ProAssurance(US:PRA)2023-05-13 15:15Financial Data and Key Metrics Changes - The company reported a net loss of $6.2 million or $0.11 per share and an operating loss of $8 million or $0.15 per share for Q1 2023, reflecting a challenging operating environment [18][19] - Gross premiums written decreased to $316 million, primarily due to declines in the Specialty P&C segment [19][28] - The consolidated combined ratio increased by 7 percentage points from Q1 2022, driven mostly by changes in prior accident year reserve development [19][21] - Net investment income grew nearly 50% to $30 million, benefiting from higher reinvestment rates [22][23] Business Line Data and Key Metrics Changes - The Specialty P&C segment experienced an operating loss in Q1 2023, with a current accident year loss ratio of 87.2%, unchanged from the previous year [9][19] - The Workers' Compensation Insurance segment saw gross written premium increase by $1 million, with a current accident year loss ratio of 72.6%, slightly higher than last year [14][15] - The segregated portfolio sale reinsurance segment posted a profit of just under $1 million for the quarter [18] Market Data and Key Metrics Changes - Gross written premium in the Specialty P&C segment decreased by 7% year-over-year due to competitive market conditions [12] - Premium retention improved to 85% in the Specialty P&C segment, despite losing a large hospital account [12] - Renewal pricing in the Workers' Compensation segment was down 6%, reflecting competitive pressures [14] Company Strategy and Development Direction - The company continues to focus on securing quality new business opportunities and retaining profitable accounts [15] - Management emphasized the importance of driving rates and maintaining a disciplined underwriting approach [36] - The company is investing heavily in data analytics to improve underwriting and risk assessment [53] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging claims environment for medical professional liability carriers, with increasing social inflation and larger verdicts [7][8] - The company is cautious about future trends and will likely be slow to adjust reserves based on improved results [58] - Management expressed confidence in the adequacy of current pricing despite ongoing challenges in the market [54] Other Important Information - The company reported a book value per share of $21.07, up 3% from year-end, driven by after-tax holding gains [28] - The company renegotiated and extended its $250 million revolving credit agreement, which includes a $125 million delayed draw term loan [29][30] Q&A Session Summary Question: Is there any geographic trend in excess verdicts? - Management indicated that excess verdicts can occur in surprising places, with no specific geographic pattern identified [36] Question: How is the company adjusting pricing in response to market conditions? - Management stated that they are driving rates effectively and have been selective in the risks they choose to underwrite [36][40] Question: What is the outlook for the Specialty segments given the decline in top line? - Management clarified that the decline is due to losing some business and not market pressure on rates, emphasizing continued positive rate gains [40] Question: How does the company view the adequacy of the 6% rate increase? - Management believes the rate increase is adequate, considering the compounded rate gains over the past few years [54] Question: Is the company more conservatively reserved compared to the industry? - Management acknowledged that they may be more cautious in their reserving practices, which could lead to higher loss ratios compared to the industry [63][64]