ProAssurance (NYSE: PRA) reported Q4 EPS of $0.18, in-line with the analyst estimate of $0.18. Revenue for the quarter came in at $211.7 million versus the consensus estimate of $208.74 million.

“In 2018 we faced a number of challenges: a very competitive insurance market, a developing loss environment in our medical professional liability line, further catastrophe losses at Lloyd’s and a volatile investment market. However, we have maintained our profitability and we can point to a number of positive developments such as the overall performance of our Workers’ Compensation Insurance segment, along with solid retention, new business gains and higher renewal pricing in our Specialty P&C segment. These reinforce our confidence in our long-term strategy that positions us for future success. At the same time, we also acknowledge that there is work to be done, especially as regards our investment at Lloyd’s. As mentioned in our previous release of preliminary results, we are disappointed in the financial performance of that investment and we are working with our colleagues in London to address our concerns. Our strategic review of this business will focus on the profitability of the overall business, the volatility in our quarterly earnings that this business has created as well as the appropriate level of our participation with the Syndicate,” said Stan Starnes, the Chairman and Chief Executive Officer of ProAssurance.

Fourth Quarter 2018 Highlights

• Consolidated gross premiums written increased by $20.0 million, a 10.4% increase over the fourth quarter of 2017. In our Lloyd’s Syndicates segment, gross premiums written increased to $25.8 million. Gross premiums written grew 7.7% in our Workers’ Compensation Insurance segment and 3.9% in our Segregated Portfolio Cell Reinsurance segment, quarter-over-quarter, to $65.0 million and $16.8 million, respectively. Gross premiums written in our Specialty P&C segment were essentially unchanged, quarter-over-quarter.
• Net premiums earned increased $19.1 million, or 10.4% quarter-over-quarter. Net premiums earned in our Lloyd’s Syndicates segment were $18.1 million. Net premiums earned were up 23.8% compared to the year-ago quarter in our Workers’ Compensation Insurance segment to $50.8 million, and up 12.2% in our Segregated Portfolio Cell Reinsurance segment, to $19.7 million. The quarter-over-quarter increase in net premiums earned in our Specialty P&C segment was 0.8%, or approximately $900,000.
• Our coordinated sales & marketing programs produced $3.4 million of business in the quarter.
• Our consolidated current accident year net loss ratio was 88.6%, an increase of approximately seven points over the prior year’s quarter primarily due to higher natural catastrophe-related losses in the fourth quarter of 2018 as compared to 2017 in our Lloyd\'s Syndicates segment and the continued caution we are exercising in our view of potential loss severity trends in the healthcare professional liability line within our Specialty P&C segment.
• Net favorable development in the fourth quarter of 2018 was $25.0 million, compared to $44.3 million in the prior year quarter.
• The consolidated underwriting expense ratio was 29.6%, a quarter-over-quarter decline of approximately five points, due to the increase in net premiums earned in the fourth quarter, as well as a $3.9 million decrease in underwriting, policy acquisition and operating expenses.
• Net realized investment losses were $46.1 million in the quarter, primarily reflecting mark-to-market adjustments in our equity trading portfolio. This compares to net realized investment losses of $2.4 million in the final quarter of 2017.
• Our consolidated net investment result was $20.9 million, a decline of $4.7 million as compared to the fourth quarter 2017; net investment income was $24.2 million, a $1.9 million decrease, quarter-over-quarter, primarily due to lower earnings from our fixed income portfolio as we have reduced our municipal bond holdings as a result of tax reform.
• We had a tax benefit of $14.1 million in the quarter, compared to a tax expense of $16.9 million in the fourth quarter of 2017 primarily driven by the pre-tax loss.

For earnings history and earnings-related data on ProAssurance (PRA) click here.