ProAssurance Takes Defensive Play During Surge Of Jury Verdicts: Analyst

Core Insights - ProAssurance Corporation received a Market Outperform rating from Citizens Capital Markets analyst Matthew J. Carletti, with a price target set at $20 [1] - The company reported a 9% increase in net investment income for the fourth quarter, while gross premiums written (GPW) decreased by 0.5% to $207.67 million [1] Specialty P&C Segment - The accident-year loss ratio for the core Specialty P&C segment was in line with expectations at 83%, indicating caution around loss severity in certain jurisdictions [2] - The Workers' Compensation segment's loss ratio also met expectations at 77%, influenced by elevated medical loss trends [2] - GPW in the core Specialty P&C segment remained flat, with cautious underwriting practices in a competitive market, solid renewal pricing of +8%, and a retention rate of 84% [2] Workers' Compensation Segment - Workers' Compensation GPW increased by 6%, exceeding estimates primarily due to higher audit premiums, although new business decreased to $3 million from $5 million the previous year [3] Market Conditions and Strategy - The company adopted a "defense" strategy in response to a surge in large jury verdicts and social inflation as courts cleared post-COVID-19 backlogs, focusing on necessary rate increases to cover elevated loss costs [4] - Despite a decline in frequency within the workers' compensation business, severity remains a concern [4] Financial Position - ProAssurance's aggressive pricing actions and constrained growth have allowed it to maintain stable loss ratios and favorable PPD levels, positioning the company stronger than a year ago [5] - The current share price reflects a 40%+ discount to book value, which is viewed as an overreaction [5] - ProAssurance shares rose by 14.10% to $16.10 at the time of publication [5]