Birmingham, AL – ProAssurance Corporation (NYSE: PRA) reports a net loss of $6.2 million, or $0.11 per diluted share, and an operating loss1 of $8.1 million, or $0.15 per diluted share, for the three months ended March 31, 2023.
Highlights – First Quarter 20232
- Gross premiums written of $316 million (-6%)
- Unfavorable prior accident year reserve development of $7 million
- Consolidated combined ratio of 113.9%
- Consolidated operating ratio of 101.3%
- Net investment income of $30 million (+48%)
- Net investment income increased by $10 million compared to 2022
- Adjusted book value per share1 of $25.81 as of March 31, 2023. Adjusted book value per share was $25.99 as of December 31, 2022.
Management Commentary
Our first quarter results for 2023 highlight the challenging market dynamics in our core operating segments. The medical professional liability market faces cost pressures driven by social inflation, reinsurance costs, and the weakening of tort reform. These pressures led to a higher net loss ratio in our Specialty P&C segment this quarter and resulted in unfavorable development of prior accident years in the segment.
In the Workers’ Compensation Insurance and Segregated Portfolio Cell Reinsurance segments, competition and lower expected claim costs pressured workers’ compensation rates. Our retention in the Workers’ Compensation Insurance segment declined, though higher new business activity and an increase in audit premium led to higher premium in the segment compared to last year. Unfavorable development on an older claim led to a decline in results compared to last year.
Ned Rand, President and Chief Executive Officer of ProAssurance, commented on the environment: “In this time of uncertainty for medical professionals, it is more important than ever that they have a professional liability carrier who will stand behind them and assist in finding solutions to the challenges they face. At ProAssurance, we are working to develop those solutions and to play a critical role in addressing the issues. Our data science and predictive analytics strategy is one of the areas we will focus on to uncover solutions.”
Rand continued: “The results for the quarter reflect our continued caution in assessing reserves in prior years; in our loss ratio selections for the current year; and in reserve increases on a handful of claims, some of which resulted from excess verdicts against our insureds in the quarter. MPL carriers and their insureds are facing an environment in which in large verdicts are too commonly rendered without regard to the facts of the case regarding liability or a reasonable assessment of damages.”
Net investment income showed substantial growth this quarter, increasing by 48% to $30 million. This continues a trend of higher investment income as a result of higher interest rates. We expect this trend to continue, as reinvestment rates are now considerably higher than the average book yield of maturing investments. In addition, bond prices strengthened over the quarter, leading to an increase in book value.
Our book value per share at quarter end was $21.07, up 3% from the December 31, 2022 book value of $20.46. Adjusted book value per share, which excludes Accumulated Other Comprehensive Income (AOCI), is $25.81 as of March 31, 2023, compared to $25.99 as of December 31, 2022.
The complete results release is available here: ProAssurance Reports Results for First Quarter 2023
Notes
1Represents a Non-GAAP financial measure. See a reconciliation to its GAAP counterpart under the heading “Non-GAAP Financial Measures”.
2Comparisons are to the first quarter of 2022.
Source: ProAssurance