- Return on equity improved to 5.5% from 3.8% YoY.
- Combined ratio for Specialty P&C segment improved to 106.3%.
- Total revenues decreased by 0.5% YoY.
- Net premiums written decreased by 5.2% YoY.
- Combined ratio for Workers' Compensation Insurance segment increased to 113.2%.
Second Quarter 2024(2)
-
Insurance underwriting results, including
9% renewal pricing increases in Medical Professional Liability (MPL) business, illustrate management’s ongoing actions to achieve sustained profitability -
Net investment income increased
16% as we take advantage of the higher interest rate environment as our portfolio matures - Earnings benefited from strong returns from our limited partnership investments (reported as equity in earnings of unconsolidated subsidiaries)
-
Book value per share was
$22.15 $26.18
(1) |
Represents a Non-GAAP financial measure. See a reconciliation to its GAAP counterpart under the heading “Non-GAAP Financial Measures” that follows. |
(2) |
Comparisons are to the second quarter of 2023 unless otherwise noted. |
Management Commentary & Results of Operations
“Operating earnings for the second quarter reflected strong net investment income and an improved - although not yet satisfactory - net loss ratio in our Specialty P&C segment,” said Ned Rand, President and Chief Executive Officer of ProAssurance. He added, “In this segment, which is largely made up of our Medical Professional Liability line of business and represents more than
“We believe we are ahead of many in the space in achieving rate levels in medical professional liability that outpace severity trends. We continue to forgo renewal and new business opportunities that we believe do not meet our expectation of rate adequacy in the current loss environment, although retention for the Specialty P&C segment remained a solid
Rand added, “Our long history in the insurance markets we serve makes us confident that these cyclical lines will respond to our focused efforts. However, current market conditions are a headwind that make it prudent to shrink in some markets to help us reach our target for long-term sustained profitability, before turning our focus to growth.”
CONSOLIDATED INCOME STATEMENT HIGHLIGHTS |
|||||||||||||||||||
Selected consolidated financial data for each period is summarized in the table below. |
|||||||||||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||||||||||
($ in thousands, except per share data) |
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross premiums written(1) |
$ |
223,921 |
|
$ |
237,928 |
|
|
(5.9 |
%) |
|
$ |
535,262 |
|
$ |
553,722 |
|
|
(3.3 |
%) |
Net premiums written |
$ |
202,911 |
|
$ |
214,046 |
|
|
(5.2 |
%) |
|
$ |
485,584 |
|
$ |
498,955 |
|
|
(2.7 |
%) |
Net premiums earned |
$ |
239,867 |
|
$ |
247,862 |
|
|
(3.2 |
%) |
|
$ |
484,017 |
|
$ |
487,649 |
|
|
(0.7 |
%) |
Net investment income |
|
36,558 |
|
|
31,650 |
|
|
15.5 |
% |
|
|
70,455 |
|
|
61,960 |
|
|
13.7 |
% |
Equity in earnings (loss) of unconsolidated subsidiaries |
|
8,652 |
|
|
6,632 |
|
|
30.5 |
% |
|
|
11,616 |
|
|
5,511 |
|
|
110.8 |
% |
Net investment gains (losses)(2) |
|
3,163 |
|
|
2,946 |
|
|
7.4 |
% |
|
|
2,895 |
|
|
5,858 |
|
|
(50.6 |
%) |
Other income (loss)(1) |
|
2,115 |
|
|
2,741 |
|
|
(22.8 |
%) |
|
|
6,070 |
|
|
3,528 |
|
|
72.1 |
% |
Total revenues(1) |
|
290,355 |
|
|
291,831 |
|
|
(0.5 |
%) |
|
|
575,053 |
|
|
564,506 |
|
|
1.9 |
% |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net losses and loss adjustment expenses |
|
186,000 |
|
|
191,058 |
|
|
(2.6 |
%) |
|
|
380,694 |
|
|
396,354 |
|
|
(4.0 |
%) |
Underwriting, policy acquisition and operating expenses(1) |
|
80,017 |
|
|
76,976 |
|
|
4.0 |
% |
|
|
158,023 |
|
|
144,764 |
|
|
9.2 |
% |
SPC |
|
249 |
|
|
994 |
|
|
(74.9 |
%) |
|
|
666 |
|
|
1,526 |
|
|
(56.4 |
%) |
SPC dividend expense (income) |
|
512 |
|
|
3,747 |
|
|
(86.3 |
%) |
|
|
1,119 |
|
|
5,689 |
|
|
(80.3 |
%) |
Interest expense |
|
5,648 |
|
|
5,502 |
|
|
2.7 |
% |
|
|
11,305 |
|
|
10,965 |
|
|
3.1 |
% |
Total expenses(1) |
|
272,426 |
|
|
278,277 |
|
|
(2.1 |
%) |
|
|
551,807 |
|
|
559,298 |
|
|
(1.3 |
%) |
Income (loss) before income taxes |
|
17,929 |
|
|
13,554 |
|
|
32.3 |
% |
|
|
23,246 |
|
|
5,208 |
|
|
346.4 |
% |
Income tax expense (benefit) |
|
2,421 |
|
|
2,927 |
|
|
(17.3 |
%) |
|
|
3,112 |
|
|
755 |
|
|
312.2 |
% |
Net income (loss) |
$ |
15,508 |
|
$ |
10,627 |
|
|
45.9 |
% |
|
$ |
20,134 |
|
$ |
4,453 |
|
|
352.1 |
% |
Non-GAAP operating income (loss) |
$ |
11,527 |
|
$ |
7,713 |
|
|
49.4 |
% |
|
$ |
15,704 |
|
$ |
294 |
|
|
5,241.5 |
% |
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic |
|
51,060 |
|
|
53,815 |
|
|
|
|
51,036 |
|
|
53,900 |
|
|
||||
Diluted |
|
51,225 |
|
|
53,918 |
|
|
|
|
51,187 |
|
|
54,017 |
|
|
||||
Earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per diluted share |
$ |
0.30 |
|
$ |
0.20 |
|
$ |
0.10 |
|
|
$ |
0.39 |
|
$ |
0.08 |
|
$ |
0.31 |
|
Non-GAAP operating income (loss) per diluted share |
$ |
0.23 |
|
$ |
0.14 |
|
$ |
0.09 |
|
|
$ |
0.31 |
|
$ |
0.01 |
|
$ |
0.30 |
|
(1) |
Consolidated totals include inter-segment eliminations. The eliminations affect individual line items only and have no effect on net income (loss). See Note 12 of the Notes to Condensed Consolidated Financial Statements in our June 30, 2024 report on Form 10-Q for amounts by line item. |
(2) |
This line item typically includes both realized and unrealized investment gains and losses, investment impairments losses, and the change in the fair value of the contingent consideration in relation to the NORCAL acquisition. Detailed information regarding the components of net investment gains (losses) are included in Note 3 of the Notes to Condensed Consolidated Financial Statements in our June 30, 2024 report on Form 10-Q. |
|
|
The abbreviation “nm” indicates that the information or the percentage change is not meaningful. |
|
BALANCE SHEET HIGHLIGHTS |
|||||||
($ in thousands, except per share data) |
June 30, 2024 |
|
December 31, 2023 |
||||
Total investments |
$ |
4,352,263 |
|
|
$ |
4,349,781 |
|
Total assets |
$ |
5,614,964 |
|
|
$ |
5,631,925 |
|
Total liabilities |
$ |
4,482,536 |
|
|
$ |
4,519,945 |
|
Common shares (par value |
$ |
637 |
|
|
$ |
636 |
|
Retained earnings |
$ |
1,402,115 |
|
|
$ |
1,381,981 |
|
Treasury shares |
$ |
(469,702 |
) |
|
$ |
(469,702 |
) |
Shareholders’ equity |
$ |
1,132,428 |
|
|
$ |
1,111,980 |
|
Book value per share |
$ |
22.15 |
|
|
$ |
21.82 |
|
Non-GAAP adjusted book value per share(1) |
$ |
26.18 |
|
|
$ |
25.83 |
|
(1) |
Adjusted book value per share is a Non-GAAP financial measure. See a reconciliation of book value per share to Non-GAAP adjusted book value per share under the heading “Non-GAAP Financial Measures” that follows. |
| CONSOLIDATED KEY RATIOS | |||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Current accident year net loss ratio |
80.3 |
% |
|
79.6 |
% |
|
80.1 |
% |
|
81.1 |
% |
Effect of prior accident years’ reserve development |
(2.8 |
%) |
|
(2.5 |
%) |
|
(1.4 |
%) |
|
0.2 |
% |
Net loss ratio |
77.5 |
% |
|
77.1 |
% |
|
78.7 |
% |
|
81.3 |
% |
Underwriting expense ratio |
33.4 |
% |
|
31.1 |
% |
|
32.6 |
% |
|
29.7 |
% |
Combined ratio |
110.9 |
% |
|
108.2 |
% |
|
111.3 |
% |
|
111.0 |
% |
Operating ratio |
95.7 |
% |
|
95.4 |
% |
|
96.7 |
% |
|
98.3 |
% |
Return on equity(1) |
5.5 |
% |
|
3.8 |
% |
|
3.6 |
% |
|
0.8 |
% |
Non-GAAP operating return on equity(1)(2) |
4.1 |
% |
|
2.7 |
% |
|
2.8 |
% |
|
0.1 |
% |
(1) |
Annualized. Refer to our June 30, 2024 report on Form 10-Q under the heading “Non-GAAP Operating ROE” in the Executive Summary of Operations section for details on our calculation. |
(2) |
See a reconciliation of ROE to Non-GAAP operating ROE under the heading “Non-GAAP Financial Measures” that follows. |
We operate in four segments: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, and Corporate. Our investment operations, excluding those reported in the Segregated Portfolio Cell Reinsurance segment, are included in the Corporate segment. Additional information on ProAssurance's four segments is included in Note 12 of the Notes to Condensed Consolidated Financial Statements in our June 30, 2024 report on Form 10-Q and in the Segment Results sections below.
Contingent Consideration: As disclosed further in our June 30, 2024 report on Form 10-Q, the independent actuarial consulting firm completed its estimate of NORCAL’s reserves for accident years 2020 and prior, and based on that estimate no additional consideration is due. The review committee appointed by NORCAL prior to the close of the transaction concurred, therefore, the
SPECIALTY P&C SEGMENT RESULTS |
|||||||||||||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||||||||||||
($ in thousands) |
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||||
Gross premiums written |
$ |
163,176 |
|
|
$ |
175,171 |
|
|
(6.8 |
%) |
|
$ |
401,894 |
|
|
$ |
417,535 |
|
|
(3.7 |
%) |
Net premiums written |
$ |
149,020 |
|
|
$ |
148,666 |
|
|
0.2 |
% |
|
$ |
367,719 |
|
|
$ |
366,056 |
|
|
0.5 |
% |
Net premiums earned |
$ |
184,546 |
|
|
$ |
182,750 |
|
|
1.0 |
% |
|
$ |
373,433 |
|
|
$ |
366,434 |
|
|
1.9 |
% |
Other income |
|
1,023 |
|
|
|
1,026 |
|
|
(0.3 |
%) |
|
|
2,377 |
|
|
|
2,016 |
|
|
17.9 |
% |
Total revenues |
|
185,569 |
|
|
|
183,776 |
|
|
1.0 |
% |
|
|
375,810 |
|
|
|
368,450 |
|
|
2.0 |
% |
Net losses and loss adjustment expenses |
|
(145,234 |
) |
|
|
(147,480 |
) |
|
(1.5 |
%) |
|
|
(298,227 |
) |
|
|
(313,510 |
) |
|
(4.9 |
%) |
Underwriting, policy acquisition and operating expenses |
|
(50,871 |
) |
|
|
(48,873 |
) |
|
4.1 |
% |
|
|
(101,922 |
) |
|
|
(91,554 |
) |
|
11.3 |
% |
Total expenses |
|
(196,105 |
) |
|
|
(196,353 |
) |
|
(0.1 |
%) |
|
|
(400,149 |
) |
|
|
(405,064 |
) |
|
(1.2 |
%) |
Segment results |
$ |
(10,536 |
) |
|
$ |
(12,577 |
) |
|
16.2 |
% |
|
$ |
(24,339 |
) |
|
$ |
(36,614 |
) |
|
33.5 |
% |
SPECIALTY P&C SEGMENT KEY RATIOS |
|||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Current accident year net loss ratio |
82.0 |
% |
|
83.4 |
% |
|
81.9 |
% |
|
84.9 |
% |
Effect of prior accident years’ reserve development |
(3.3 |
%) |
|
(2.7 |
%) |
|
(2.0 |
%) |
|
0.7 |
% |
Net loss ratio |
78.7 |
% |
|
80.7 |
% |
|
79.9 |
% |
|
85.6 |
% |
Underwriting expense ratio |
27.6 |
% |
|
26.7 |
% |
|
27.3 |
% |
|
25.0 |
% |
Combined ratio |
106.3 |
% |
|
107.4 |
% |
|
107.2 |
% |
|
110.6 |
% |
ProAssurance is a leader in the competitive Medical Professional Liability market, which made up almost
For the quarter, the segment’s combined ratio improved 1.1 percentage points compared to last year’s second quarter, primarily due to a lower net loss ratio that reflected our continued focus on price adequacy and cautious underwriting as well as our ability to target segments within healthcare where there are opportunities to write business profitability.
-
Premiums: Renewal pricing was up
9% for the segment compared with7% in the first quarter of 2024. Retention was a solid84% while new business declined to$5.0 million -
Net loss ratio: Current accident year net loss ratio improved 1.4 percentage points over last year, primarily due to our underwriting actions and pricing we have achieved over the course of the past year. Net favorable prior accident year reserve development was
$6.2 million - Underwriting expense ratio: Year-over-year increase of just under 1 percentage point, largely due to higher amortization of deferred policy acquisition costs as last year’s expense ratio benefited from higher ceding commission income associated with a large tail policy, which is an offset to expense.
WORKERS’ COMPENSATION INSURANCE SEGMENT RESULTS |
|||||||||||||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||||||||||||
($ in thousands) |
2024 |
|
2023 |
|
% Change |
|
2024 |
|
|
2023 |
|
|
% Change |
||||||||
Gross premiums written |
$ |
60,745 |
|
|
$ |
62,757 |
|
|
(3.2 |
%) |
|
$ |
133,360 |
|
|
$ |
136,187 |
|
|
(2.1 |
%) |
Net premiums written |
$ |
39,993 |
|
|
$ |
42,323 |
|
|
(5.5 |
%) |
|
$ |
90,346 |
|
|
$ |
89,894 |
|
|
0.5 |
% |
Net premiums earned |
$ |
41,770 |
|
|
$ |
41,018 |
|
|
1.8 |
% |
|
$ |
82,864 |
|
|
$ |
81,821 |
|
|
1.3 |
% |
Other income |
|
469 |
|
|
|
651 |
|
|
(28.0 |
%) |
|
|
946 |
|
|
|
1,232 |
|
|
(23.2 |
%) |
Total revenues |
|
42,239 |
|
|
|
41,669 |
|
|
1.4 |
% |
|
|
83,810 |
|
|
|
83,053 |
|
|
0.9 |
% |
Net losses and loss adjustment expenses |
|
(32,149 |
) |
|
|
(29,762 |
) |
|
8.0 |
% |
|
|
(63,786 |
) |
|
|
(60,606 |
) |
|
5.2 |
% |
Underwriting, policy acquisition and operating expenses |
|
(15,139 |
) |
|
|
(14,400 |
) |
|
5.1 |
% |
|
|
(29,628 |
) |
|
|
(27,379 |
) |
|
8.2 |
% |
Total expenses |
|
(47,288 |
) |
|
|
(44,162 |
) |
|
7.1 |
% |
|
|
(93,414 |
) |
|
|
(87,985 |
) |
|
6.2 |
% |
Segment results |
$ |
(5,049 |
) |
|
$ |
(2,493 |
) |
|
(102.5 |
%) |
|
$ |
(9,604 |
) |
|
$ |
(4,932 |
) |
|
(94.7 |
%) |
WORKERS’ COMPENSATION INSURANCE SEGMENT KEY RATIOS |
|||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Current accident year net loss ratio |
77.0 |
% |
|
72.6 |
% |
|
77.0 |
% |
|
72.6 |
% |
Effect of prior accident years’ reserve development |
— |
% |
|
— |
% |
|
— |
% |
|
1.5 |
% |
Net loss ratio |
77.0 |
% |
|
72.6 |
% |
|
77.0 |
% |
|
74.1 |
% |
Underwriting expense ratio |
36.2 |
% |
|
35.1 |
% |
|
35.8 |
% |
|
33.5 |
% |
Combined ratio |
113.2 |
% |
|
107.7 |
% |
|
112.8 |
% |
|
107.6 |
% |
ProAssurance is a specialty regional underwriter of workers’ compensation products and services. Due to underwriting actions taken over the past 12 months and a slight improvement in loss trends, the second quarter 2024 combined ratio for the Workers’ Compensation Insurance segment was improved from the full-year 2023 segment combined ratio by 8 percentage points. However, the ratio was above last year’s second quarter as we began to observe the higher loss trends related to rising medical costs per claim in the second half of 2023.
-
Premiums: Our underwriting appetite remains constrained due to market conditions with new business of
$4.5 million $7.1 million -
Net loss ratio: Current accident year net loss ratio was
77.0% compared with81.3% for full-year 2023, as our caution in the current claims environment and focus on operational discipline is being reflected in results. While we continue to reflect higher loss trends, the average cost per claim has improved slightly from the elevated levels initially seen in the second half of 2023 and reported claim frequency continues to trend below historical levels. There was no change in prior accident year reserves for this segment in the second quarter. - Underwriting expense ratio: Year-over-year increase of 1.1 percentage point was largely due to higher compensation-related costs.
SEGREGATED PORTFOLIO CELL REINSURANCE SEGMENT RESULTS |
|||||||||||||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||||||||||||
($ in thousands) |
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||||
Gross premiums written |
$ |
15,883 |
|
|
$ |
25,113 |
|
|
(36.8 |
%) |
|
$ |
31,817 |
|
|
$ |
47,994 |
|
|
(33.7 |
%) |
Net premiums written |
$ |
13,898 |
|
|
$ |
23,057 |
|
|
(39.7 |
%) |
|
$ |
27,519 |
|
|
$ |
43,005 |
|
|
(36.0 |
%) |
Net premiums earned |
$ |
13,551 |
|
|
$ |
24,094 |
|
|
(43.8 |
%) |
|
$ |
27,720 |
|
|
$ |
39,394 |
|
|
(29.6 |
%) |
Net investment income |
|
985 |
|
|
|
603 |
|
|
63.3 |
% |
|
|
1,678 |
|
|
|
1,024 |
|
|
63.9 |
% |
Net investment gains (losses) |
|
258 |
|
|
|
1,194 |
|
|
(78.4 |
%) |
|
|
1,728 |
|
|
|
2,355 |
|
|
(26.6 |
%) |
Other income (expense) |
|
1 |
|
|
|
1 |
|
|
— |
% |
|
|
— |
|
|
|
1 |
|
|
nm |
|
Net losses and loss adjustment expenses |
|
(8,617 |
) |
|
|
(13,816 |
) |
|
(37.6 |
%) |
|
|
(18,681 |
) |
|
|
(22,238 |
) |
|
(16.0 |
%) |
Underwriting, policy acquisition and operating expenses |
|
(5,250 |
) |
|
|
(6,538 |
) |
|
(19.7 |
%) |
|
|
(9,961 |
) |
|
|
(11,575 |
) |
|
(13.9 |
%) |
SPC |
|
(249 |
) |
|
|
(994 |
) |
|
(74.9 |
%) |
|
|
(666 |
) |
|
|
(1,526 |
) |
|
(56.4 |
%) |
SPC net results |
|
679 |
|
|
|
4,544 |
|
|
(85.1 |
%) |
|
|
1,818 |
|
|
|
7,435 |
|
|
(75.5 |
%) |
SPC dividend (expense) income (2) |
|
(512 |
) |
|
|
(3,747 |
) |
|
(86.3 |
%) |
|
|
(1,119 |
) |
|
|
(5,689 |
) |
|
(80.3 |
%) |
Segment results (3) |
$ |
167 |
|
|
$ |
797 |
|
|
(79.0 |
%) |
|
$ |
699 |
|
|
$ |
1,746 |
|
|
(60.0 |
%) |
(1) |
Represents the provision for |
(2) |
Represents the net (profit) loss attributable to external cell participants. |
(3) |
Represents our share of the net profit (loss) and OCI of the SPCs in which we participate. |
| SEGREGATED PORTFOLIO CELL REINSURANCE SEGMENT KEY RATIOS | |||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Current accident year net loss ratio |
66.1 |
% |
|
62.9 |
% |
|
65.6 |
% |
|
63.7 |
% |
Effect of prior accident years’ reserve development |
(2.5 |
%) |
|
(5.6 |
%) |
|
1.8 |
% |
|
(7.2 |
%) |
Net loss ratio |
63.6 |
% |
|
57.3 |
% |
|
67.4 |
% |
|
56.5 |
% |
Underwriting expense ratio |
38.7 |
% |
|
27.1 |
% |
|
35.9 |
% |
|
29.4 |
% |
Combined ratio |
102.3 |
% |
|
84.4 |
% |
|
103.3 |
% |
|
85.9 |
% |
Segregated Portfolio Cell Reinsurance segment results include underwriting profit or loss plus investment results, net of
CORPORATE SEGMENT |
|||||||||||||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||||||||||||
($ in thousands) |
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||||
Net investment income |
$ |
35,573 |
|
|
$ |
31,047 |
|
|
14.6 |
% |
|
$ |
68,777 |
|
|
$ |
60,936 |
|
|
12.9 |
% |
Equity in earnings (loss) of unconsolidated subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
All other investments, primarily investment fund LPs/LLCs |
|
8,261 |
|
|
|
8,143 |
|
|
1.4 |
% |
|
|
11,328 |
|
|
|
7,376 |
|
|
53.6 |
% |
Tax credit partnerships |
|
391 |
|
|
|
(1,511 |
) |
|
125.9 |
% |
|
|
288 |
|
|
|
(1,865 |
) |
|
115.4 |
% |
Total equity in earnings (loss) of unconsolidated subsidiaries: |
|
8,652 |
|
|
|
6,632 |
|
|
30.5 |
% |
|
|
11,616 |
|
|
|
5,511 |
|
|
110.8 |
% |
Net investment gains (losses) |
|
(3,835 |
) |
|
|
(248 |
) |
|
(1446.4 |
%) |
|
|
(5,573 |
) |
|
|
503 |
|
|
(1208.0 |
%) |
Other income (expense) |
|
1,968 |
|
|
|
2,173 |
|
|
(9.4 |
%) |
|
|
5,028 |
|
|
|
2,500 |
|
|
101.1 |
% |
Operating expenses |
|
(9,783 |
) |
|
|
(8,275 |
) |
|
18.2 |
% |
|
|
(18,473 |
) |
|
|
(16,477 |
) |
|
12.1 |
% |
Interest expense |
|
(5,648 |
) |
|
|
(5,502 |
) |
|
2.7 |
% |
|
|
(11,305 |
) |
|
|
(10,965 |
) |
|
3.1 |
% |
Income tax (expense) benefit |
|
(2,488 |
) |
|
|
(2,927 |
) |
|
(15.0 |
%) |
|
|
(3,179 |
) |
|
|
(755 |
) |
|
321.1 |
% |
Segment results |
$ |
24,439 |
|
|
$ |
22,900 |
|
|
6.7 |
% |
|
$ |
46,891 |
|
|
$ |
41,253 |
|
|
13.7 |
% |
Consolidated effective tax rate |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
The Corporate segment, which includes investment results for our Specialty P&C and Workers’ Compensation Insurance segments, reported a
-
Net investment income: The current interest rate environment continues to benefit our net investment income, which increased again in the quarter, driven by higher average book yields on our fixed maturity investments. During the quarter, we reinvested at an average new money rate of approximately
6% , exceeding the rate on maturing assets and our average book yield of3.5% . - Equity in earnings of unconsolidated subsidiaries: Our investments in limited partnerships, typically reported to us on a one-quarter lag, continued to produce strong returns in the quarter. Our tax credit partnership investments are nearing the end of their lifecycle, and amortization of partnership operating losses and associated tax benefits are expected to be nominal. However, in the second quarter we benefited from a decrease in our estimate of our allocable share of partnership operating losses versus increasing this estimate last year.
-
Corporate expenses: The
$1.5 million - Net investment losses: While not included in our operating results, net investment losses in the quarter largely related to unrealized losses from our equity investments.
NON-GAAP FINANCIAL MEASURES
Non-GAAP Operating Income (Loss)
Non-GAAP operating income (loss) is a financial measure that is widely used to evaluate performance within the insurance sector. In calculating Non-GAAP operating income (loss), we have excluded the effects of the items listed in the following table that do not reflect normal results. We believe Non-GAAP operating income (loss) presents a useful view of the performance of our insurance operations; however, it should be considered in conjunction with net income (loss) computed in accordance with GAAP. The following table reconciles net income (loss) to Non-GAAP operating income (loss):
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP OPERATING INCOME (LOSS) |
|||||||||||||||
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
||||||||||||
($ in thousands, except per share data) |
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net income (loss) |
$ |
15,508 |
|
|
$ |
10,627 |
|
|
$ |
20,134 |
|
|
$ |
4,453 |
|
Items excluded in the calculation of Non-GAAP operating income (loss): |
|
|
|
|
|
|
|
||||||||
Net investment (gains) losses (1) |
|
(3,163 |
) |
|
|
(2,946 |
) |
|
|
(2,895 |
) |
|
|
(5,858 |
) |
Net investment gains (losses) attributable to SPCs which no profit/loss is retained (2) |
|
175 |
|
|
|
939 |
|
|
|
1,327 |
|
|
|
1,852 |
|
Transaction-related costs (3) |
|
320 |
|
|
|
— |
|
|
|
320 |
|
|
|
— |
|
Foreign currency exchange rate (gains) losses (4) |
|
(511 |
) |
|
|
387 |
|
|
|
(2,440 |
) |
|
|
1,214 |
|
Non-operating income (5) |
|
— |
|
|
|
(1,462 |
) |
|
|
— |
|
|
|
(1,462 |
) |
Guaranty fund assessments (recoupments) |
|
(59 |
) |
|
|
1 |
|
|
|
28 |
|
|
|
(74 |
) |
Pre-tax effect of exclusions |
|
(3,238 |
) |
|
|
(3,081 |
) |
|
|
(3,660 |
) |
|
|
(4,328 |
) |
Tax effect, at |
|
(743 |
) |
|
|
167 |
|
|
|
(770 |
) |
|
|
169 |
|
After-tax effect of exclusions |
|
(3,981 |
) |
|
|
(2,914 |
) |
|
|
(4,430 |
) |
|
|
(4,159 |
) |
Non-GAAP operating income (loss) |
$ |
11,527 |
|
|
$ |
7,713 |
|
|
$ |
15,704 |
|
|
$ |
294 |
|
Per diluted common share: |
|
|
|
|
|
|
|
||||||||
Net income (loss) |
$ |
0.30 |
|
|
$ |
0.20 |
|
|
$ |
0.39 |
|
|
$ |
0.08 |
|
Effect of exclusions |
|
(0.07 |
) |
|
|
(0.06 |
) |
|
|
(0.08 |
) |
|
|
(0.07 |
) |
Non-GAAP operating income (loss) per diluted common share |
$ |
0.23 |
|
|
$ |
0.14 |
|
|
$ |
0.31 |
|
|
$ |
0.01 |
|
(1) |
Net investment gains (losses) for the three and six months ended June 30, 2024 include the |
|
|
(2) |
Net investment gains (losses) on investments related to SPCs are recognized in our Segregated Portfolio Cell Reinsurance segment. SPC results, including any net investment gain or loss, that are attributable to external cell participants are reflected in the SPC dividend expense (income). To be consistent with our exclusion of net investment gains (losses) recognized in earnings, we are excluding the portion of net investment gains (losses) that is included in the SPC dividend expense (income) which is attributable to the external cell participants. |
|
|
(3) |
Transaction-related costs are attributable to actuarial consulting fees paid during the second quarter of 2024 in relation to the final determination of contingent consideration associated with the NORCAL acquisition. See additional discussion under the heading "Contingent Consideration" in the Financing Activities and Related Cash Flows section in our June 30, 2024 report on From 10-Q. We are excluding these costs as they do not reflect normal operating results and are unique and non-recurring in nature. |
|
|
(4) |
Foreign currency exchange rate gains (losses) relate to the impact of foreign exchange rate movements on foreign currency denominated loss reserves predominately associated with premium assumed from an international medical professional liability insured in our Specialty P&C segment. Our participation in this program has grown in recent years which has led to greater volatility in our results of operations even with nominal movements in exchange rates given the size of the reserve. We mitigate foreign exchange rate exposure on our Consolidated Balance Sheet by generally matching the currency and duration of associated investments to the corresponding loss reserves. In accordance with GAAP, the impact on the market value of available-for-sale fixed maturities due to changes in foreign currency exchange rates is reflected as a part of OCI. Conversely, the impact of changes in foreign currency exchange rates on loss reserves is reflected through net income (loss) as a component of other income. Therefore, we believe foreign currency exchange rate gains (losses) in our Consolidated Statements of Income and Comprehensive Income in isolation are not indicative of our operating performance. |
|
|
(5) |
Proceeds associated with the sale of a portion of our ownership interest in the underwriting and operations entity associated with Syndicate 1729 to an unrelated third party recognized in other income in our Corporate segment. We are excluding these costs as they do not reflect normal operating results and are unique and non-recurring in nature. |
|
|
(6) |
The |
Non-GAAP Operating ROE
The following table is a reconciliation of ROE to Non-GAAP operating ROE for the three and six months ended June 30, 2024 and 2023:
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
ROE(1) |
5.5 |
% |
|
3.8 |
% |
|
3.6 |
% |
|
0.8 |
% |
Pre-tax effect of items excluded in the calculation of Non-GAAP operating ROE |
(1.1 |
%) |
|
(1.2 |
%) |
|
(0.7 |
%) |
|
(0.7 |
%) |
Tax effect, at |
(0.3 |
%) |
|
0.1 |
% |
|
(0.1 |
%) |
|
— |
% |
Non-GAAP operating ROE |
4.1 |
% |
|
2.7 |
% |
|
2.8 |
% |
|
0.1 |
% |
(1) |
Annualized. Refer to our June 30, 2024 report on Form 10-Q under the heading “Non-GAAP Operating ROE” in the Executive Summary of Operations section for details on our calculation. |
(2) |
The |
Non-GAAP Adjusted Book Value per Share
The following table is a reconciliation of our book value per share to Non-GAAP adjusted book value per share at June 30, 2024 and December 31, 2023:
|
Book Value Per Share |
||
Book Value Per Share at December 31, 2023 |
$ |
21.82 |
|
Less: AOCI Per Share(1) |
|
(4.01 |
) |
Non-GAAP Adjusted Book Value Per Share at December 31, 2023 |
|
25.83 |
|
Increase (decrease) to Non-GAAP Adjusted Book Value Per Share during the six months ended June 30, 2024 attributable to: |
|
||
Net income (loss) |
|
0.39 |
|
Other(2) |
|
(0.04 |
) |
Non-GAAP Adjusted Book Value Per Share at June 30, 2024 |
|
26.18 |
|
Add: AOCI Per Share(1) |
|
(4.03 |
) |
Book Value Per Share at June 30, 2024 |
$ |
22.15 |
|
(1) |
Primarily the impact of accumulated unrealized investment gains (losses) on our available-for-sale fixed maturity investments. See Note 9 of the Notes to Condensed Consolidated Financial Statements in our June 30, 2024 report on Form 10-Q for additional information. |
(2) |
Includes the impact of share-based compensation. |
Conference Call Information
ProAssurance management will discuss second quarter 2024 results during a conference call at 10:30 a.m. ET on Friday, August 9, 2024. Preregistration for the call is available at https://www.netroadshow.com/events/login?show=2353dfd9&confId=68501. The dial-in numbers are (833) 470-1428 (toll free) or (404) 975-4839, access code 120351.
Investors are encouraged to listen to the live audio webcast of the call that can also be accessed at https://events.q4inc.com/attendee/584574041. A replay of the call will be available at the same link later in the day on August 9.
About ProAssurance
ProAssurance Corporation is an industry-leading specialty insurer with extensive expertise in medical professional liability, products liability for medical technology and life sciences, legal professional liability, and workers’ compensation. ProAssurance Group is rated “A” (Excellent) by AM Best.
For the latest on ProAssurance and its industry-leading suite of products and services, cutting-edge risk management and practice enhancement programs, follow @ProAssurance on X (formerly Twitter) or LinkedIn. ProAssurance’s YouTube channel regularly presents thought-provoking, insightful videos that communicate effective practice management, patient safety and risk management strategies.
Caution Regarding Forward-Looking Statements
Any statements in this news release that are not historical facts or explicitly stated as an opinion are specifically identified as forward-looking statements. These statements are based upon our estimates and anticipation of future events and are subject to significant risks, assumptions and uncertainties that could cause actual results to differ materially from the expected results described in the forward-looking statements. Forward-looking statements are identified by words such as, but not limited to, “anticipate,” “believe,” “estimate,” “expect,” “hope,” “hopeful,” “intend,” “likely,” “may,” “optimistic,” “possible,” “potential,” “preliminary,” “project,” “should,” “will,” and other analogous expressions.
Although it is not possible to identify all of these risks and factors, they include, among others, the following: inadequate loss reserves to cover the Company's actual losses; inherent uncertainty of models resulting in actual losses that are materially different than the Company's estimates; adverse economic factors; a decline in the Company's financial strength rating; loss of one or more key executives; loss of a group of agents or brokers that generate significant portions of the Company's business; failure of any of the loss limitations or exclusions the Company employs, or change in other claims or coverage issues; adverse performance of the Company's investment portfolio; adverse market conditions that affect its excess and surplus lines insurance operations; and other risks described in the Company's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release and the Company does not undertake and specifically declines any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240808897123/en/
Heather J. Wietzel • SVP, Investor Relations
800-282-6242 • 205-776-3028 • InvestorRelations@ProAssurance.com
Source: ProAssurance Corporation
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