PRA - Earnings call transcript Q1 2024 | ProAssurance Corporation

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Operator

Good morning, everyone. Welcome to ProAssurance's conference call to discuss the company's first quarter 2024 results. I would like to remind you that the call is being recorded. [Operator Instructions] Now I will turn the call over to Heather Wietzel.

Heather Wietzel

Good morning, everyone. be to pleasure a here today. It's both XXQ and issued its May news Form on report and first XXXX. release X, ProAssurance quarter yesterday, results significant results. factors those uncertainties could the affect in documents and cautionary and about Included alter business expected were company's control and are that the other ProAssurance's out of statements risks, complete review of on this and call, Please review management our for results morning, information. and team will release investors the should the those statements. This discuss XX-Q news selected aspects and full

to explicitly and law expressly forward-looking expect the expectations the dealing alter content and on required is and call these with projections, accurate update call this obligation part is except protections. The We of harbor laws of of make or undertake statements. this and identify subject statements ProAssurance estimates meaning forward-looking safe XXXX, to U.S. by securities and will statements disclaims not and any federal disclosed as as applicable or to only these on information X, regulation, as within May

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

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

over Ned. call to turn the Now I'll

Edward Rand

which and welcoming ratio benefiting increase in of ProAssurance. We improvement I'd to quarter a from year everyone to like our start Heather investment And improvement we calendar loss our X-point we you. call operating welcoming the a remain focused Thank share, in the year XX% ratio. earnings underwrite by current reported per in $X.XX the first and in seen to risks markets cautious cost to remain in we be and on and can income. The the trends. challenging, both about driving loss continue accident loss underwriting in be operate improvement We X-point

beyond trends. that retention progress levels our insurers. and pricing saw existing on cost loss continuing long-term focused help We rate strong are our objectives quarter profitability goals are solid move We with of we get believe toward achieving the us in toward to

to quarter social abated continue loss the the liability severity but inflation from medical many of be trends. in our challenging in in resumption had not non-renew meet market forgo existing emerged We new jurisdictions, on criteria. The costs with business fourth environment pandemic. initially of claims the and continues does pressure higher-than-anticipated XXXX professional underwriting and These that to XXXX and the in XXXX, during the

new gaining still treatments health claim address. frequency, lines the quickly in insights business. our inflation, higher as on are and using care rising outcomes. Since and XX% trends due we closed average moderation utilization cost we wage underwrite rising cases and is without of in care by of providers, more per vertically-integrated claim of a the at Despite continued to per costs more of market. payments medical by We're technologies accordingly. ever-growing share providers applied providers, patient which our faster impact an industry-wide than impact quarters. saw the these that case respond the medical in compensation workers professional meaningfully to December claim study seen convinced We're taught of in have to are profitability that to efforts. trends, the medical to workers' in prior to trends of payments respond The our months both broader us these trend businesses. believe and our that see actions in claims development, we're importance increasing the monitor to taking long of are will cyclical in line the the observe maturity on per underwriting conditions. Reinforcing continue address we continuing received is ability bottom the we workers' open average in insurance year achieve than XX compensation of our could treated confident industry, of to changing the We that cost will but we're must view the described has Workers' can on published these to Institute impact market The and reserves study Research noted current ultimately focused claim our both book the care. Confirming confident XX% represents claim medical underwriting more comp utilization Compensation workers' market higher in coming liability be We per more stance, impact and the a higher history our remain medical ultimately XXXX,

quarter, said a to as fix short-term can achieving delivering protecting current to require expense know conditions be conditions long-term results quickly our we over But to improve focus These shrink book of that last our we markets, achieve. like. long conditions positive turn will will for would goal our keeping However, and compromise believe as from as the sheet some while balance maintaining likely market at in headwind, and to the are I we term. not will the us wait can We we growth. to our key that achieve insureds discipline the a our we we us

takes progress at Dana's our of look segments. signs see you'll closer remarks the she in a think I as

Dana Shannon Hendricks

Thanks, Ned.

leveraging goals. that million seeing toward rates the mentioned. to our able for our greater retained million a the good yield that average eligible at we're line profitability were account. maintaining is in opportunities of for We're Specialty We XX% expertise progress of criteria achieve of segment. policies by written pricing renewal, a new P&C large premiums driven Let to of disciplined quarter-over-quarter nonrenewal underwriting segments professional X%. We benefit profitability. me liability our Ned selection and could segment's our risk an of sector medical where long-term our the declined us rate of with top of also move business priced market Gross the start $XX.X the generate example The increase $X.X to identify

quarter, year of our segment's to underwriting net example our compared almost of X also Another favorable guidelines NORCAL of management claims the which application ongoing demonstrates Last improved amortization the primarily effects we as as of large million, points attributable positive strategy. In year's the $X.X $X.X purchase ratio, and accident loss several recognized effective pricing the our as reserve related primarily to last well This unfavorable net quarter. year first first accounting is current quarter development development, prior year's to transaction. of the accident million included result verdicts.

due $X.X reminder, prior impact we ratio the expense reserves a review increase in in-depth perform basis and quarters. The to the XXXX, the refund primarily a tax Employee fair the a payroll acquisition. Retention fourth items consideration million quarter's the semiannual Credit program more in including year As of second on from liability beneficial in the and to the NORCAL a of value was of contingent related a decrease in

will First rate years. The earning participation years continues the the our This quarter to premium are of state reporting XXXX, business beginning our few open compounded quarter, prior Workers' with second reductions in to strategy operational the Compensation also over in quarter disciplined Lloyd's theme in continuing drive X with in segment out lag. next results where decreases. underwriting loss be runoff segment cost reflect for activity

premiums $XXX,XXX. Despite market adequacy policy reasons. million book saw selection. current top for the in slight and conditions premiums count, decline the in $X We were small to of a a require risk believe reduction the line approximately to continue for higher in extraordinary traditional approximately We dedication premium segment several

our that Portfolio renewed Segregated First, payrolls written endorsement. Cell was toward medical higher in midterm believe estimates due in us positive business discipline we than accident the XXXX, as program of our caution in that year We Reinsurance of reported $X.X ratio than There year's rate current move be last policy increase our expense a higher this EBUB underwriting million first we're believe reflecting the quarter. no business for selectively. The long-term first last seeing in environment We year and was in in impact captive results. estimate reflected insured accident goals. below XX% loss segment. The full in was costs Ned cost The the traditional around and trends first compensation-related current in an claims prior on quarter and policies operational the quarter segment. of year's reserve our we in the prior although increase retained first at beginning primarily to the Plus, quarter, that was focus change of is added policies rates ratio new several previously year discussed. existing quarter to were XXXX adequacy quarter segment's the year an higher

we results. investment or the quarter-over-quarter XX% to income rising environment. as took advantage $X million Net Turning by rate rose of investment

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

LLCs compared me, year per of value an was approximately holding million earnings in $X We $XX.XX from investment and loss our million in share $X and in gain unrealized ago also equity LPs excuse losses. embedded -- a $X the $XXX,XXX quarter. Book per with share recorded to

both portfolio the those have related matures. and ability accrete value maturity, as losses to intent We so securities unrealized the until to hold back the book will

and said, are protecting insureds Ned we our As long over term. committed to our sheet balance the

objectives, seeing achieve will be signs to meet continue and We intentional capital are to our that pricing on we Heather? beginning levels management. that actions our are

Heather Wietzel

Ned, final comments? Dana. you, any Thank

Edward Rand

But the be I'll that Thanks, we reiterate we I'd done urgency that to there. take quarter, to know we're shortcuts report there more to say again, achieving the that we Heather. that not to in of simply pleased understand goal. get profitability like is will and

Heather Wietzel

prepared for Thank we're ready remarks. concludes you. questions. That Harry, our

Operator

we line Carletti for first our Instructions] [Operator And question JMP. the of to of go Matt will today,

Matthew Carletti

environment you pandemic kind talked on you back the kind the out severity so you of frame? ago, kind of coming over past you Ned, how guys some and guys changed might of took. update of social bit a year kind a the and have or the of about year up saw how -- about inflation actions competitive spiked really over of that Can time us

Edward Rand

maybe jump but that by a consequence, know, as a at are Matt, of what of generate I in And investment willing might would mutuals But more I ago, to, see accumulated pricing by competitive well. What we it's add segment. Robert, seeing do, think, environment. to Yes. market competitors, is than segment it our decisions XX write of of to think income. months levels are as in say lot that territory as inconsistent scenarios, Happy you that to is capital, I not lot a anything of A that, territory we a have kind as and we rational you were consequence are that? from lot would call and appropriate. a

Robert Francis

I was universally, were say which won't the rate accounts, taking but Ned. rate increases with saw certainly was actually that concur generally would coming harder there probably X/X companies increases, speaking, were many what or look a what that we pandemic, out taking at I larger rate underperforming. Unfortunately, half and they're of some of bit overall. Thanks, more taking And small small little their they needed. increases were

that So didn't but have additional because they because profit was income, investment want direction. the of lose overall the little We have they Ned a same right business, goal. operating 'XX. moving bit as the in to softened profit an underwriting goal. That think it don't They in mentioned,

believe And do the level discipline, We ago. are so still the mutual that few softened a of better maintaining world carriers of of years a sort but little living in larger are the bit carriers 'XX. in a that

Operator

from Greg of is Raymond today question next James. line of Peters Our the

Sidney Schultz

for This is Greg. Sid on

decreases, line. or out if sometime the some the get to And You of see comp you just workers' X? could ahead curious environment think I'm severity of year how playing over next rate in rate out recognizing being called with you market inflection the the the an the

Edward Rand

needs certain been get It's a Sid. to point. it I'm has pricing really frequency's The not to that inflection And X. decline great question, fairly do going to in think We frequency-driven.

frequency have And that you severity kind watch to that trend crosses so for. it's over really of when that trend

coming. is the think We trend our frequency continue with. think while of severity being and impact improvements where of in having, kind the meaningful. I and your that benefit to something everybody and we that see frequency that care we view, are view we're a see unquestionable lot don't point on more faced In in is that it's Regardless medical from of severity yet. trend, We market think trends reflected is at that that the being frequency point a

Operator

Farnam from next ] Bob Our is Instructions] the [Operator of (sic) [ line Dan of Janney. question

Robert Farnam

regards with Specialty It's are to to if Farnam question had inflation. then are curious about I'm address a that Ned, just rates. the And social segment Janney. there in Bob not you I just P&C raising can things do inflation social

Edward Rand

Bob, it's question, answer. long good a a It's Yes. probably and

things. are So yes, there certainly

are there that we we think can things how approach I claims. do in

obviously, kind can refining directly things make settle And the finding well. of that cost balance take price, risk there's very balance choose and impact, you an distance beyond claims, So we that that underwriting you to the we can and choose choose control. claims to an between that and we on territories the of write that in the obviously, have very, write, ultimate a a claim. From difference as to standpoint, can

then fault. parties a by at think goes worth, to a question. of of, in is lot really what inflation. dollar and right societal be you about a happening what of need I lot perhaps compensate might of of the And my injured happens of done who the what's can turn of the just driven A tide question inflation then now be social complicated that's of view, social views or how views is regardless kind much more kind can societal to

And so important. and sorts are try I what product safety public think number about and some of doctors do practice and that tide focus turn and have that an those to of a is our we informing is the where do how issues doctors better industry, of there the as what

lost. as of guys. we're because provide I an do kind we insurance the society made bad could And industry, the ] allows the of are happen the that that job think value better grease industry [ to also fact I commerce a think we the that to often gets communicating

And -- I there's much both recapture health industry, a care reform. need And there. to involved a reform, whole that And right? when that reform, insurance then tort think so can And minds automatically we myriad and of that. but things tort within some narratives try improve as help there's an there's it's as go I industry tort talk we people's more to caps, think there's about so

is Some of litigation disclosure around of funding. it

the the is it of and putting making and plans around they what that life parameters how Some putting around develop planners and they're care rational is sure and forth plans realistic.

things as there address lot as the of within we do So an a are organization are at that yes, and looking that to we then are there are we that can things working well. industry

Robert Farnam

that Are you in there in geographic areas that progress see those some you're regards?

Edward Rand

are and jurisdictions, they was There's today. those I from unpredictable. see that delineation to more verdicts highly and it from, that's I a But bad would that were of and those case to are there little coming think the X think think XX there are XX it's haphazard And little -- probable more years and are stable that more less We stable are that are and a much about. ago, where cautious certainly geographic better kind that But say we of more pricing we there we here is it predictable. feel areas coming are harder our XX could say years markets predictable others today ago. I was feel about than that, that you about. that and about there better litigation XX large better environment jurisdictions. really and were the were that if where you see not is

Operator

from question the Mark Our next today Securities. of line Truist is of Hughes

Mark Hughes

for a Ned, rates do are we little about need generally their I they think just think less interest underwriting, the the and you doing What order the flow in of capitalized, think them advantage mutuals cash be do in are higher taking that? over maybe competitive. with Fed they -- just positions you turn to

Edward Rand

Yes.

think investment driven. really it's income I

and a As still profit. operating that focused they're higher and very turn an or operating write combined underwriting on to Rob mentioned, they in ratio profit can

them a back they at underprice you challenge if up lot make for offset compounds you and I get generate challenge present trends year-over-year-over-year, a be losses. below the think to the running underwriting pricing, though able well for pricing that But I you're right to yes, to if And have gap year, are will jump for keeping that if every think income investment good not point. to when to now, you market so consistently in to you're come that adequate some have finally will them a and trends, of with considerable. can quite

Mark Hughes

I you kind earlier current when commentary, Can I'm the care if then accident but improvement terms ratio think health of year improvement, price, And of missed break loss in conditions, you sorry that about they the in in the the experienced? business. the apart were what this components claims and

Edward Rand

premium know you you've you so a those around of that it's don't quarter, -- -- Yes. kind claims. don't I you detail of earned of lot -- detail looking the at have claims but claims the say lot would you're a received, of number in have there when

months this driven driven by we're but in -- also trend gains right? pricing we severity made ago. And part experience quarter, when So wrote pricing gains it's that XX of So driven we're that the the that the in we've that trends seeing. is in are that, business it's is first we the more the excess by got seeing -- our that pricing belief

so for that pick making for the loss And year. credit give current that ourselves the and we we're

also currently business that look mix loss We of take ratio. when the a at business non-renewed we've kind of that establishing and we have that the

Mark Hughes

I analysis terms still not NCCI the continues on of loss this, in trajectory, already Yes. loss but or there the NCCI's sign if and that -- of stabilization industry loss experience you there of the Are some a cost to And seeing abating. cost recommendations? again, touched you be it be any might their apologize down kind just

Edward Rand

price I is how market what seems rate said I'm drive can what And challenging an say trends right we severity think the down. Again, drive when much not individual pretty very frequency is focus can't as real. whole think. our continue earlier, as a the done. want are to thinks where in the in forever now and I I we you underwriter to focusing would And that jump NCCI Kevin, trends on very, market account so

to And we they and to turn. does so there delay a that think look, perhaps be tide the backwards and influencing kind response. then We and need the has NCCI think with backwards I is sit. think often where looking is of that

will Just industry. when for can't it say the

that, to on add Anything going to we're you'd control So our own. it Kevin?

Kevin Shook

medical I worried cost that No, inflation. generally, will think to say leaders see are I loss with surprised is you said. continued acknowledging I about And that decreases. agree industry everything NCCI people were extremely

part with on to the in do try want executives XXXX. So of to company medical of work I to forward frequency-based, look the having think comp to largely it instead and that build be we is something working more NCCI, in

Operator

This time back session Wietzel. to I'd this hand conclude you. our Thank today, Q&A and at will for to like Heather

Heather Wietzel

again you, us on free next would who's to if out forward like joined Please least. conference at the look to call, Thank today. with everyone, further. quarter's feel you talk speaking reach We you to

you. a thank day. great Have So

Operator

joining. today's you conclude call. Thank will This conference all for

You may disconnect lines. now your

ProAssurance (PRA) 7 May 242024 Q1 Earnings call transcript