ProAssurance Reports Results for Second Quarter 2023
Highlights - Second Quarter 2023(2)
-
Gross premiums written of
$238 million (+1%) -
New business written increased to
$19 million (+58%) -
Favorable prior accident year reserve development of
$6 million -
Consolidated combined ratio of 108.2%
- Consolidated operating ratio of 95.4%
-
Net investment income of
$32 million (+44%)-
Net investment income increased by
$10 million compared to 2022
-
Net investment income increased by
-
Adjusted book value per share(1) of
$26.31 as ofJune 30, 2023 . Adjusted book value per share was$25.99 as ofDecember 31, 2022 .
|
(1) |
Represents a Non-GAAP financial measure. See a reconciliation to its GAAP counterpart under the heading “Non-GAAP Financial Measures” that follows. |
|
|
(2) |
Comparisons are to the second quarter of 2022. |
Management Commentary & Results of Operations
Our second quarter results for 2023 reflect operating income of
“The lines of business in which we operate continue to face challenges, and we are responding in ways that will benefit all of our constituencies over the long-term,” said
New business written was noteworthy this quarter in several of our lines of business. The healthcare professional liability, life sciences, and traditional workers compensation lines all produced new business exceeding expectations in the quarter.
Rand commented, “The new business we wrote across multiple lines is a testament to the hard work our team members have performed in keeping the market aware of the value proposition that
Net investment income showed substantial growth this quarter, increasing by 44% to
Our book value per share at quarter end was
|
CONSOLIDATED INCOME STATEMENT HIGHLIGHTS |
|||||||||||||||||||||
|
Selected consolidated financial data for each period is summarized in the table below. |
|||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||||
|
($ in thousands, except per share data) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
2023 |
|
|
2022 |
|
|
Change |
||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gross premiums written(1) |
$ |
237,928 |
|
$ |
235,475 |
|
|
|
1.0 |
% |
|
$ |
553,722 |
|
$ |
571,082 |
|
|
|
(3.0 |
%) |
|
Net premiums written |
$ |
214,046 |
|
$ |
210,151 |
|
|
|
1.9 |
% |
|
$ |
498,955 |
|
$ |
521,066 |
|
|
|
(4.2 |
%) |
|
Net premiums earned |
$ |
247,862 |
|
$ |
247,271 |
|
|
|
0.2 |
% |
|
$ |
487,649 |
|
$ |
512,982 |
|
|
|
(4.9 |
%) |
|
Net investment income |
|
31,650 |
|
|
21,944 |
|
|
|
44.2 |
% |
|
|
61,960 |
|
|
42,387 |
|
|
|
46.2 |
% |
|
Equity in earnings (loss) of unconsolidated subsidiaries |
|
6,632 |
|
|
5,180 |
|
|
|
28.0 |
% |
|
|
5,511 |
|
|
12,799 |
|
|
|
(56.9 |
%) |
|
Net investment gains (losses)(2) |
|
2,946 |
|
|
(23,884 |
) |
|
|
112.3 |
% |
|
|
5,858 |
|
|
(37,390 |
) |
|
|
115.7 |
% |
|
Other income (loss)(1) |
|
2,741 |
|
|
5,314 |
|
|
|
(48.4 |
%) |
|
|
3,528 |
|
|
8,119 |
|
|
|
(56.5 |
%) |
|
Total revenues(1) |
|
291,831 |
|
|
255,825 |
|
|
|
14.1 |
% |
|
|
564,506 |
|
|
538,897 |
|
|
|
4.8 |
% |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net losses and loss adjustment expenses |
|
191,058 |
|
|
177,670 |
|
|
|
7.5 |
% |
|
|
396,354 |
|
|
387,093 |
|
|
|
2.4 |
% |
|
Underwriting, policy acquisition and operating expenses(1) |
|
76,976 |
|
|
77,333 |
|
|
|
(0.5 |
%) |
|
|
144,764 |
|
|
149,109 |
|
|
|
(2.9 |
%) |
|
SPC |
|
994 |
|
|
349 |
|
|
|
184.8 |
% |
|
|
1,526 |
|
|
991 |
|
|
|
54.0 |
% |
|
SPC dividend expense (income) |
|
3,747 |
|
|
(854 |
) |
|
|
538.8 |
% |
|
|
5,689 |
|
|
1,513 |
|
|
|
276.0 |
% |
|
Interest expense |
|
5,502 |
|
|
4,919 |
|
|
|
11.9 |
% |
|
|
10,965 |
|
|
9,360 |
|
|
|
17.1 |
% |
|
Total expenses(1) |
|
278,277 |
|
|
259,417 |
|
|
|
7.3 |
% |
|
|
559,298 |
|
|
548,066 |
|
|
|
2.0 |
% |
|
Income (loss) before income taxes |
|
13,554 |
|
|
(3,592 |
) |
|
|
477.3 |
% |
|
|
5,208 |
|
|
(9,169 |
) |
|
|
156.8 |
% |
|
Income tax expense (benefit) |
|
2,927 |
|
|
(1,933 |
) |
|
|
251.4 |
% |
|
|
755 |
|
|
(3,950 |
) |
|
|
119.1 |
% |
|
Net income (loss) |
$ |
10,627 |
|
$ |
(1,659 |
) |
|
|
740.6 |
% |
|
$ |
4,453 |
|
$ |
(5,219 |
) |
|
|
185.3 |
% |
|
Non-GAAP operating income (loss) |
$ |
8,562 |
|
$ |
16,328 |
|
|
|
(47.6 |
%) |
|
$ |
490 |
|
$ |
24,008 |
|
|
|
(98.0 |
%) |
|
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic |
|
53,815 |
|
|
54,068 |
|
|
|
|
|
53,900 |
|
|
54,040 |
|
|
|
||||
|
Diluted |
|
53,918 |
|
|
54,186 |
|
|
|
|
|
54,017 |
|
|
54,165 |
|
|
|
||||
|
Earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net income (loss) per diluted share |
$ |
0.20 |
|
$ |
(0.03 |
) |
|
$ |
0.23 |
|
|
$ |
0.08 |
|
$ |
(0.10 |
) |
|
$ |
0.18 |
|
|
Non-GAAP operating income (loss) per diluted share |
$ |
0.16 |
|
$ |
0.30 |
|
|
$ |
(0.14 |
) |
|
$ |
0.01 |
|
$ |
0.44 |
|
|
$ |
(0.43 |
) |
|
(1) |
Consolidated totals include inter-segment eliminations. The eliminations affect individual line items only and have no effect on net income (loss). See Note 12 of the Notes to Condensed Consolidated Financial Statements in our |
|
|
(2) |
This line item typically includes both realized and unrealized investment gains and losses, investment impairments losses, and, for the current period, the change in the fair value of the contingent consideration in relation to the NORCAL acquisition. Detailed information regarding the components of net investment gains (losses) are included in Note 3 of the Notes to Condensed Consolidated Financial Statements in our |
|
|
The abbreviation “nm” indicates that the information or the percentage change is not meaningful. |
||
|
BALANCE SHEET HIGHLIGHTS |
|||||||
|
($ in thousands, except per share data) |
|
|
|
||||
|
Total investments |
$ |
4,315,417 |
|
|
$ |
4,387,683 |
|
|
Total assets |
$ |
5,657,412 |
|
|
$ |
5,699,999 |
|
|
Total liabilities |
$ |
4,537,698 |
|
|
$ |
4,595,981 |
|
|
Common shares (par value |
$ |
636 |
|
|
$ |
634 |
|
|
Retained earnings |
$ |
1,425,038 |
|
|
$ |
1,423,286 |
|
|
|
$ |
(439,185 |
) |
|
$ |
(419,214 |
) |
|
Shareholders’ equity |
$ |
1,119,714 |
|
|
$ |
1,104,018 |
|
|
Book value per share |
$ |
21.24 |
|
|
$ |
20.46 |
|
|
Non-GAAP adjusted book value per share(1) |
$ |
26.31 |
|
|
$ |
25.99 |
|
|
(1) |
Adjusted book value per share is a Non-GAAP financial measure. See a reconciliation of book value per share to Non-GAAP adjusted book value per share under the heading “Non-GAAP Financial Measures” that follows. |
|
CONSOLIDATED KEY RATIOS |
|||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Current accident year net loss ratio |
79.6 |
% |
|
79.5 |
% |
|
81.1 |
% |
|
80.2 |
% |
|
Effect of prior accident years’ reserve development |
(2.5 |
%) |
|
(7.6 |
%) |
|
0.2 |
% |
|
(4.7 |
%) |
|
Net loss ratio |
77.1 |
% |
|
71.9 |
% |
|
81.3 |
% |
|
75.5 |
% |
|
Underwriting expense ratio |
31.1 |
% |
|
31.3 |
% |
|
29.7 |
% |
|
29.1 |
% |
|
Combined ratio |
108.2 |
% |
|
103.2 |
% |
|
111.0 |
% |
|
104.6 |
% |
|
Operating ratio |
95.4 |
% |
|
94.3 |
% |
|
98.3 |
% |
|
96.3 |
% |
|
Return on equity(1) |
3.2 |
% |
|
(0.4 |
%) |
|
0.5 |
% |
|
(0.7 |
%) |
|
Non-GAAP operating return on equity(1)(2) |
3.0 |
% |
|
5.3 |
% |
|
0.1 |
% |
|
3.7 |
% |
|
|
|
|
|
|
|
|
|
||||
|
Combined ratio, excluding transaction-related costs(3) |
108.2 |
% |
|
102.9 |
% |
|
111.0 |
% |
|
104.3 |
% |
|
(1) |
Quarterly amounts are annualized. Refer to our |
|
|
(2) |
See a reconciliation of ROE to Non-GAAP operating ROE under the heading “Non-GAAP Financial Measures” that follows. |
|
|
(3) |
Our consolidated underwriting expense ratio for the three and six months ended |
|
SPECIALTY P&C SEGMENT RESULTS |
|||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||||
|
($ in thousands) |
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
||
|
Gross premiums written |
$ |
170,174 |
|
|
$ |
167,760 |
|
|
1.4 |
% |
|
$ |
409,049 |
|
|
$ |
425,433 |
|
|
(3.9 |
%) |
|
Net premiums written |
$ |
145,562 |
|
|
$ |
150,015 |
|
|
(3.0 |
%) |
|
$ |
359,627 |
|
|
$ |
384,853 |
|
|
(6.6 |
%) |
|
Net premiums earned |
$ |
178,902 |
|
|
$ |
183,547 |
|
|
(2.5 |
%) |
|
$ |
358,245 |
|
|
$ |
381,514 |
|
|
(6.1 |
%) |
|
Other income |
|
1,021 |
|
|
|
1,903 |
|
|
(46.3 |
%) |
|
|
2,014 |
|
|
|
2,924 |
|
|
(31.1 |
%) |
|
Total revenues |
|
179,923 |
|
|
|
185,450 |
|
|
(3.0 |
%) |
|
|
360,259 |
|
|
|
384,438 |
|
|
(6.3 |
%) |
|
Net losses and loss adjustment expenses |
|
(145,044 |
) |
|
|
(137,002 |
) |
|
5.9 |
% |
|
|
(309,096 |
) |
|
|
(302,960 |
) |
|
2.0 |
% |
|
Underwriting, policy acquisition and operating expenses |
|
(47,439 |
) |
|
|
(48,077 |
) |
|
(1.3 |
%) |
|
|
(88,399 |
) |
|
|
(90,958 |
) |
|
(2.8 |
%) |
|
Total expenses |
|
(192,483 |
) |
|
|
(185,079 |
) |
|
4.0 |
% |
|
|
(397,495 |
) |
|
|
(393,918 |
) |
|
0.9 |
% |
|
Segment results |
$ |
(12,560 |
) |
|
$ |
371 |
|
|
(3,485.4 |
%) |
|
$ |
(37,236 |
) |
|
$ |
(9,480 |
) |
|
(292.8 |
%) |
|
SPECIALTY P&C SEGMENT KEY RATIOS |
|||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Current accident year net loss ratio |
84.7 |
% |
|
84.1 |
% |
|
86.0 |
% |
|
85.0 |
% |
|
Effect of prior accident years’ reserve development |
(3.6 |
%) |
|
(9.5 |
%) |
|
0.3 |
% |
|
(5.6 |
%) |
|
Net loss ratio |
81.1 |
% |
|
74.6 |
% |
|
86.3 |
% |
|
79.4 |
% |
|
Underwriting expense ratio |
26.5 |
% |
|
26.2 |
% |
|
24.7 |
% |
|
23.8 |
% |
|
Combined ratio |
107.6 |
% |
|
100.8 |
% |
|
111.0 |
% |
|
103.2 |
% |
Compared to the second quarter of last year, gross written premium increased 1.4% driven by
We achieved renewal pricing increases of 6%, on par with the 6% increase achieved in the second quarter of 2022. New business written improved to
Excluding adjustments from purchase accounting and ceded premium, the segment current accident year net loss ratio increased by 0.7 percentage points in the quarter driven by the continued severity trends and changes in the mix of business.
We recognized net favorable prior accident year reserve development of
The expense ratio slightly increased to 26.5% compared to 26.2% last year. Compensation-related expenses were largely responsible for the increase, although this was mostly offset by an increase in ceding commission, which provides a benefit to the expense ratio.
|
WORKERS’ COMPENSATION INSURANCE SEGMENT RESULTS |
|||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||||
|
($ in thousands) |
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
||
|
Gross premiums written |
$ |
62,757 |
|
|
$ |
63,634 |
|
|
(1.4 |
%) |
|
$ |
136,187 |
|
|
$ |
135,752 |
|
|
0.3 |
% |
|
Net premiums written |
$ |
42,323 |
|
|
$ |
42,558 |
|
|
(0.6 |
%) |
|
$ |
89,894 |
|
|
$ |
87,824 |
|
|
2.4 |
% |
|
Net premiums earned |
$ |
41,018 |
|
|
$ |
41,709 |
|
|
(1.7 |
%) |
|
$ |
81,821 |
|
|
$ |
82,393 |
|
|
(0.7 |
%) |
|
Other income |
|
651 |
|
|
|
517 |
|
|
25.9 |
% |
|
|
1,232 |
|
|
|
1,199 |
|
|
2.8 |
% |
|
Total revenues |
|
41,669 |
|
|
|
42,226 |
|
|
(1.3 |
%) |
|
|
83,053 |
|
|
|
83,592 |
|
|
(0.6 |
%) |
|
Net losses and loss adjustment expenses |
|
(29,762 |
) |
|
|
(27,947 |
) |
|
6.5 |
% |
|
|
(60,606 |
) |
|
|
(55,158 |
) |
|
9.9 |
% |
|
Underwriting, policy acquisition and operating expenses |
|
(14,400 |
) |
|
|
(13,669 |
) |
|
5.3 |
% |
|
|
(27,379 |
) |
|
|
(26,669 |
) |
|
2.7 |
% |
|
Total expenses |
|
(44,162 |
) |
|
|
(41,616 |
) |
|
6.1 |
% |
|
|
(87,985 |
) |
|
|
(81,827 |
) |
|
7.5 |
% |
|
Segment results |
$ |
(2,493 |
) |
|
$ |
610 |
|
|
(508.7 |
%) |
|
$ |
(4,932 |
) |
|
$ |
1,765 |
|
|
(379.4 |
%) |
|
WORKERS’ COMPENSATION INSURANCE SEGMENT KEY RATIOS |
|||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Current accident year net loss ratio |
72.6 |
% |
|
71.8 |
% |
|
72.6 |
% |
|
71.8 |
% |
|
Effect of prior accident years’ reserve development |
0.0 |
% |
|
(4.8 |
%) |
|
1.5 |
% |
|
(4.9 |
%) |
|
Net loss ratio |
72.6 |
% |
|
67.0 |
% |
|
74.1 |
% |
|
66.9 |
% |
|
Underwriting expense ratio |
35.1 |
% |
|
32.8 |
% |
|
33.5 |
% |
|
32.4 |
% |
|
Combined ratio |
107.7 |
% |
|
99.8 |
% |
|
107.6 |
% |
|
99.3 |
% |
The Workers’
Gross premiums decreased by
The current accident year net loss ratio increased 0.8 percentage points, primarily reflecting an increase in losses recognized under our reinsurance contract annual aggregate deductible and higher ULAE costs. We recognized no prior accident year reserve development in the second quarter of 2023, compared to net favorable prior accident year reserve development of
Underwriting expenses increased by
|
SEGREGATED PORTFOLIO CELL REINSURANCE SEGMENT RESULTS |
|||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||||
|
($ in thousands) |
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
||
|
Gross premiums written |
$ |
25,113 |
|
|
$ |
16,634 |
|
|
51.0 |
% |
|
$ |
47,994 |
|
|
$ |
45,003 |
|
|
6.6 |
% |
|
Net premiums written |
$ |
23,057 |
|
|
$ |
14,515 |
|
|
58.8 |
% |
|
$ |
43,005 |
|
|
$ |
39,732 |
|
|
8.2 |
% |
|
Net premiums earned |
$ |
24,094 |
|
|
$ |
16,222 |
|
|
48.5 |
% |
|
$ |
39,394 |
|
|
$ |
35,536 |
|
|
10.9 |
% |
|
Net investment income |
|
603 |
|
|
|
211 |
|
|
185.8 |
% |
|
|
1,024 |
|
|
|
323 |
|
|
217.0 |
% |
|
Net investment gains (losses) |
|
1,194 |
|
|
|
(2,782 |
) |
|
142.9 |
% |
|
|
2,355 |
|
|
|
(3,493 |
) |
|
167.4 |
% |
|
Other income |
|
1 |
|
|
|
1 |
|
|
— |
% |
|
|
1 |
|
|
|
1 |
|
|
— |
% |
|
Net losses and loss adjustment expenses |
|
(13,816 |
) |
|
|
(9,272 |
) |
|
49.0 |
% |
|
|
(22,238 |
) |
|
|
(20,763 |
) |
|
7.1 |
% |
|
Underwriting, policy acquisition and operating expenses |
|
(6,538 |
) |
|
|
(5,237 |
) |
|
24.8 |
% |
|
|
(11,575 |
) |
|
|
(9,605 |
) |
|
20.5 |
% |
|
SPC |
|
(994 |
) |
|
|
(349 |
) |
|
184.8 |
% |
|
|
(1,526 |
) |
|
|
(991 |
) |
|
54.0 |
% |
|
SPC net results |
|
4,544 |
|
|
|
(1,206 |
) |
|
476.8 |
% |
|
|
7,435 |
|
|
|
1,008 |
|
|
637.6 |
% |
|
SPC dividend (expense) income (2) |
|
(3,747 |
) |
|
|
854 |
|
|
538.8 |
% |
|
|
(5,689 |
) |
|
|
(1,513 |
) |
|
276.0 |
% |
|
Segment results (3) |
$ |
797 |
|
|
$ |
(352 |
) |
|
326.4 |
% |
|
$ |
1,746 |
|
|
$ |
(505 |
) |
|
445.7 |
% |
|
(1) |
Represents the provision for |
|
|
(2) |
Represents the net (profit) loss attributable to external cell participants. |
|
|
(3) |
Represents our share of the net profit (loss) and OCI of the SPCs in which we participate. |
| SEGREGATED PORTFOLIO CELL REINSURANCE SEGMENT KEY RATIOS | |||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Current accident year net loss ratio |
62.9 |
% |
|
70.7 |
% |
|
63.7 |
% |
|
67.3 |
% |
|
Effect of prior accident years’ reserve development |
(5.6 |
%) |
|
(13.5 |
%) |
|
(7.2 |
%) |
|
(8.9 |
%) |
|
Net loss ratio |
57.3 |
% |
|
57.2 |
% |
|
56.5 |
% |
|
58.4 |
% |
|
Underwriting expense ratio |
27.1 |
% |
|
32.3 |
% |
|
29.4 |
% |
|
27.0 |
% |
|
Combined ratio |
84.4 |
% |
|
89.5 |
% |
|
85.9 |
% |
|
85.4 |
% |
The improvement in the Segregated Portfolio Cell Reinsurance segment results for the second quarter of 2023 primarily reflects improved investment results and a lower net loss ratio in the segregated portfolio cells in which we participate.
Gross premiums written increased in the quarter, primarily reflecting healthcare professional liability tail premium of
Workers’ compensation renewal premium reflected rate decreases of 6% and renewal retention of 84% for the three months ended
The second quarter 2023 calendar year net loss ratio was consistent with 2022, reflecting a lower workers’ compensation loss ratio, offset by an increase in the healthcare professional liability loss ratio. The workers’ compensation current accident year net loss ratio decreased in 2023, reflecting a reduction in claim severity and frequency. The increase in the healthcare professional liability current accident year net loss ratio was driven by a higher loss ratio in the program that wrote the tail coverage. We recognized net favorable prior accident year reserve development in the workers’ compensation business of
The underwriting expense ratio decreased to 27.1% in 2023 from 32.3% in 2022, primarily reflecting the impact of a lower ceding commission on the healthcare professional liability tail coverage written and fully earned in the second quarter of 2023. Underwriting expenses mostly represent commissions and other expenses charged by the Workers’
LLOYD’S SYNDICATES SEGMENT RESULTS
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||||
|
($ in thousands) |
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
||
|
Gross premiums written |
$ |
4,997 |
|
|
$ |
4,081 |
|
|
22.4 |
% |
|
$ |
8,486 |
|
|
$ |
9,897 |
|
|
(14.3 |
%) |
|
Net premiums written |
$ |
3,104 |
|
|
$ |
3,063 |
|
|
1.3 |
% |
|
$ |
6,429 |
|
|
$ |
8,657 |
|
|
(25.7 |
%) |
|
Net premiums earned |
$ |
3,848 |
|
|
$ |
5,793 |
|
|
(33.6 |
%) |
|
$ |
8,189 |
|
|
$ |
13,539 |
|
|
(39.5 |
%) |
|
Net investment income |
|
137 |
|
|
|
143 |
|
|
(4.2 |
%) |
|
|
325 |
|
|
|
355 |
|
|
(8.5 |
%) |
|
Net investment gains (losses) |
|
33 |
|
|
|
(485 |
) |
|
106.8 |
% |
|
|
22 |
|
|
|
(884 |
) |
|
102.5 |
% |
|
Other income (loss) |
|
5 |
|
|
|
129 |
|
|
(96.1 |
%) |
|
|
2 |
|
|
|
263 |
|
|
(99.2 |
%) |
|
Net losses and loss adjustment expenses |
|
(2,436 |
) |
|
|
(3,449 |
) |
|
(29.4 |
%) |
|
|
(4,414 |
) |
|
|
(8,212 |
) |
|
(46.2 |
%) |
|
Underwriting, policy acquisition and operating expenses |
|
(1,434 |
) |
|
|
(1,508 |
) |
|
(4.9 |
%) |
|
|
(3,155 |
) |
|
|
(4,218 |
) |
|
(25.2 |
%) |
|
Segment results |
$ |
153 |
|
|
$ |
623 |
|
|
(75.4 |
%) |
|
$ |
969 |
|
|
$ |
843 |
|
|
14.9 |
% |
|
LLOYD’S SYNDICATES SEGMENT KEY RATIOS |
|||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Current accident year net loss ratio |
23.8 |
% |
|
14.1 |
% |
|
38.4 |
% |
|
29.9 |
% |
|
Effect of prior accident years’ reserve development |
39.5 |
% |
|
45.4 |
% |
|
15.5 |
% |
|
30.8 |
% |
|
Net loss ratio |
63.3 |
% |
|
59.5 |
% |
|
53.9 |
% |
|
60.7 |
% |
|
Underwriting expense ratio |
37.3 |
% |
|
26.0 |
% |
|
38.5 |
% |
|
31.2 |
% |
|
Combined ratio |
100.6 |
% |
|
85.5 |
% |
|
92.4 |
% |
|
91.9 |
% |
Results of our Lloyd’s Syndicates segment are generally reported on a one-quarter lag and include the results from our current participation in Lloyd's of London Syndicate 1729. Our participation in the results of Syndicate 1729 for the 2023 underwriting year remains unchanged from the 2022 underwriting year at 5%. We ceased participation in Syndicate 6131 beginning with the 2022 underwriting year. Due to the quarter lag, our ceased participation in Syndicate 6131 was not reflected in our results until the second quarter of 2022. We continue to view our participation at Lloyd’s as an investment outside of our core operations.
The Lloyd’s segment reported a combined ratio of 100.6% for the quarter. The current accident year net loss ratio increased to 23.8% in 2023 as compared to 14.1% in 2022, driven by certain catastrophe related losses.
We recognized
|
CORPORATE SEGMENT |
|||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||||
|
($ in thousands) |
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
||
|
Net investment income |
$ |
30,910 |
|
|
$ |
21,590 |
|
|
43.2 |
% |
|
$ |
60,611 |
|
|
$ |
41,709 |
|
|
45.3 |
% |
|
Equity in earnings (loss) of unconsolidated subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
All other investments, primarily investment fund LPs/LLCs |
|
8,143 |
|
|
|
7,028 |
|
|
15.9 |
% |
|
|
7,376 |
|
|
|
17,035 |
|
|
(56.7 |
%) |
|
Tax credit partnerships |
|
(1,511 |
) |
|
|
(1,848 |
) |
|
(18.2 |
%) |
|
|
(1,865 |
) |
|
|
(4,236 |
) |
|
(56.0 |
%) |
|
Total equity in earnings (loss) of unconsolidated subsidiaries: |
|
6,632 |
|
|
|
5,180 |
|
|
28.0 |
% |
|
|
5,511 |
|
|
|
12,799 |
|
|
(56.9 |
%) |
|
Net investment gains (losses) |
|
(281 |
) |
|
|
(20,617 |
) |
|
(98.6 |
%) |
|
|
481 |
|
|
|
(33,013 |
) |
|
101.5 |
% |
|
Other income (loss) |
|
2,173 |
|
|
|
3,626 |
|
|
(40.1 |
%) |
|
|
2,500 |
|
|
|
5,691 |
|
|
(56.1 |
%) |
|
Operating expenses |
|
(8,275 |
) |
|
|
(9,019 |
) |
|
(8.2 |
%) |
|
|
(16,477 |
) |
|
|
(17,756 |
) |
|
(7.2 |
%) |
|
Interest expense |
|
(5,502 |
) |
|
|
(4,919 |
) |
|
11.9 |
% |
|
|
(10,965 |
) |
|
|
(9,360 |
) |
|
17.1 |
% |
|
Income tax (expense) benefit |
|
(2,927 |
) |
|
|
1,789 |
|
|
263.6 |
% |
|
|
(755 |
) |
|
|
3,559 |
|
|
121.2 |
% |
|
Segment results |
$ |
22,730 |
|
|
$ |
(2,370 |
) |
|
1059.1 |
% |
|
$ |
40,906 |
|
|
$ |
3,629 |
|
|
1027.2 |
% |
|
Consolidated effective tax rate |
|
21.6 |
% |
|
|
53.8 |
% |
|
|
|
|
14.5 |
% |
|
|
43.1 |
% |
|
|
||
The rise in interest rates continues to add significantly to our net investment income, which increased to
Equity in earnings from our investment in LPs/LLCs, which are typically reported to us on a one-quarter lag, increased to
The corporate segment results include
Other income was
Operating expenses decreased by
Non-GAAP Financial Measures
Non-GAAP Operating Income (Loss)
Non-GAAP operating income (loss) is a financial measure that is widely used to evaluate performance within the insurance sector. In calculating Non-GAAP operating income (loss), we have excluded the effects of the items listed in the following table that do not reflect normal results. We believe Non-GAAP operating income (loss) presents a useful view of the performance of our insurance operations; however, it should be considered in conjunction with net income (loss) computed in accordance with GAAP. The following table reconciles net income (loss) to Non-GAAP operating income (loss):
|
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP OPERATING INCOME (LOSS) |
|||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
(In thousands, except per share data) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Net income (loss) |
$ |
10,627 |
|
|
$ |
(1,659 |
) |
|
$ |
4,453 |
|
|
$ |
(5,219 |
) |
|
Items excluded in the calculation of Non-GAAP operating income (loss): |
|
|
|
|
|
|
|
||||||||
|
Net investment (gains) losses (1) |
|
(2,946 |
) |
|
|
23,884 |
|
|
|
(5,858 |
) |
|
|
37,390 |
|
|
Net investment gains (losses) attributable to SPCs which no profit/loss is retained (2) |
|
939 |
|
|
|
(2,198 |
) |
|
|
1,852 |
|
|
|
(2,800 |
) |
|
Transaction-related costs (3) |
|
— |
|
|
|
685 |
|
|
|
— |
|
|
|
1,862 |
|
|
Guaranty fund assessments (recoupments) |
|
1 |
|
|
|
113 |
|
|
|
(74 |
) |
|
|
125 |
|
|
Pre-tax effect of exclusions |
|
(2,006 |
) |
|
|
22,484 |
|
|
|
(4,080 |
) |
|
|
36,577 |
|
|
Tax effect, at 21% (4) |
|
(59 |
) |
|
|
(4,497 |
) |
|
|
117 |
|
|
|
(7,350 |
) |
|
After-tax effect of exclusions |
|
(2,065 |
) |
|
|
17,987 |
|
|
|
(3,963 |
) |
|
|
29,227 |
|
|
Non-GAAP operating income (loss) |
$ |
8,562 |
|
|
$ |
16,328 |
|
|
$ |
490 |
|
|
$ |
24,008 |
|
|
Per diluted common share: |
|
|
|
|
|
|
|
||||||||
|
Net income (loss) |
$ |
0.20 |
|
|
$ |
(0.03 |
) |
|
$ |
0.08 |
|
|
$ |
(0.10 |
) |
|
Effect of exclusions |
|
(0.04 |
) |
|
|
0.33 |
|
|
|
(0.07 |
) |
|
|
0.54 |
|
|
Non-GAAP operating income (loss) per diluted common share |
$ |
0.16 |
|
|
$ |
0.30 |
|
|
$ |
0.01 |
|
|
$ |
0.44 |
|
|
(1) |
Net investment gains (losses) for the three and six months ended |
|
|
(2) |
Net investment gains (losses) on investments related to SPCs are recognized in our Segregated Portfolio Cell Reinsurance segment. SPC results, including any net investment gain or loss, that are attributable to external cell participants are reflected in the SPC dividend expense (income). To be consistent with our exclusion of net investment gains (losses) recognized in earnings, we are excluding the portion of net investment gains (losses) that is included in the SPC dividend expense (income) which is attributable to the external cell participants. |
|
|
(3) |
Transaction-related costs associated with our acquisition of NORCAL. We are excluding these costs as they do not reflect normal operating results and are unique and non-recurring in nature. |
|
|
(4) |
The 21% rate is the annual expected statutory tax rate associated with the taxable or tax deductible items listed above. We utilized the estimated annual effective tax rate method for the three and six months ended |
Non-GAAP Operating ROE
The following table is a reconciliation of ROE to Non-GAAP operating ROE for the three and six months ended
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
ROE(1) |
3.2 |
% |
|
(0.4 |
%) |
|
0.5 |
% |
|
(0.7 |
%) |
|
Pre-tax effect of items excluded in the calculation of Non-GAAP operating ROE |
(0.2 |
%) |
|
7.2 |
% |
|
(0.4 |
%) |
|
5.5 |
% |
|
Tax effect, at 21%(2) |
— |
% |
|
(1.5 |
%) |
|
— |
% |
|
(1.1 |
%) |
|
Non-GAAP operating ROE |
3.0 |
% |
|
5.3 |
% |
|
0.1 |
% |
|
3.7 |
% |
|
(1) |
Quarterly amounts are annualized. Refer to our |
|
|
(2) |
The 21% rate is the statutory tax rate associated with the taxable or tax deductible items. See further discussion in footnote 4 in this section under the heading "Non-GAAP Operating Income." |
Non-GAAP Adjusted Book Value per Share
The following table is a reconciliation of our book value per share to Non-GAAP adjusted book value per share at
|
|
Book Value Per Share |
||
|
Book Value Per Share at |
$ |
20.46 |
|
|
Less: AOCI Per Share(1) |
|
(5.53 |
) |
|
Non-GAAP Adjusted Book Value Per Share at |
|
25.99 |
|
|
Increase (decrease) to Non-GAAP Adjusted Book Value Per Share during the six months ended |
|
||
|
Dividends declared |
|
(0.05 |
) |
|
Cumulative repurchase of shares(2) |
|
0.32 |
|
|
Net income (loss) |
|
0.08 |
|
|
Other(3) |
|
(0.03 |
) |
|
Non-GAAP Adjusted Book Value Per Share at |
|
26.31 |
|
|
Add: AOCI Per Share(1) |
|
(5.07 |
) |
|
Book Value Per Share at |
$ |
21.24 |
|
|
(1) |
Primarily the impact of accumulated unrealized investment gains (losses) on our available-for-sale fixed maturity investments. See Note 9 of the Notes to Condensed Consolidated Financial Statements in our |
|
|
(2) |
Represents the impact of our repurchase of 1.4 million common shares, conducted through a 10b5-1 stock repurchase plan during the second quarter of 2023. See Note 9 of the Notes to Condensed Consolidated Financial Statements in our |
|
|
(3) |
Includes the impact of share-based compensation. |
Conference Call Information
Callers may also choose to pre-register to receive unique call access details and avoid operator wait times; pre-register here if desired: https://www.netroadshow.com/events/login?show=75636f9a&confId=53156.
The conference call will also be webcast at https://events.q4inc.com/attendee/305732155.
A replay will be available by telephone for at least 7 days after the call date. US-based investors may access the replay by dialing (866) 813-9403 (toll free) or (929) 458-6194, and international investors may dial +44 (204) 525-0658. The access code for all attendees is 531045. A replay will also be available for at least one year at investor.proassurance.com. Investors may follow @ProAssurance on Twitter to be notified of the latest news about
About
Caution Regarding Forward-Looking Statements
Any statements in this news release that are not historical facts are specifically identified as forward-looking statements. These statements are based upon our estimates and anticipation of future events and are subject to significant risks, assumptions and uncertainties that could cause actual results to differ materially from the expected results described in the forward-looking statements. Forward-looking statements are identified by words such as, but not limited to, “anticipate,” “believe,” “estimate,” “expect,” “hope,” “hopeful,” “intend,” “likely,” “may,” “optimistic,” “possible,” “potential,” “preliminary,” “project,” “should,” “will,” and other analogous expressions.
Although it is not possible to identify all of these risks and factors, they include, among others, the following: inadequate loss reserves to cover the Company's actual losses; inherent uncertainty of models resulting in actual losses that are materially different than the Company's estimates; adverse economic factors; a decline in the Company's financial strength rating; loss of one or more key executives; loss of a group of agents or brokers that generate significant portions of the Company's business; failure of any of the loss limitations or exclusions the Company employs, or change in other claims or coverage issues; adverse performance of the Company's investment portfolio; adverse market conditions that affect its excess and surplus lines insurance operations; and other risks described in the Company's filings with the
src="https://cts.businesswire.com/ct/CT?id=bwnewssty=20230808950807r1sid=acqr8distro=nxlang=en" style="width:0;height:0" />
View source version on businesswire.com: https://www.businesswire.com/news/home/20230808950807/en/
EVP, Chief Financial Officer
800-282-6242 • 205-877-4462 • [email protected]
Source:
F&G Annuities & Life Reports Second Quarter 2023 Results
Jackson Announces Second Quarter 2023 Results
Advisor News
- Benefit Costs Squeeze Schools, Driving Cuts, Tax Hikes And Difficult Tradeoffs
- Why client insurance needs could change even if their life doesn’t
- Most Gen Z investors think less than a year ahead when making financial decisions
- IRI pitches retirement agenda to Jeffries as democrats shape affordability platform
- Help child-free clients plan for their later years
More Advisor NewsAnnuity News
- Ty J. Young Wealth Management Acquires Senior Insurance Services, Expanding Its Growing Annuity Firm: Ty J. Young Wealth Management
- Guidance, bulletin or reg? NAIC debates form of annuity illustration update
- Nationwide adds mutual fund-linked strategy to New Heights Select FIA
- NUNN INTRODUCES BILL TO CUT RED TAPE, GIVE IOWANS CLEARER INSURANCE INFORMATION
- NAIC working group pressed to accelerate annuity illustration overhaul
More Annuity NewsHealth/Employee Benefits News
Life Insurance News