PRA - Earnings call transcript Q4 2024 | ProAssurance Corporation

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Operator

Good morning, everyone. Welcome to ProAssurance's conference call to discuss the company's fourth 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. release, February and XX, news Form report its yesterday, XX-K XXXX. issued investor XXXX presentation on ProAssurance Included in out those and significant control risks, documents could alter were cautionary and and factors statements expected other results. that ProAssurance's are affect of company's uncertainties the business about the Please statements. review those

of full should morning, XX-K review This aspects and management and this on news will team results our for complete the information. call, selected release discuss the and investors

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

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

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

to Now we'll the call Ned. turn over

Edward Rand

demonstrate the reported P&C. segment, results and which makes I'd these business, consecutive fifth our our quarter our majority we progress to everyone In medical of largest of making Yesterday, particular, in you, Thank operating liability call. like to welcoming we start up especially our professional improved earnings. are by the

Dan the our impact our business comments net income are Lloyd's operations. quarter. will on touch the focused of My ongoing on on for core

nearly year effort is sequentially combined favorable rising to full favorable P&C Specialty multiyear including accident ratio almost reported sign prior positive segment's the by medical X X the year ratio of XXX%, points respond of generating points XXX%, quarter, X of that results, improved combined development. our reserve professional to benefiting to points a from almost In the a For segment liability severity development.

we We've accident efforts as resulting LAE believe many well year the Continuing eroding than ratio environment We renewal rate severity stayed of XXXX to in trends. social strategic inflation our of facing ahead due we achieved abuse. exacerbated points and loss reform that impact a the legal have legal improvement and more increases since levels by are space in system outpaced of tort challenging re-underwriting premium initiatives. other NPL in in XX the achieving and as mean the

of Even remains. year, with the progress work this past

fourth continue year's business adequacy X% business to XX% rate that for increases XX% premium our this renewal not specialty the Renewal in meet we renewal premium almost for brings quarter MPL expectation to portion MPL standard environment. increases forgo MPL since were opportunities within new of our business of in our the This and line our of and loss cumulatively. book. do current believe We XXXX

Exclusive and standard distribution accounts. more the in solid our changes, market targeted including in the write highly our We profitable sectors retention quarter, in remain very relevant midsized in strong and a of where XX% small of our well of with partners. was premiums positioned the much we our existing retention rate book to

As and below was adequacy focus quarter on expected, impacted the XXXX and by rate business our continues year. for be new the to

managing address tools and our commitment to disciplined and on pricing Innovation our risk to conditions. pricing claims continue Complementing decisions market enhance our focus to underwriting selection, is workflows.

believe identify will markets write opportunities us where that extensive and profitability there business are help analytics and to predictive specialty us As are objectives. our letting data we've we leverage subsectors specific geographic meet said, our

using AI-ready to committed in that XXXX, to that self-service the and launched also enhancing marketplace. a In of do distinguish filing fully and of for process are an a enhanced partners helping the our system functionality policyholders late portal insurers of the ensuring form we us nationwide us for in manuals find the business distribution web workflows agents. new options standard all business. our revised with, and easy and use delivers We're of policy We're for variety

our Compensation Turning Workers' to segment.

higher audit book continue XXXX. was in last higher medical premiums million year, appetite initially $X in for they obtain as more begun had and that Net we up pricing, to the we premiums $X new address and carefully year. renewal rate million our work than manage necessary only saw mid-XXXX, loss moderate improved We reflecting underwriting while business although written to the were trends to over traditional our the below

data system only are address paving in market conditions. productivity our along to we challenging tools, to we help are for is ratio improved XXXX. the The believe quarter leverage discipline with the management system early making been enhance addition, partially the operational efficiency. working on that impact integrated way profitability, using focus us risk combined In the a the having is positive ability implemented we with policy AI our will for billing is well, and underwriting year and due compared that has analytics, XXXX. the with claims, to progress Not innovation and These initiatives claims and initiatives

with Analytics. enhance case professionals. initial reserve will specialist burdens medical pleased CLARA injured implementation workers' capabilities, improve our This estimation workers, claims help our enlighten administrative are with comp claims us partnership the for the outcomes of We

severity escalating to platform to intelligence the We that tool care document through high directing of in with best-performing early their aspects life including and help claims to providers claims identify are their assists platform leveraging medical medical the address costs, cycle.

our optimize decisions, tools Plus, the and one in that improving market up ramping to medical network innovation Compensation And underway tool support use making profitable that's investments of in underwriting to the operational proprietary account just small of analytics we penetration and We're more Workers' management expand guide segment. example in segment. a what's our also partners. are data

and long-term results need focused objectives Across achieve. we reaching on we the the organization, remain that our intently to

the We at are of long our not expense fix our the the achieve progress sheet pleased to insurers compromise protecting over will XXXX, of term. and we but balance a with short-term

long history liability medical professional both Our respond in these has and compensation our that will efforts. workers' lines cyclical us focused taught to

maintaining both despite to is We profitability remain achieve confident delivering discipline know businesses key ultimately positive our underwriting long-term in our headwinds. sustained ability to market that We in results.

into see Dana? signs you'll of progress these more think as results. looks further Dana I our

Dana Shannon Hendricks

Specialty results before turning a into segments investments. Compensation overall P&C going I'm Ned. deeper bit and Workers' to Thanks, dive and to of aspects the

First, let on one me item. touch housekeeping

the release business indicated, the operating from currently As participation our Syndicates results from earnings, we have Lloyd's run-off. in in is the excluded previous as

previously remain few in Lloyd's reported, open. ceased and underwriting we've XXXX, we Syndicate XXXX although XXXX a XXXX years As beginning participating in respectively, and

on aviation a typically IBNR we XXXX results informed quarter increase from risks underwriting January these report were delay, X-quarter in management year significant reserves Syndicate in While by for we XXXX. the from a of fourth Syndicate

which on about these ratio about the combined Accordingly, of segment losses we accelerated $X.XX points. by quarter was reporting the quarter million impact income fourth the The per reducing or into had impact our for the fourth share. Specialty $X.X X net reported of P&C quarter

XX.X%. and Turning premiums liability year, strategies full the appetite fourth written without quarter reflecting declined for to and business. both the for of ongoing prior Specialty for due net full largely ratio net favorable disciplined P&C improved a segment loss accident The medical years the from Lloyd's, and pricing combined ratio development underwriting segment's core with year, operations in our results to XXXX professional

generally claims relative our quarter, last expectations. As we to closing said are favorably

Turning year loss to the current accident ratio.

actions We full including of to business year of ratio XX the was of and underwriting for current X.X the the In with by medical liability factors, the continuing actions jurisdictions. improving see a from taken accident impact benefit year in are over by loss around months the few fourth professional the quarter, some a positive overshadowed past pricing loss trends recognition severity several point. those

year loss a as in comparison the estimate quarter year-over-year reinsurers. Further, was unallocated as to well change premiums the by quarter-over-quarter of expenses the impacted ceded adjustment prior lowered in

For loss to an that focus workers' change rate environment on rate compensation, state-mandated continues our decreases. our reflects renewal experience cost adequacy in

to The decline have the to slowed by increase accident segment's the higher the full at the compared million, XXXX. below year points quarter net at reserves written in favorable year as However, segment with that XXXX, for net and year year audit X% net and whereas development the XX% our due was to prior time. seen in wage rates $X.X higher-than-expected to decline actions just premiums or ratio rate. year ratio in full results. trends loss was strengthened we reflect reserve quarter premiums continued current accident XXX%, The loss offset X% combined as X Fourth for partially observed inflation, was the prior in year the we yielding due that largely are

the Across declined X% in XXXX. head organization, count entire

quarter, However, ratios to incentive-based leading segments. higher as expense all year-over-year costs in compensation improvement last raised consolidated noted we our has results the in

year results. solid of and for for the off take investment the rate income continue as X% finish another had very quarter rose investment the a to We Turning to XX% strong advantage Net quarter year. we environment. to

fixed average XX% approximately in duration maturity X.X%. points average the book remains in investment-grade bonds an New XXX of yields were quality our or with consolidated portfolio than quarter of X.X% the for basis purchase The years. high fourth portfolio higher yield X.X with

and duration yield. We of match that to liabilities to continue our to our to our manage largely generate portfolio asset optimize

reported as on contribution typically quarter million earnings to continuing another produce million quarter, million, to strong Our partnerships $XX added investments full a and $X report up unconsolidated the and $XX limited structures earnings for These to X subsidiaries, of and XXXX. are lag, in from returns. LLCs, the they equity year bringing

by Reported also due income year-end to driven equity. in $X.XX maturity directly per to $XX.XX our change increased rose book accumulated $XX that comprehensive fixed on share other value $X.XX, share flow Adjusted $X.XX which share to largely of the after-tax portfolio was million per value XXXX earnings and per of by to gains $XX.XX. book since holding of has

expect, portfolio our loss you still securities of As in a an unrealized maturity includes number fixed would position.

intent We until securities have both maturity. hold the ability to these and

is is yields losses to our GAAP unrealized current investment bond accrete portfolio book our or leverage matures, as those decline should X.Xx there because will So value. equity. Further, upside back

me our let that close, that Ned? results. To actions are seeing positive we are reiterate delivering signs

Edward Rand

progress operating encouraged be coming of earnings quarters. share of profitability per Thanks, year we Dana. to with and there are We're ratio We progress look more long-term forward to operating to done $X.XX know achieve our in and an making results expect continued objectives is and full certainly by the sharing XX.X%.

Heather Wietzel

our prepared for concludes operator. ready remarks, That We're questions.

Operator

[Operator first question from Mark Instructions] comes today from Truist. And Hughes our

Mark Hughes

quarter. fourth the How in characterize would you the competition

you pushing so? more good the you're think think fourth that's improved profitability. trajectory to business? or quarter in competition? the less of going contributing thinking very Specialty And XXXX? meaningful had How into P&C renewal should pricing, I a the the premiums, How you Was and about I'm do think growth here we on little about it

Edward Rand

Yes.

think in don't questions, we So we've look we've seen quarter XXXX. as think Mark. fourth either. anything we really good different saw I forward that I the don't see different anything And really throughout XXXX, to

be XXXX say some And that's -- that would they the would protect be capital, what as And the we expect hands them XXXX. awash and out markets to excess to how look players played use to capital. in in expand seek continues they of so to aggressive the market some to potentially of capital also that to of I and with expand much that causes sitting and in

priority. think for they to for opportunities the order growth So is mantra XXXX driving to saw will that's you retention in that what continues would rate as But achieve to willing going I if rate, a present be be XXXX, higher I look We being us. expect grow forego in profitability over and in to happen themselves. certainly to And well.

in are of what the with to position spite those kind rate attractive pressures, still do that I the of think to it our that rates in we're in retention marketplace I able and gains competitive very maintain think backdrop. are that achieve we speaks

Mark Hughes

Understood. development reserve And within did years then What Specialty. accident that the come from?

Edward Rand

a number in of kind out spread places. different of It's

it's little quickly, the look kind and on more would at you together. we that prior more I separately, business, still and at -- the coming some more But more bit the business the business say then And where we legacy it's that's see NORCAL on business, develop XXXX recent some If although from and a look coming things years. NORCAL legacy largely. of

Mark Hughes

improved pick at early should loss XXXX. your expect what the XXXX, around accident current on of start then And Any of in XX%. but year still we kind thoughts

Edward Rand

going minute as Not to we're really marketplace. there's we'll to to like We the taken, be ago, make said to in 'XX just can rate which 'XX what believe lot beyond hard continue needs is a that in and push I as we rate a more regard. seek that look

Operator

from comes question Sandler. from next Paul The Piper Newsome

Jon Paul Newsome

Sorry about that.

answers bit great additional comp business. Specialty different a on that the want to rate color you Any could business sort business So on the more. we environment. it's given bit workers' competitive Maybe rate of or can push turn a little in little to push how

Edward Rand

going lot in comp of a Yes. we for That word consider that work with loss kind the to And backwards claim within looking, think kind by factor, continue those we see stale decline of cost I coming work Paul. operate from probably not decline Thanks, bit rate certainly marketplace. marketplace. comp The factoring oftentimes can also and and bureaus in. the a severity I able can of the frequency it's and to drive we your comp and the largely the taking indications in of right? rating is rating But that because rates in that's a work you're sway bureaus certainly like led place states the each the is push down. very sufficiently space a will in that have push And data across

kind team out of way but rate should has continuing the probably to lost cost a trend figure Eastern a down. for is in forward to be are challenge that the push indications that market trending so And up to at

an we And so are individual underwriter. account

loss we does but So the we very strive to cost where behavior decisions make market. can, that inform the those in much and the decline market

bit challenges market work and alone like some a the the about the some of the market, we're wilderness talking that in up rest catch sometimes at seeing And us to I but confident we're feel of the comp in we're point. will

continue again, managed and We for But the 'XX we in really rate comp. where same sort 'XX that to work against like underwrite loss to an get for believe lot a were multipliers a cost for of individual that on in hard down adequate. flat objective kind keep saw 'XX, basis, market of 'XX almost the and rates push account we those are

Jon Paul Newsome

do frequency seeing? book may Or a comp in are trend be just thinking side, it than you On seeing the severity others seeing? workers' think differentiates the is you're difference that others your from or where

Edward Rand

Yes.

I in have building over for Paul, we the severity think than the declines is seeing. it I on is to think -- think don't side. and of X but know more market specific the it's on years, with 'XX, I kind what I very I side in frequency numbers the seen XX severity frequency the much last think the line

than just think concerns I we're much to so more responding severity frequency.

keep going going frequency think is down to either. we don't Although

Operator

from The next question comes JMP. from Matt Carletti

Matthew Carletti

thoughts I capital and update you hoping your management. Ned us could on on was Dan,

here premiums, about of -- sounds of quarters like not I it talking kind continues of good few to to sit growth, lot value. kind equity grow. some maybe buybacks, book remains a did ago, you're -- you stock discount -- pretty a pretty at flattish A As

get how you on kind just you're thinking of about help could if So inside that. your head us

Dana Shannon Hendricks

take question. that to Happy Yes. Matt.

with the including And balance satisfied Of our our RBCs what we're in goals. capital support efficiency. with the adequate also group with recognizing we're Best. it's course, when to different A.M. management, stable maintaining capital do about subsidiaries think that. that the to of we're the at achievement order thinking quite We're for We're underwriting volatility. operating solidly importance considering about and many we're our insurance important rating need going to factors, going capacity think we And of A prioritizing for keep to accomplishing that we

particular portfolio diversify de-risked A acquisition to know, opportunity to intentionally certain And about our we we're sectors we optimistic are accretive believe efficient. the NORCAL, the of anticipation think as prior to that to the the yield. acquisition. we to few now capital build can portfolio investment had sought and risk capital that portfolio years of cautiously and some we you As when that we allocation, the we're capital increase back investment to considering back, pick add up in allocations we

organization, So efficiency, productivity, across long-term and the to that and we in our enhancing investing cetera. et operations achieve, our goal objectives on including is the profitability, our results need

certainly including going needs we're and is that but context capital, debt of of repurchase to in company uses So levels. other consider, operating something the

Operator

from The Raymond Peters James. next question Gregory from comes

Charles Peters

expense to provide additional back comments color inside combined ratio. like specialty go to I'd higher little the the Maybe a higher the on ratio.

I agent can us I look a at Is been on compensation. associated agent think update And you Has should any in forward, new your you cited out the going level partners, comp like annual distribution that things change result? there this expect if and then relationships? that? that, we just with

Edward Rand

the the at material Yes. question, on relationship Greg. that of Maybe end changes starting No side. agency

see that We that's levels, commission equity space nothing space certainly that in and new. on ownership to and private really in continue around puts commission but consolidation levels expectations pressure that

into on We to expect that XXXX. continue

let answer specific around comp. question expense ratio your I'll Dana the more

Dana Shannon Hendricks

recall of this short-term achievement that the very in will the of year, because in side XXXX involved sort points ratio. XXXX number of round comp. And low incentive at terms the Well, there, quarterly a the a is just our up incentive bit over out points to X little looking what was added that would are was say, on just that comparison, Greg, X moving the there full of at really. of variety of look fourth When you ratio when I comp nearly quarter there. you're parts items unusual increase year a I though, the certainly,

comparing. So onetime quite swing that ratio reduced whenever as then years that number the expense the a from benefits ratio -- of well. between creates XXXX had a And X you're further, that

Charles Peters

cited So on versus table. moving XX.X% the -- full just the Specialty that results to that bad just answer? and year, normalized there's XX.X% year. a looking both includes And clarify 'XX answer It I'm directions Is 'XX for parts is like underwriting of that in PC segment good, both like focus at 'XX, you the your sort XX.X%. your and that seems run guys let's rate on just ratio the good I'm in the guys expense

Dana Shannon Hendricks

Greg, I we managing the to focus equation, themselves think dollars expense what ratio remain I downward, be the on are on but all while would pressured. the say there, the to going as that premium is of selection, continue that risk side pressured we earned will

Charles Peters

Okay. I could you if just answer. did That in I'm Dana? sorry, previous add your I'm sorry something, sense. makes believe it missed

Dana Shannon Hendricks

No.

Charles Peters

with Okay. RBC something In missed was I I What on ratio where answer sorry, at end 'XX? the your else. I'm distracted end at if of 'XX relative was was previous the RBC, it. to of the it

Edward Rand

you I are of here capital? statutory risk-based have about stat talking us. Greg, don't NAIC the sorry, statements front in I'm

Dana Shannon Hendricks

you tell better. it's can I

Edward Rand

the think year, I in front I but improved data of everything don't us. have that in

Charles Peters

that's Oh, just target to trying company has just was I fine. -- was out a every I zone. figure

like. about that about But was talked offline target you. you wondering zone. just in can a of we front looks once data this talk the You have I what

much thanks for your answers. So very

Operator

session. Q&A today's conclude will This

Heather So comments. closing I'll for to some back call hand the

Heather Wietzel

any joining questions, today. follow-up call. we'll Thank you, to a us the you if great and free Feel look out next to for quarterly forward have Have everyone, day. reach

Operator

This much attendance. for today's very your call. Thank you concludes

You disconnect may lines. your now

ProAssurance (PRA) 25 Feb 252024 Q4 Earnings call transcript