PRA - Earnings call 4 2023 | ProAssurance Corporation

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Operator

Good morning, everyone. Welcome to ProAssurance's Conference Call to discuss the company's fourth quarter 2023 results. I'd like to remind you that the call is being recorded. [Operator Instructions] Now I will turn the call over to Frank O'Neil. Please go ahead.

Frank O'Neil

everyone. morning, Good XXXX. fourth February on Form in news February the which We XXXX, quarter and issued XX, on yesterday XX, also on in release was reported filed results our XX-K, report

uncertainties Included in those affect and team company's management factors This were review press cautionary ProAssurance's the results business are be of and discussing expected should and of on aspects results. filing quarterly those significant out call Please statements and that control other releases about documents complete risks, accompanying will selected could and on information. the alter Form this morning, investors full and the review our XX-K for statements.

and we identify forward-looking to February meaning the content within XX, XXXX. safe as make of accurate explicitly the on call statements The protections. on expect applicable Federal of subject dealing to statements this and expectations, is Securities with harbor Law U.S. call these We and this projections, estimates only

as disclosed required obligation alter law or not will these update to disclaims ProAssurance information and regulation, expressly part statements. undertake any of forward-looking Except as or by

reconciliation to company's Our expects today's these The non-GAAP provides to recent their numbers of a news items management call. non-GAAP GAAP counterparts. release during reference also team

me Murphy. today Karen executive and our leadership On Rand, President Rob be Also joining Kevin Chief with will Shook the and call the Ned team today Officer. CEO; Dana Financial Hendricks, Francis, members,

Now over I'm Ned. going turn to the call to

Edward Rand

number everyone. want Thank upfront. you, to headline address Frank, and the I good morning,

business. significant increases Workers' in share reflecting quarter, was continuation Our Compensation of primarily our operating in the losses loss per book of $X.XX in the

challenging create remains the litigation the direct our very insurers. sheet balance and and time, recognize our market to ultimately long-term current we sustained results commitment ProAssurance a disappointing, headwinds a of profitability. At The presented same result we to difficult to that the conditions will but have strategy a climate. believe our are are committed protecting by

adapting evolution has focus us our trajectory. the on markets to target pricing responding and positive discipline, that shown us experience with actions of a a propel Our while on underwriting will

the While implemented return levels we longer have that we strategies to it confident anticipated. we ProAssurance remain taking is acknowledge to we profitability, than that will of acceptable have

The a continues reality today on worsen ground as progress us environment as has is we that from the prevented to loss much like. would and making

this a unfortunately, more the refocus progress have operations, make performance, financial difference made our and effective. our masks Our within cohesive time. the organization tremendous organization over make to progress business will remain confident and we We streamline

both to The our Workers' Compensation competitive environment in Insurance Specialty challenge. a continues P&C and present segments

in saw while both priced, in of we renewal believe new be lines gains we to retention business, well strong. that remains business However,

in an drop gross operating resulted Our of pressures competitive in in overall light premiums. decisions

ultimately perform will the the business we business high-quality select add profitably. have be option an A both policies write decisions substantial our the attributes, coverage from believe with the our of and in it we and better written result service, new adequacy at to in do pursuit and When be future. rates disciplined which business confirms amount will lost to of past, the market we we ability the or and so away are we bedrock retain are our to profitability non-renewing. our could these superior of not present rates, been believe underwriting, rate that we renew the our was business business The than of walk

want regarding I general to segments. operating some Now our make comments

and reserving. Specialty our reflecting we're and underwriting, to where and judgments First, and in continue pricing P&C social drive medical higher, inflation that settlements

to be the future. that per unabated. deterioration in reductions cost the medical foreseeable inflation trends claim tied In will introduction our claims Despite we continue workers dual and the fact are as about drive we continued years, recent and for Given additional for cautious for in rate seeing continue the costs the the quarter litigation the substantial treatments frequency, noted of claim in Workers' the health climate average increasing last as continues are care effects costs wage medical we of to to see new technologies. Compensation, rise

trends industry are in believe ahead book. of We of the we of because our the recognizing nature short-tailed these

fewer any we companies in approximately time closed XX% compared cases one to leaving line open a than with this of reminder, at industry, faster the As us other claims business.

it to claim productivity costly early becomes, And in which as as the longer getting is we a injured case the management. intervention why on in-depth possible Frank? quickly and open, is more focus our industry, back workers through

Frank O'Neil

Thank to and who Dana, review results you, go some investment next specific Ned. sheet will from the highlights returns. provide balance We'll segment and Dana?

Dana Shannon Hendricks

Frank. Thanks,

the or was operating net per from difference in $X of million and million $X.X the interest Our of our syndicate the $X.X of loss entity in with our $XX and operating ownership $X between remaining of foreign gains, exclusion reflecting resulting primarily with of sale loss $X.XX quarter the million Lloyd's diluted million net exchange income currency investment share, associated million an losses. the

the to in which results, of increase. the being In terms of rose Compensation the ratio consolidated results that segment fourth almost underwriting XXXX, X combined quarter Workers' compared driver Insurance our primary points of

equal While than had our by our year full consolidated consolidated in quarter favorable impacted which higher segment, driven ratio. to of our estimate expense ratio and unfavorably quarter to this current last fourth loss of our Specialty almost offsetting points P&C by the year, ULAE expense our ratio largely was impact and adjustment an consolidated was X

our higher primarily continue earned expect lower into our expense which in as ratio drive pressure The premium, of reflected we to maintain consolidated rates. remaining the increase we XXXX for

rates segments. and last the the adequate cannot difference for less getting we're Specialty million $X with quarter our P&C, fourth do In to risks by and focus Turning when being so, the differences. now reduction away our remaining about due were million premiums we to timing on underwriting operating than year $XX of driven walking

and new business policies able Even rate as our on we meet write renew we focused adequacy, standards. are that to underwriting are

business essentially million, fourth at retention last double premium and X% was New XX%. with higher, year's pricing $XX quarter renewal was

Those are for deliver. ProAssurance value willing to results us we in find we tell insurance and and pay service that promises the insurers make the

decline premium Workers' the reinsurance ceded Insurance premiums portfolio renewal audit segment. business segment, Compensation our our segregated In lower market gross That decreased $XXX,XXX. to written sale result and primarily alternative of the in was

traditional from higher $X In renewal business the new face continue see Retention to fourth to cost last approximately last premiums increased compared each year. as loss At the intense time, book, declined million our state X% quarter was rate year. and prescribed writings rates adjustments. same XX points and pressure than renewal we competition XX%,

In In cost fact, of seeing. approved trends loss face current we're increased the loss our the full loss XX%. to ratio have we trends some cost states to our for additional loss book, year Workers' in accident in the flies decreases which response year XXXX, Compensation

year's Underwriting in expenses our essentially quarter. last were segment unchanged fourth Workers' Compensation from

reflecting points increased earned. However, the lower underwriting premiums net ratio primarily X expense

$XX continue to million increased we reinvest income highlight portfolio mature. be at Our to almost investment rates investment million continue as $X by securities results yields average as within higher to book as due net to higher our a

higher in New quarter yield. XXX basis were book average than points X.X% or our the purchase yields

X% holding down as since up per approximately reinvestment year-end rate provide end $XX.XX, balances we've for at was cash investment fixed end last the on million driven Our average in gains after-tax value operating X.X% to unrealized reduced of needs. of are share from our year maturity $XX of the by portfolio. last order year more of Book the

hold book share, value losses will the both back which is That unrealized approximately per to as there of still embedded matures value per portfolio said, the we intent until maturity. share book ability $X and as accrete have holding to in

conclude, couple to there items of a And before I I'd are like highlight.

on XX, a revolver draw refinanced our senior First, $XXX $XXX with million $XXX on a we loan. our term and million November million notes

interest compared with lending on XX, pleased and on given environment. refinance in Additionally, swaps were retired the rate term the respectively, X interest very senior we of December going as to revolver notes. X.X%, the our result loan the X.X% into rate entered XXXX effective this results a interest current and which We're total X.X% into that of

our Second, to XXXX second begin financial in our at call Lloyd's, the year. we ending with to due that impact participation will beginning That's of the in in last results XXXX underwriting be quarter quarter, the would we quarter we mentioned and see lag. done, our that

an earlier, open the syndicates over a the continue we from the And pro prior As as our our years interest of entity earn year-end. in I associated policy period. Frank? remaining to underwriting our results sale participation mentioned to rata out will with reminder, in to completed Lloyd's XXXX prior

Frank O'Neil

I questions. Ned, you think for Dana. X more wanted make it comment you, we to open Thank before

Edward Rand

Frank. Thanks, Yes.

we you, open done of unit. our the congratulate Ross. unit Before publicly for and Thank realignment and His small he's want our -- for I our has Ross work our podiatric and questions, business is thank for invaluable. want unit business Dr. Ross company retiring, insurers. the in our to been leadership our Taubman, in for business him small who it to I leads

Frank O'Neil

you, our remarks. Thank Ned. that concludes Alex, And prepared

for the are lines. open questions We if you'll ready

Operator

JMP. comes Carletti first Instructions] of for [Operator question today Our from Matt

Matthew Carletti

at with you XXX% kind is we of might guys shorter know basically to feel your of it lead kind you it? the playing view a there first? more a of caught on, part seeing that comp, severity that? not and kind Is -- it's large. you're I industry and should that believe about there anything have you're book you there would industry ahead Or on Ned, maybe comments of than think really be tail Are specifically. on the else anything the healthcare-focused that that taking seeing into Is of that maybe I you workers' stating

Edward Rand

look great this large book, the have piece we where it kind predominant. dominant of write, book. Yes. a And different across classes any book care business health the question, business the more we class that the but comp business. we do not of is work really single spread Matt. really a We when see it's find We across of don't It's entire

a I general view as So is the to business to opposed a it think specific more industry of anything class. yes,

Matthew Carletti

P&C. Okay. Perfect. And on then Specialty

of couple kind think noticed a we had questions. to growth. line hospitals of One some top the metrics, of I just return a is nice and As facilities about

for a about I what of around If worked and kind seeing good turn years know you've there? book maybe you're to some you could seeing just talk that bit a of couple of little things. kind

quarter? just little it that timing coming it bit or renewed And difference in chunk you timing expand then prior you of is that there? on a it renew premiums. a specifically, mentioned quarter the a in Can will Just a

Edward Rand

Yes.

difference it's timing On the question. to taking of specific business, both. the in we business, But I'm question answer on because just that little So some take more to and expect Rob the around answer going let one to that renewal XXXX. bit isn't hospital a place, a place

Robert Francis

Sure. This is Rob.

hit fortunate criteria wasn't seeing thought the a the met side. to of facility are it's is we enough So some, recognizing a the on underwriting really particularly are that enough really The our that not in bag ones, the and of bit quarter market We hospital a were prices couple fourth fortunate good submissions appropriately. that increasing business, little were but that really we hospital mixed enough. we we -- that think, on

simply opportunities hand, than is the pricing, incumbent On market, is little we the have in which far the number of increasing on the our higher hospital from bit even other a greater renewal a because missed carriers. pricing

our pricing Additionally, excess the we've in that some number access quite of a believe off is high-level just business, towers we not either. adequate high-level because come of

bit it's bag. of a So little a mixed

Matthew Carletti

last helpful. one, repurchases of And your kind could, then on I appetite just That's one and currently. share if

numbers. We aggressive look how you as than can can active. the surplus that as of you should book view to just 'XX, the my we is kind your been less backdrop, in value, of give XX% at or about to doing premium forward You've if But the kind X, of see we a I'm stock your us math right, be AOCI there? that expect on ex is

Edward Rand

I'm you sorry, repeat can the question?

Matthew Carletti

than less premiums just value trading AOCI ex surplus X? of below and Yes, outlook activity book for repurchase given to half

Edward Rand

sure. you. Thank Yes,

look of to we'll something levels. to capitalization it's subject Yes, levels at liquidity Sorry. kind and continue

Operator

from question Bob of Our comes Janney. next Farnam

Robert Farnam

question a got for a Kevin. question Ned for I've and

with Just the starting off Ned one.

kind of your I'm looking at So ROE. targeted

that to, You're get XX-year looking down ratio -- type basis I'm XXX to points treasury. investment income what, of to need on curious based what able at, above do you generate to type be profile, your of the what combined return?

Edward Rand

Yes. I XX that. to combined get around believe it's

Robert Farnam

Okay.

impact Kevin, And so fee curious Okay. I'm the schedules. the of about --

different has each schedule. I think state fee

I'm than state? are asking others? state states types in -- inflationary about that are I'm differences have to Just different worse just different curious thinking was trying more know there there by classes. So any just if inflationary terms Matt geographies, I trends of of

Kevin Shook

Bob. is, There

in schedules fee traumatic them our for have procedures, there's are XX schedules, increases them exemptions So fee core injuries and X XX certain I and exemptions are customary. states, state. different by of that usual will There's for say And complicated. are of

But because this was for looked and years up period. is example, at of have what we're is general up the to X the that get Pennsylvania prior seeing. last exemptions, fee from is versus to a schedules that schedules compared but I It that all fee prior in 'XX specific the hard recently in to X went almost to what say XXXX a And X%. the study read 'XX figure years doubled

Robert Farnam

the frequently or How of fee kind are revised? updated schedules

Kevin Shook

them but of are certain states years. annually, Most of it's every updated couple there are updated where

Robert Farnam

Okay. -- got terms space, comp workers' I -- I'm mean, year XXX-or-so down. combined you've in in ratio at the All like background had accident And just a ratio the combined of looking you and rates going right.

So you're new are of you level that like just putting what curious, new on, profitability expecting business the business from on? coming I'm the

Kevin Shook

that's there's lot on shopping other Interestingly, a not of going the with everything in comp. lines, the of

rate for new our are over our business much has are been renewal seeing a So months has get we last the to perfect able XX our I the better stuff and and that at performed which model, level service we than is very think interesting. book,

Robert Farnam

Okay.

priced that the kind combined based expect improve XXX be business the that fair? accident So better. seems on the to that new Is year -- to going would of you ratio forward

Kevin Shook

new and continue is it reasonable performs to a see has, it we proportion of If a as historically conclusion. I that business that, higher think

Operator

Fritscher Maxwell Securities. from comes question next Our of Truist

Maxwell Fritscher

going in for much one just calling business? how I wondering Mark push in have pricing to Hughes you I are today. I'm was physicians question. this more

Edward Rand

How much in question? heard push going more we the business, -- I sure the is How physician just sorry, to to much the are I'm pricing question. Maxwell, make that

Maxwell Fritscher

Yes. Yes.

Edward Rand

across a of yes, think, we, I to drive in and drive need we will rate, medical liability No, book continue there the as earlier, comments said to our think rate is we business. all professional of

it's book that side, specific than care physician have. the health more On the state we probably specialty

trends. are adequate other are so into we're the is up more states think we And double there where lot keep rate some we like to states with feel needed getting increases are there still severity rate digits required. or where up And a modest

Operator

from Our next Instructions] of Capital. comes Hirsch question Adam [Operator Jumana

Adam Hirsch

book to premiums your address And corporate to is the OpEx is gap XX% down? like value? also then are If how up while big quarter, what your plan you in the could large close

Edward Rand

Yes.

a I number think, associated on there. There's that. what's So address on kind moving expense, I'm of of the with to OpEx Dana let going going parts,

relative we're what that book on value? you Your asked? question, where closing the to trading second gap Is

Adam Hirsch

sir. Yes,

Edward Rand

the or operating tends ROE relative Okay. of operating Yes, levels so look on the what value When it drive equity. to that. to book industry positive on going Thank back and a to return getting to our you. you are return to at target insurance as trade whole, ROE

propel will return that on time. multiple And equity forward so over driving forward

And return really value. that's return to our So book we the positive ROE, focus, which relative driver that's to then to insurance profitability, trade where the impact that within will industry. is

on answer Dana, question? do you have operating the expense an

Dana Shannon Hendricks

I've about certainly million press $X what the release. open really increase just showing operating we're up largely corporate filling headcount to you due been that's in compensation-related larger a and expenses, we're at looking think some some I quoted Quarter-over-quarter, on Adam, than our Yes. numbers, much with costs largely.

question? further So a is there

Adam Hirsch

So you I just XX% say that up do -- I no, it's year-over-year... mean

Dana Shannon Hendricks

thought say I I Okay. number. you heard different

Adam Hirsch

headcount you No, was reason have why to with I is expand a business ma'am. going how right curious there's if now. just

Dana Shannon Hendricks

expanding we're No, not no, headcount. no,

that XXXX, as in late had the as than about just metrics We've are open filling year. in COVID coming years year-end you and out this the we've of certainly that positions recent see was open of Some more there had open. headcount

Operator

no At further questions. this time, we currently have

to So any Frank back remarks. O'Neil I'll hand further for

Frank O'Neil

call quarter team Thank ProAssurance's with our today. concludes first you, be we results. And Thank you management Alex. back for that report will when you.

Operator

Thank you for today's joining call.

disconnect You may now your lines.

ProAssurance (PRA) 28 Feb 242023 Q4 Earnings call transcript