ProAssurance Reports Results for Third Quarter 2024
ProAssurance (NYSE: PRA) reported net income of $16.4 million ($0.32 per diluted share) and operating income of $17.3 million ($0.34 per diluted share) for Q3 2024. Key highlights include: Specialty P&C segment combined ratio improved to 99.5%, net investment income increased 14%, and book value per share rose to $24.07 from $21.82 at year-end 2023. The company achieved renewal premium increases of 13% in Q3, part of a cumulative 65% premium change since 2018. Despite solid retention at 84%, the company continues to be selective in renewals and new business to maintain rate adequacy in the current challenging loss environment.
ProAssurance (NYSE: PRA) ha riportato un utile netto di 16,4 milioni di dollari (0,32 dollari per azione diluita) e un utile operativo di 17,3 milioni di dollari (0,34 dollari per azione diluita) per il terzo trimestre del 2024. I punti salienti includono: il rapporto combinato del segmento P&C speciale è migliorato al 99,5%, il reddito da investimenti netti è aumentato del 14% e il valore contabile per azione è salito a 24,07 dollari rispetto ai 21,82 dollari alla fine del 2023. L'azienda ha ottenuto un aumento dei premi di rinnovo del 13% nel terzo trimestre, parte di un cambiamento cumulativo dei premi del 65% dal 2018. Nonostante una buona retention dell'84%, l'azienda continua ad essere selettiva nei rinnovi e nei nuovi affari per mantenere l'adeguatezza delle tariffe nell'attuale difficile ambiente di perdite.
ProAssurance (NYSE: PRA) reportó un ingreso neto de 16.4 millones de dólares (0.32 dólares por acción diluida) y un ingreso operativo de 17.3 millones de dólares (0.34 dólares por acción diluida) para el tercer trimestre de 2024. Los aspectos destacados incluyen: el ratio combinado del segmento de P&C especial se mejoró al 99.5%, los ingresos netos por inversiones aumentaron un 14%, y el valor contable por acción subió a 24.07 dólares desde 21.82 dólares a finales de 2023. La compañía logró aumentos en las primas de renovación del 13% en el tercer trimestre, parte de un cambio acumulativo en las primas del 65% desde 2018. A pesar de una sólida retención del 84%, la empresa sigue siendo selectiva en renovaciones y nuevos negocios para mantener la adecuación de tarifas en el actual desafiante entorno de pérdidas.
ProAssurance (NYSE: PRA)는 2024년 3분기에 순이익 1,640만 달러(희석 주당 0.32달러)와 운영 이익 1,730만 달러(희석 주당 0.34달러)를 보고했습니다. 주요 하이라이트로는 특수 P&C 분야의 결합 비율이 99.5%로 개선되었고, 순 투자 수익이 14% 증가했으며, 주당 장부 가치가 2023년 말 21.82달러에서 24.07달러로 상승했습니다. 회사는 3분기에 13%의 갱신 프리미엄 증가를 달성했으며, 이는 2018년 이후 누적 65%의 프리미엄 변화의 일환입니다. 84%의 견고한 유지율에도 불구하고, 회사는 현재의 어려운 손실 환경에서 요율 적절성을 유지하기 위해 갱신 및 신규 사업에서 선택적입니다.
ProAssurance (NYSE: PRA) a annoncé un bénéfice net de 16,4 millions de dollars (0,32 dollar par action diluée) et un bénéfice d'exploitation de 17,3 millions de dollars (0,34 dollar par action diluée) pour le troisième trimestre 2024. Les principaux points forts comprennent : le ratio combiné du segment P&C spécialisé a été amélioré à 99,5 %, le revenu net des investissements a augmenté de 14 % et la valeur comptable par action a augmenté à 24,07 dollars par rapport à 21,82 dollars à la fin de 2023. L'entreprise a réalisé des augmentations de primes de renouvellement de 13 % au troisième trimestre, ce qui fait partie d'un changement cumulatif de 65 % des primes depuis 2018. Malgré un taux de conservation solide de 84 %, l'entreprise reste sélective en matière de renouvellements et de nouvelles affaires pour maintenir l'adéquation des tarifs dans l'environnement difficile de pertes actuel.
ProAssurance (NYSE: PRA) berichtete im dritten Quartal 2024 einen Nettogewinn von 16,4 Millionen Dollar (0,32 Dollar je verwässerte Aktie) und einen operativen Gewinn von 17,3 Millionen Dollar (0,34 Dollar je verwässerte Aktie). Zu den wichtigsten Highlights gehören: Die kombinierte Quote im Spezial-P&C-Segment verbesserte sich auf 99,5 %, das Nettoanlageergebnis stieg um 14 % und der Buchwert pro Aktie erhöhte sich von 21,82 Dollar zum Jahresende 2023 auf 24,07 Dollar. Das Unternehmen erzielte im dritten Quartal eine Erhöhung der Erneuerungsprämien um 13 %, was Teil eines kumulierten Prämienwechsels von 65 % seit 2018 ist. Trotz einer soliden Bindungsrate von 84 % bleibt das Unternehmen bei Erneuerungen und neuen Geschäften selektiv, um die Tarifangemessenheit in der aktuellen herausfordernden Verlustsituation aufrechtzuerhalten.
- Net income of $16.4 million, reversing previous year's loss
- 14% increase in net investment income
- 13% renewal premium increases in Q3
- Improved Specialty P&C combined ratio of 99.5%
- Book value per share increased by $2.25 to $24.07
- 3.7% decrease in gross premiums written
- 8.6% increase in underwriting and operating expenses
- Overall combined ratio remains elevated at 105.6%
- New business volume declined significantly
- Higher medical loss cost trends continuing
Insights
The Q3 2024 results show meaningful progress in ProAssurance's turnaround efforts. Key highlights include a 99.5% combined ratio in the core Specialty P&C segment, demonstrating improved underwriting performance. Net income of
The
Book value per share increased to
Third Quarter 2024(2)
-
Specialty P&C segment combined ratio of
99.5% demonstrates progress resulting from management’s ongoing actions focused on achieving sustained profitability -
Net investment income increased
14% as we take advantage of the current interest rate environment as the portfolio matures - Earnings benefited from solid returns from limited partnership investments (reported as equity in earnings of unconsolidated subsidiaries)
-
Book value per share was
$24.07 $2.25 $21.82 $37 million $77 million $26.52 $25.83
(1) |
Represents a Non-GAAP financial measure. See a reconciliation to its GAAP counterpart under the heading “Non-GAAP Financial Measures” that follows. |
(2) |
Comparisons are to the third quarter of 2023 unless otherwise noted. |
Management Commentary & Results of Operations
“Operating earnings for the third quarter reflected our growing confidence in the impact of the actions we have taken over the past several years, with the Specialty P&C segment delivering a combined ratio of
“Specialty P&C renewal premium increases of
Rand noted, “Our long history in the insurance markets we serve makes us confident that these cyclical lines will respond to our focused efforts. However, current market conditions continue to be a headwind that make it prudent to shrink in some markets to help us reach our target for long-term sustained profitability across all business segments, before turning our focus to growth.”
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CONSOLIDATED INCOME STATEMENT HIGHLIGHTS |
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Selected consolidated financial data for each period is summarized in the table below. |
||||||||||||||||||||||
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
|||||||||||||||||||
($ in thousands, except per share data) |
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
|||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross premiums written(1) |
$ |
307,940 |
|
|
$ |
319,762 |
|
|
|
(3.7 |
%) |
|
$ |
843,202 |
|
$ |
873,484 |
|
|
|
(3.5 |
%) |
Net premiums written |
$ |
279,546 |
|
|
$ |
292,023 |
|
|
|
(4.3 |
%) |
|
$ |
765,130 |
|
$ |
790,978 |
|
|
|
(3.3 |
%) |
Net premiums earned |
$ |
243,160 |
|
|
$ |
242,420 |
|
|
|
0.3 |
% |
|
$ |
727,176 |
|
$ |
730,068 |
|
|
|
(0.4 |
%) |
Net investment income |
|
37,272 |
|
|
|
32,754 |
|
|
|
13.8 |
% |
|
|
107,727 |
|
|
94,714 |
|
|
|
13.7 |
% |
Equity in earnings (loss) of unconsolidated subsidiaries |
|
4,767 |
|
|
|
(61 |
) |
|
|
7,914.8 |
% |
|
|
16,383 |
|
|
5,450 |
|
|
|
200.6 |
% |
Net investment gains (losses)(2) |
|
2,252 |
|
|
|
(2,702 |
) |
|
|
183.3 |
% |
|
|
5,146 |
|
|
3,156 |
|
|
|
63.1 |
% |
Other income (expense)(1) |
|
(2,198 |
) |
|
|
3,336 |
|
|
|
(165.9 |
%) |
|
|
3,872 |
|
|
6,864 |
|
|
|
(43.6 |
%) |
Total revenues(1) |
|
285,253 |
|
|
|
275,747 |
|
|
|
3.4 |
% |
|
|
860,304 |
|
|
840,252 |
|
|
|
2.4 |
% |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net losses and loss adjustment expenses |
|
176,331 |
|
|
|
208,891 |
|
|
|
(15.6 |
%) |
|
|
557,025 |
|
|
605,245 |
|
|
|
(8.0 |
%) |
Underwriting, policy acquisition and operating expenses(1) |
|
80,389 |
|
|
|
74,014 |
|
|
|
8.6 |
% |
|
|
238,408 |
|
|
218,779 |
|
|
|
9.0 |
% |
SPC |
|
377 |
|
|
|
(175 |
) |
|
|
315.4 |
% |
|
|
1,043 |
|
|
1,351 |
|
|
|
(22.8 |
%) |
SPC dividend expense (income) |
|
1,360 |
|
|
|
(2,518 |
) |
|
|
154.0 |
% |
|
|
2,479 |
|
|
3,171 |
|
|
|
(21.8 |
%) |
Interest expense |
|
5,698 |
|
|
|
5,514 |
|
|
|
3.3 |
% |
|
|
17,004 |
|
|
16,478 |
|
|
|
3.2 |
% |
Goodwill impairment |
|
— |
|
|
|
44,110 |
|
|
nm |
|
|
— |
|
|
44,110 |
|
|
nm |
||||
Total expenses(1) |
|
264,155 |
|
|
|
329,836 |
|
|
|
(19.9 |
%) |
|
|
815,959 |
|
|
889,134 |
|
|
|
(8.2 |
%) |
Income (loss) before income taxes |
|
21,098 |
|
|
|
(54,089 |
) |
|
|
139.0 |
% |
|
|
44,345 |
|
|
(48,882 |
) |
|
|
190.7 |
% |
Income tax expense (benefit) |
|
4,657 |
|
|
|
(4,655 |
) |
|
|
200.0 |
% |
|
|
7,770 |
|
|
(3,901 |
) |
|
|
299.2 |
% |
Net income (loss) |
$ |
16,441 |
|
|
$ |
(49,434 |
) |
|
|
133.3 |
% |
|
$ |
36,575 |
|
$ |
(44,981 |
) |
|
|
181.3 |
% |
Non-GAAP operating income (loss) |
$ |
17,288 |
|
|
$ |
(5,077 |
) |
|
|
440.5 |
% |
|
$ |
33,003 |
|
$ |
(4,783 |
) |
|
|
790.0 |
% |
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic |
|
51,156 |
|
|
|
51,837 |
|
|
|
|
|
51,077 |
|
|
53,205 |
|
|
|
||||
Diluted |
|
51,277 |
|
|
|
52,006 |
|
|
|
|
|
51,217 |
|
|
53,339 |
|
|
|
||||
Earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) per diluted share |
$ |
0.32 |
|
|
$ |
(0.95 |
) |
|
$ |
1.27 |
|
|
$ |
0.71 |
|
$ |
(0.85 |
) |
|
$ |
1.56 |
|
Non-GAAP operating income (loss) per diluted share |
$ |
0.34 |
|
|
$ |
(0.10 |
) |
|
$ |
0.44 |
|
|
$ |
0.64 |
|
$ |
(0.09 |
) |
|
$ |
0.73 |
|
(1) |
Consolidated totals include inter-segment eliminations. The eliminations affect individual line items only and have no effect on net income (loss). See Note 13 of the Notes to Condensed Consolidated Financial Statements in our September 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 September 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) |
September 30, 2024 |
|
December 31, 2023 |
||||
Total investments |
$ |
4,461,116 |
|
|
$ |
4,349,781 |
|
Total assets |
$ |
5,732,372 |
|
|
$ |
5,631,925 |
|
Total liabilities |
$ |
4,501,146 |
|
|
$ |
4,519,945 |
|
Common shares (par value |
$ |
638 |
|
|
$ |
636 |
|
Retained earnings |
$ |
1,418,556 |
|
|
$ |
1,381,981 |
|
Treasury shares |
$ |
(469,702 |
) |
|
$ |
(469,702 |
) |
Shareholders’ equity |
$ |
1,231,226 |
|
|
$ |
1,111,980 |
|
Book value per share |
$ |
24.07 |
|
|
$ |
21.82 |
|
Non-GAAP adjusted book value per share(1) |
$ |
26.52 |
|
|
$ |
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 September 30 |
|
Nine Months Ended September 30 |
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Current accident year net loss ratio |
81.5 |
% |
|
83.0 |
% |
|
80.5 |
% |
|
81.8 |
% |
Effect of prior accident years’ reserve development |
(9.0 |
%) |
|
3.2 |
% |
|
(3.9 |
%) |
|
1.1 |
% |
Net loss ratio |
72.5 |
% |
|
86.2 |
% |
|
76.6 |
% |
|
82.9 |
% |
Underwriting expense ratio |
33.1 |
% |
|
30.5 |
% |
|
32.8 |
% |
|
30.0 |
% |
Combined ratio |
105.6 |
% |
|
116.7 |
% |
|
109.4 |
% |
|
112.9 |
% |
Operating ratio |
90.3 |
% |
|
103.2 |
% |
|
94.6 |
% |
|
99.9 |
% |
Return on equity(1) |
5.6 |
% |
|
(18.6 |
%) |
|
4.2 |
% |
|
(5.7 |
%) |
Non-GAAP operating return on equity(1)(2) |
5.9 |
% |
|
(1.9 |
%) |
|
3.8 |
% |
|
(0.6 |
%) |
(1) |
Annualized. Refer to our September 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. |
SPECIALTY P&C SEGMENT RESULTS |
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|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
||||||||||||||||||
($ in thousands) |
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||||
Gross premiums written |
$ |
244,007 |
|
|
$ |
256,125 |
|
|
(4.7 |
%) |
|
$ |
645,902 |
|
|
$ |
673,660 |
|
|
(4.1 |
%) |
Net premiums written |
$ |
221,490 |
|
|
$ |
241,888 |
|
|
(8.4 |
%) |
|
$ |
589,209 |
|
|
$ |
607,945 |
|
|
(3.1 |
%) |
Net premiums earned |
$ |
188,704 |
|
|
$ |
195,772 |
|
|
(3.6 |
%) |
|
$ |
562,137 |
|
|
$ |
562,206 |
|
|
— |
% |
Other income (expense) |
|
982 |
|
|
|
1,089 |
|
|
(9.8 |
%) |
|
|
3,359 |
|
|
|
3,106 |
|
|
8.1 |
% |
Total revenues |
|
189,686 |
|
|
|
196,861 |
|
|
(3.6 |
%) |
|
|
565,496 |
|
|
|
565,312 |
|
|
— |
% |
Net losses and loss adjustment expenses |
|
(136,337 |
) |
|
|
(162,677 |
) |
|
(16.2 |
%) |
|
|
(434,564 |
) |
|
|
(476,187 |
) |
|
(8.7 |
%) |
Underwriting, policy acquisition and operating expenses |
|
(51,492 |
) |
|
|
(49,395 |
) |
|
4.2 |
% |
|
|
(153,415 |
) |
|
|
(140,949 |
) |
|
8.8 |
% |
Total expenses |
|
(187,829 |
) |
|
|
(212,072 |
) |
|
(11.4 |
%) |
|
|
(587,979 |
) |
|
|
(617,136 |
) |
|
(4.7 |
%) |
Segment results |
$ |
1,857 |
|
|
$ |
(15,211 |
) |
|
112.2 |
% |
|
$ |
(22,483 |
) |
|
$ |
(51,824 |
) |
|
56.6 |
% |
SPECIALTY P&C SEGMENT KEY RATIOS |
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|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Current accident year net loss ratio |
82.7 |
% |
|
83.4 |
% |
|
82.1 |
% |
|
84.4 |
% |
Effect of prior accident years’ reserve development |
(10.5 |
%) |
|
(0.3 |
%) |
|
(4.8 |
%) |
|
0.3 |
% |
Net loss ratio |
72.2 |
% |
|
83.1 |
% |
|
77.3 |
% |
|
84.7 |
% |
Underwriting expense ratio |
27.3 |
% |
|
25.2 |
% |
|
27.3 |
% |
|
25.1 |
% |
Combined ratio |
99.5 |
% |
|
108.3 |
% |
|
104.6 |
% |
|
109.8 |
% |
ProAssurance is a leader in the competitive Medical Professional Liability market, which made up almost
For the quarter, the segment’s combined ratio improved 8.8 percentage points compared to last year’s third 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 that we believe will meet our profitability objectives.
-
Premiums: Renewal pricing remained strong at
13% for the segment. Retention was a solid84% while new business of$8.3 million -
Net loss ratio: Current accident year net loss ratio improved 0.7 percentage points over last year, primarily due to our underwriting actions and pricing we have achieved over the course of the past 12 months. Net favorable prior accident year reserve development was
$19.7 million - Underwriting expense ratio: Year-over-year increase of just over 2 percentage points, largely due to higher compensation-related costs.
WORKERS’ COMPENSATION INSURANCE SEGMENT RESULTS |
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|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
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($ in thousands) |
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||||
Gross premiums written |
$ |
63,933 |
|
|
$ |
63,637 |
|
|
0.5 |
% |
|
$ |
197,292 |
|
|
$ |
199,824 |
|
|
(1.3 |
%) |
Net premiums written |
$ |
46,318 |
|
|
$ |
44,386 |
|
|
4.4 |
% |
|
$ |
136,664 |
|
|
$ |
134,280 |
|
|
1.8 |
% |
Net premiums earned |
$ |
41,829 |
|
|
$ |
39,885 |
|
|
4.9 |
% |
|
$ |
124,692 |
|
|
$ |
121,706 |
|
|
2.5 |
% |
Other income (expense) |
|
537 |
|
|
|
333 |
|
|
61.3 |
% |
|
|
1,483 |
|
|
|
1,565 |
|
|
(5.2 |
%) |
Total revenues |
|
42,366 |
|
|
|
40,218 |
|
|
5.3 |
% |
|
|
126,175 |
|
|
|
123,271 |
|
|
2.4 |
% |
Net losses and loss adjustment expenses |
|
(32,193 |
) |
|
|
(41,208 |
) |
|
(21.9 |
%) |
|
|
(95,980 |
) |
|
|
(101,813 |
) |
|
(5.7 |
%) |
Underwriting, policy acquisition and operating expenses |
|
(14,383 |
) |
|
|
(13,542 |
) |
|
6.2 |
% |
|
|
(44,008 |
) |
|
|
(40,923 |
) |
|
7.5 |
% |
Total expenses |
|
(46,576 |
) |
|
|
(54,750 |
) |
|
(14.9 |
%) |
|
|
(139,988 |
) |
|
|
(142,736 |
) |
|
(1.9 |
%) |
Segment results |
$ |
(4,210 |
) |
|
$ |
(14,532 |
) |
|
71.0 |
% |
|
$ |
(13,813 |
) |
|
$ |
(19,465 |
) |
|
29.0 |
% |
WORKERS’ COMPENSATION INSURANCE SEGMENT KEY RATIOS |
|||||||||||
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Current accident year net loss ratio |
77.0 |
% |
|
83.1 |
% |
|
77.0 |
% |
|
76.0 |
% |
Effect of prior accident years’ reserve development |
— |
% |
|
20.2 |
% |
|
— |
% |
|
7.7 |
% |
Net loss ratio |
77.0 |
% |
|
103.3 |
% |
|
77.0 |
% |
|
83.7 |
% |
Underwriting expense ratio |
34.4 |
% |
|
34.0 |
% |
|
35.3 |
% |
|
33.6 |
% |
Combined ratio |
111.4 |
% |
|
137.3 |
% |
|
112.3 |
% |
|
117.3 |
% |
ProAssurance is a specialty regional underwriter of workers’ compensation products and services. The third quarter 2024 combined ratio for the Workers’ Compensation Insurance segment improved 10 percentage points compared to the full-year 2023 segment combined ratio due to a lower calendar year net loss ratio.
-
Premiums: Higher audit premiums were the primary reason for the increase in net written premiums. We continue to carefully manage our underwriting appetite due to market conditions. Retention was
82% although we saw improved renewal pricing. New business was$3.3 million $5.4 million -
Net loss ratio: Current accident year net loss ratio of
77.0% improved 4.3 points from the81.3% for full-year 2023. We also continue to observe and reflect the higher medical loss cost trends that we initially saw in the second half of 2023, although they have begun to moderate this year. There was no change in prior accident year reserves for this segment in this year’s third quarter compared to substantial reserve strengthening in last year’s third quarter due to the higher than expected loss trends observed at that time. - Underwriting expense ratio: Year-over-year increase of 0.4 percentage point was largely due to higher compensation-related costs.
SEGREGATED PORTFOLIO CELL REINSURANCE SEGMENT RESULTS |
|||||||||||||||||||||
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
||||||||||||||||||
($ in thousands) |
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||||
Gross premiums written |
$ |
13,650 |
|
|
$ |
7,930 |
|
|
72.1 |
% |
|
$ |
45,467 |
|
|
$ |
55,924 |
|
|
(18.7 |
%) |
Net premiums written |
$ |
11,738 |
|
|
$ |
5,749 |
|
|
104.2 |
% |
|
$ |
39,257 |
|
|
$ |
48,753 |
|
|
(19.5 |
%) |
Net premiums earned |
$ |
12,627 |
|
|
$ |
6,763 |
|
|
86.7 |
% |
|
$ |
40,347 |
|
|
$ |
46,156 |
|
|
(12.6 |
%) |
Net investment income |
|
1,009 |
|
|
|
601 |
|
|
67.9 |
% |
|
|
2,687 |
|
|
|
1,625 |
|
|
65.4 |
% |
Net investment gains (losses) |
|
599 |
|
|
|
(525 |
) |
|
214.1 |
% |
|
|
2,327 |
|
|
|
1,830 |
|
|
27.2 |
% |
Other income (expense) |
|
1 |
|
|
|
2 |
|
|
(50.0 |
%) |
|
|
1 |
|
|
|
3 |
|
|
(66.7 |
%) |
Net losses and loss adjustment expenses |
|
(7,801 |
) |
|
|
(5,006 |
) |
|
55.8 |
% |
|
|
(26,481 |
) |
|
|
(27,245 |
) |
|
(2.8 |
%) |
Underwriting, policy acquisition and operating expenses |
|
(4,143 |
) |
|
|
(3,668 |
) |
|
12.9 |
% |
|
|
(14,105 |
) |
|
|
(15,241 |
) |
|
(7.5 |
%) |
SPC |
|
(377 |
) |
|
|
175 |
|
|
315.4 |
% |
|
|
(1,043 |
) |
|
|
(1,351 |
) |
|
(22.8 |
%) |
SPC net results |
|
1,915 |
|
|
|
(1,658 |
) |
|
215.5 |
% |
|
|
3,733 |
|
|
|
5,777 |
|
|
(35.4 |
%) |
SPC dividend (expense) income (2) |
|
(1,360 |
) |
|
|
2,518 |
|
|
154.0 |
% |
|
|
(2,479 |
) |
|
|
(3,171 |
) |
|
(21.8 |
%) |
Segment results (3) |
$ |
555 |
|
|
$ |
860 |
|
|
(35.5 |
%) |
|
$ |
1,254 |
|
|
$ |
2,606 |
|
|
(51.9 |
%) |
(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 September 30 |
|
Nine Months Ended September 30 |
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Current accident year net loss ratio |
77.9 |
% |
|
70.5 |
% |
|
69.5 |
% |
|
64.7 |
% |
Effect of prior accident years’ reserve development |
(16.1 |
%) |
|
3.5 |
% |
|
(3.9 |
%) |
|
(5.7 |
%) |
Net loss ratio |
61.8 |
% |
|
74.0 |
% |
|
65.6 |
% |
|
59.0 |
% |
Underwriting expense ratio |
32.8 |
% |
|
54.2 |
% |
|
35.0 |
% |
|
33.0 |
% |
Combined ratio |
94.6 |
% |
|
128.2 |
% |
|
100.6 |
% |
|
92.0 |
% |
Segregated Portfolio Cell Reinsurance segment results include underwriting profit or loss plus investment results, net of
CORPORATE SEGMENT |
|||||||||||||||||||||
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
||||||||||||||||||
($ in thousands) |
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||||
Net investment income |
$ |
36,263 |
|
|
$ |
32,153 |
|
|
12.8 |
% |
|
$ |
105,040 |
|
|
$ |
93,089 |
|
|
12.8 |
% |
Equity in earnings (loss) of unconsolidated subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
All other investments, primarily investment fund LPs/LLCs |
|
5,218 |
|
|
|
368 |
|
|
1317.9 |
% |
|
|
16,546 |
|
|
|
7,744 |
|
|
113.7 |
% |
Tax credit partnerships |
|
(451 |
) |
|
|
(429 |
) |
|
5.1 |
% |
|
|
(163 |
) |
|
|
(2,294 |
) |
|
(92.9 |
%) |
Total equity in earnings (loss) of unconsolidated subsidiaries: |
|
4,767 |
|
|
|
(61 |
) |
|
7914.8 |
% |
|
|
16,383 |
|
|
|
5,450 |
|
|
200.6 |
% |
Net investment gains (losses) |
|
1,653 |
|
|
|
(3,677 |
) |
|
145.0 |
% |
|
|
(3,921 |
) |
|
|
(3,174 |
) |
|
(23.5 |
%) |
Other income (expense) |
|
(2,747 |
) |
|
|
2,847 |
|
|
(196.5 |
%) |
|
|
2,281 |
|
|
|
5,347 |
|
|
(57.3 |
%) |
Operating expenses |
|
(11,342 |
) |
|
|
(8,344 |
) |
|
35.9 |
% |
|
|
(29,812 |
) |
|
|
(24,823 |
) |
|
20.1 |
% |
Interest expense |
|
(5,698 |
) |
|
|
(5,514 |
) |
|
3.3 |
% |
|
|
(17,004 |
) |
|
|
(16,478 |
) |
|
3.2 |
% |
Income tax (expense) benefit |
|
(4,657 |
) |
|
|
4,655 |
|
|
200.0 |
% |
|
|
(7,837 |
) |
|
|
3,901 |
|
|
300.9 |
% |
Segment results |
$ |
18,239 |
|
|
$ |
22,059 |
|
|
(17.3 |
%) |
|
$ |
65,130 |
|
|
$ |
63,312 |
|
|
2.9 |
% |
Consolidated effective tax rate |
|
22.1 |
% |
|
|
8.6 |
% |
|
|
|
|
17.5 |
% |
|
|
8.0 |
% |
|
|
||
The Corporate segment, which includes investment results for our Specialty P&C and Workers’ Compensation Insurance segments, continues to contribute meaningfully to operating results and reported earnings of
-
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
5.2% for the consolidated portfolio, exceeding the rate on maturing assets and our consolidated average book yield of3.6% . - 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.
- Other income (expense): Reflected changes in exchange rates for foreign currency denominated loss reserves, which are not included in our operating results.
- Operating expenses: The year-over-year increase in expenses in the quarter was largely due to higher compensation-related costs.
- Net investment gains: While not included in our operating results, net investment gains in the quarter were driven by unrealized holding gains from changes in the fair value of 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 September 30 |
|
Nine Months Ended September 30 |
||||||||||||
($ in thousands, except per share data) |
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net income (loss) |
$ |
16,441 |
|
|
$ |
(49,434 |
) |
|
$ |
36,575 |
|
|
$ |
(44,981 |
) |
Items excluded in the calculation of Non-GAAP operating income (loss): |
|
|
|
|
|
|
|
||||||||
Net investment (gains) losses (1) |
|
(2,252 |
) |
|
|
2,702 |
|
|
|
(5,146 |
) |
|
|
(3,156 |
) |
Net investment gains (losses) attributable to SPCs in which no profit/loss is retained (2) |
|
416 |
|
|
|
(431 |
) |
|
|
1,743 |
|
|
|
1,421 |
|
Transaction-related costs (3) |
|
— |
|
|
|
— |
|
|
|
320 |
|
|
|
— |
|
Goodwill impairment |
|
— |
|
|
|
44,110 |
|
|
|
— |
|
|
|
44,110 |
|
Foreign currency exchange rate (gains) losses (4) |
|
3,849 |
|
|
|
(1,705 |
) |
|
|
1,409 |
|
|
|
(491 |
) |
Non-operating income (5) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,462 |
) |
Guaranty fund assessments (recoupments) |
|
(899 |
) |
|
|
103 |
|
|
|
(871 |
) |
|
|
29 |
|
Pre-tax effect of exclusions |
|
1,114 |
|
|
|
44,779 |
|
|
|
(2,545 |
) |
|
|
40,451 |
|
Tax effect, at |
|
(267 |
) |
|
|
(422 |
) |
|
|
(1,027 |
) |
|
|
(253 |
) |
After-tax effect of exclusions |
|
847 |
|
|
|
44,357 |
|
|
|
(3,572 |
) |
|
|
40,198 |
|
Non-GAAP operating income (loss) |
$ |
17,288 |
|
|
$ |
(5,077 |
) |
|
$ |
33,003 |
|
|
$ |
(4,783 |
) |
Per diluted common share: |
|
|
|
|
|
|
|
||||||||
Net income (loss) |
$ |
0.32 |
|
|
$ |
(0.95 |
) |
|
$ |
0.71 |
|
|
$ |
(0.85 |
) |
Effect of exclusions |
|
0.02 |
|
|
|
0.85 |
|
|
|
(0.07 |
) |
|
|
0.76 |
|
Non-GAAP operating income (loss) per diluted common share |
$ |
0.34 |
|
|
$ |
(0.10 |
) |
|
$ |
0.64 |
|
|
$ |
(0.09 |
) |
(1) |
Net investment gains (losses) recognized in earnings are primarily driven by changes in the value of investments that are marked to fair value each period, the nature and timing of which are unrelated to our normal operating results. Net investment gains (losses) for the nine months ended September 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 September 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 Condensed Consolidated Balance Sheet by generally matching the currency and duration of associated investments to the corresponding loss reserves as well as utilizing foreign currency forward contracts. When we invest in foreign currency denominated available-for-sale fixed maturities, in accordance with GAAP, the change in market value 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 (expense). Therefore, we believe foreign currency exchange rate gains (losses) in our Condensed 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 nine months ended September 30, 2024 and 2023:
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
ROE(1) |
5.6 |
% |
|
(18.6 |
%) |
|
4.2 |
% |
|
(5.7 |
%) |
Effect of items excluded in the calculation of Non-GAAP operating ROE |
0.3 |
% |
|
16.7 |
% |
|
(0.4 |
%) |
|
5.1 |
% |
Non-GAAP operating ROE |
5.9 |
% |
|
(1.9 |
%) |
|
3.8 |
% |
|
(0.6 |
%) |
(1) |
Annualized. Refer to our September 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. |
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 September 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 nine months ended September 30, 2024 attributable to: |
|
||
Net income (loss) |
|
0.71 |
|
Other(2) |
|
(0.02 |
) |
Non-GAAP Adjusted Book Value Per Share at September 30, 2024 |
|
26.52 |
|
Add: AOCI Per Share(1) |
|
(2.45 |
) |
Book Value Per Share at September 30, 2024 |
$ |
24.07 |
|
(1) |
Primarily the impact of accumulated unrealized investment gains (losses) on our available-for-sale fixed maturity investments. See Note 10 of the Notes to Condensed Consolidated Financial Statements in our September 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 third quarter 2024 results during a conference call at 10:00 a.m. ET on Friday, November 8, 2024. Preregistration for the call is available here and the dial-in numbers are (833) 470-1428 (toll free) or (404) 975-4839, access code 070621.
Investors are encouraged to listen to the live audio webcast of the call that can also be accessed via the Events page of the Company’s website. A replay of the call will be available at the same location later in the day on November 8.
About ProAssurance
ProAssurance Corporation is an industry-leading specialty insurer with extensive expertise in medical professional liability and products liability for medical technology and life sciences. The company also is a provider of workers’ compensation insurance in the eastern
For the latest on ProAssurance and its industry-leading suite of products and services, cutting-edge risk management and practice enhancement programs, visit our website at ProAssuranceGroup.com with investor content available at Investor.ProAssurance.com. Our YouTube channel regularly presents 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/20241107325308/en/
Heather J. Wietzel • SVP, Investor Relations
800-282-6242 • 205-776-3028 • InvestorRelations@ProAssurance.com
Source: ProAssurance Corporation
FAQ
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