Executive Summary

Q4 2024 delivered GAAP diluted EPS of $0.31 and Non-GAAP operating EPS of $0.36, with total revenues of $290.1M; revenue declined 2.3% YoY but rose 1.6% QoQ, while consolidated combined ratio was 109.3% (vs. 112.0% in Q4 2023, 105.6% in Q3 2024) .
Specialty P&C core operations showed continued improvement: combined ratio 100.9% (vs. 104.8% in Q4 2023 and 99.5% in Q3 2024), driven by ~8.7 points of favorable prior-year reserve development and disciplined pricing; renewal increases were 10% in standard MPL and 8% in specialty MPL .
Workers’ Compensation combined ratio improved materially YoY to 117.6% from 134.8%, reflecting better current accident-year performance, though expense ratio was higher due to ceding commission and compensation costs; segment results remained a loss of $7.2M in Q4 .
Investment tailwinds persisted: net investment income +9% YoY in Q4, reinvestment at ~5.8% new money rate vs. 3.5% average book yield; book value per share was $23.49 (adjusted BVPS $26.86) .
Notable non-core noise: accelerated recognition of aviation IBNR at Lloyd’s (run-off) reduced net income by $5.3M (~$0.10 per share) and added ~3 points to the reported Specialty P&C combined ratio; underlying core progress remains intact .

What Went Well and What Went Wrong

What Went Well

“Fifth consecutive quarter of improved operating earnings,” underpinned by Specialty P&C progress and favorable prior accident-year reserve development; full-year combined ratio improved ~5 points to 104% with ~6 points of favorable development .
MPL pricing discipline remains effective: renewal premium increases of 10% (standard) and 8% (specialty) in Q4, with cumulative MPL renewal premium change near 70% since 2018, helping outpace severity trends .
Investment performance continued to contribute: Q4 reinvestment at ~5.8% vs. 3.5% book yield, limited partnerships added ~$5M in Q4; book value rose $1.67 YoY to $23.49, adjusted BVPS to $26.86 .

What Went Wrong

Lloyd’s run-off impact: accelerated aviation losses from 2021 underwriting year reduced Q4 net income by $5.3M (~$0.10 per share) and added ~3 points to reported Specialty P&C combined ratio .
Expense pressure: underwriting expense ratios rose YoY across segments driven by incentive compensation and ceding commission adjustments; Specialty P&C full-year underwriting expense ratio increased to 27.1% from 25.6% .
Workers’ Compensation still elevated: Q4 combined ratio 117.6% despite improvement, with higher expense ratio (+500 bps YoY) and ongoing medical cost severity headwinds; segment loss of $7.2M in Q4 .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Total Revenues ($USD Millions)	$296.96	$285.25	$290.10
Diluted EPS ($USD)	$0.12	$0.32	$0.31
Non-GAAP Operating EPS ($USD)	$(0.05)	$0.34	$0.36
Net Investment Income ($USD Millions)	$33.71	$37.27	$36.81
Combined Ratio - Consolidated (%)	112.0%	105.6%	109.3%

Segment breakdown (performance and underwriting):

Segment	Metric	Q4 2023	Q3 2024	Q4 2024
Specialty P&C	Total Revenues ($USD Millions)	$195.20	$189.69	$186.82
Specialty P&C	Segment Results ($USD Millions)	$(7.78)	$1.86	$(6.89)
Specialty P&C	Combined Ratio (%)	104.8%	99.5%	100.9%
Workers’ Comp	Total Revenues ($USD Millions)	$38.62	$42.37	$43.32
Workers’ Comp	Segment Results ($USD Millions)	$(13.03)	$(4.21)	$(7.17)
Workers’ Comp	Combined Ratio (%)	134.8%	111.4%	117.6%
SPC Reinsurance	Net Premiums Earned ($USD Millions)	$15.39	$12.63	$12.35
SPC Reinsurance	Segment Results ($USD Millions)	$0.23	$0.56	$0.70
SPC Reinsurance	Combined Ratio (%)	93.2%	94.6%	80.5%
Corporate	Segment Results ($USD Millions)	$26.45	$18.24	$29.53
Corporate	Net Investment Income ($USD Millions)	$33.04	$36.26	$35.89
Corporate	Effective Tax Rate (%)	34.5%	22.1%	13.7%

KPIs and trajectory:

KPI	Q2 2024	Q3 2024	Q4 2024
Specialty P&C Renewal Pricing (%)	9%	13%	10% (standard MPL), 8% (specialty MPL)
Specialty P&C Retention (%)	84%	84%	84% (FY 2024 overall; 87% standard physicians)
Combined Ratio - Consolidated (%)	110.9%	105.6%	109.3%
Book Value Per Share ($)	$22.15	$24.07	$23.49
Adjusted Book Value Per Share ($)	$26.18	$26.52	$26.86
Net Investment Income ($USD Millions)	$36.56	$37.27	$36.81

Guidance Changes

ProAssurance did not provide formal quantitative forward guidance (revenue, margins, OpEx, OI&E, tax rate, or dividends) in the Q4 2024 press release or earnings call. Management emphasized continued pricing discipline and underwriting focus over growth and maintained a conservative capital management posture (A.M. Best rating priority, RBC stability) .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	Not provided	Not provided	Maintained no formal guidance
Margins/Combined Ratio	FY 2025	Not provided	Not provided; focus on rate adequacy, disciplined underwriting	Maintained qualitative stance
OpEx	FY 2025	Not provided	Not provided; expense ratios pressured by incentive compensation	N/A
Tax Rate	FY 2025	Not provided	Not provided; discussion of diminishing tax credit impact without specifics	N/A
Dividends	FY 2025	Not provided	Not provided	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
AI/Technology initiatives	Agreement with CLARA Analytics; integrated claims/policy/billing system; AI to enhance outcomes and reserves	AI-ready web portal launching; CLARA ramp-up; predictive analytics to target markets/subsectors	AI-ready portal launched; CLARA implementation underway; innovation tools enhancing underwriting/claims workflows	Accelerating implementation
Social inflation / tort reform	Recognized severity driven by social inflation/eroding tort reforms; outpacing with rates	Severity persists; accident-year loss ratio improved >20 points since 2019	“Continuing social inflation and eroding tort reform” headwinds; maintain rate discipline	Persistent headwind; disciplined pricing
Workers’ comp medical severity	Rising medical cost per claim; caution until rate obtained	Moderating trends; current AY loss ratio ~4 points better than FY 2023	AY net loss ratio 77%; favorable prior-year development $0.5M; severity moderating but still elevated	Improving but pressured
Pricing and renewal rates	MPL renewal +9% (10% standard; 12% specialty)	MPL renewal +14% (standard) and +18% (specialty)	MPL renewal +10% (standard) and +8% (specialty)	High but moderating
Capital management / RBC	Cautious capital allocation; A.M. Best affirmed; prioritize rating and liquidity	Intentional capital management reiterated	Buybacks considered vs operating needs; keep RBC solid; “better” RBC vs 2023	Conservative stance maintained
Regulatory/rating bureaus (WC)	—	—	WC rate-setting constraints from rating bureaus; loss cost indications declining despite severity; pushing rate where possible	Ongoing external constraint
Geography/vertical integration (WC)	—	Pennsylvania fee schedule pressures; vertical integration increases utilization	Severity more about utilization than frequency; trends broad-based across footprint	Continued monitoring

Management Commentary

“We reported our fifth consecutive quarter of improved operating earnings… Specialty P&C full year combined ratio improved… including almost 6 points of favorable development.” — Ned Rand, CEO .
“Renewal premium increases in this year’s fourth quarter were 10% for our standard MPL business and 8% for the specialty portion… bringing cumulative renewal increases since 2018 to almost 70%.” — Ned Rand, CEO .
“We accelerated the reporting of [Lloyd’s aviation] losses into our fourth quarter… reducing fourth quarter net income by $5.3 million or about $0.10 per share… impact on the reported Specialty P&C combined ratio… about 3 points.” — Dana Hendricks, CFO .
“New purchase yields… ~5.8%… higher than our average book yield of 3.5%… fixed maturity portfolio… 93% investment grade… avg duration 3.2 years.” — Dana Hendricks, CFO .
“We launched an AI-ready web portal… and are enhancing workflows; filing fully revised policy form and manuals for use nationwide.” — Ned Rand, CEO .

Q&A Highlights

Competitive dynamics: Market “awash with capital” leading to aggressive pricing by some players; PRA prioritizes profitability over growth while still achieving rate increases and attractive retention .
Reserve development: Favorable development spread across legacy ProAssurance (2020 and prior) and more recent years in NORCAL book .
Current accident-year loss pick: Expect continued rate pushing in 2025 similar to 2024 to address severity trends; no specific pick provided .
Workers’ comp pricing constraints: Rating bureaus’ backward-looking loss cost trends limit rate; PRA pushing rate account-by-account; severity, not frequency, is the primary concern .
Capital allocation: Buybacks considered but weighed against subsidiary capital needs, rating priorities, and portfolio diversification for yield; RBC “better” vs prior year, specifics not disclosed on call .
Expense ratios: Specialty P&C underwriting expense ratio up just over 2 points YoY; incentive compensation added nearly 2 points in Q4; 2023 had unusual benefits lowering expenses .

Estimates Context

Wall Street consensus estimates (S&P Global) for Q4 2024 EPS and revenue were unavailable at time of writing due to data access limits. As a result, we cannot quantify beats/misses versus consensus and will update when S&P Global data becomes accessible [GetEstimates error: Daily Request Limit Exceeded].

Key Takeaways for Investors

Core Specialty P&C improvement continues: combined ratio at 100.9% with strong favorable development; pricing discipline remains the primary lever to outpace severity trends, supporting medium-term margin normalization .
Investment income tailwind intact: reinvestment rates materially above book yields and LP returns supporting earnings; BVPS and adjusted BVPS improved YoY, with potential upside as unrealized bond losses accrete .
Workers’ Comp trajectory improving but uneven: AY loss ratio better, yet expense and medical severity keep combined ratio elevated; operational analytics (CLARA, PPO optimization) should aid reserve accuracy and outcomes over time .
Non-core Lloyd’s run-off noise obscured Q4 optics; management excluded non-core from operating results, reinforcing view that underlying MPL profitability initiatives are working .
Expense headwinds likely persist near term due to incentive comp and retention of talent amid shrinking earned premium; focus remains on expense control without compromising underwriting rigor .
Capital optionality exists, but management prioritizes A rating and RBC stability; repurchases contemplated within broader capital needs and debt levels, suggesting a disciplined approach rather than aggressive buybacks .
Near-term trading lens: absent formal guidance and with consensus unavailable, narrative hinges on continued favorable reserve development, sustained pricing increases, and stability in investment yields; watch for subsequent events, including strategic developments, that could re-rate the equity .

Appendix: Prior Quarters Reference

Q3 2024: GAAP EPS $0.32; operating EPS $0.34; total revenues $285.25M; consolidated combined ratio 105.6%; Specialty P&C combined ratio 99.5% with 10.5 points favorable development; MPL renewal pricing +14% standard, +18% specialty .
Q2 2024: GAAP EPS $0.30; operating EPS $0.23; total revenues $290.36M; consolidated combined ratio 110.9%; Specialty P&C combined ratio 106.3%; MPL renewal pricing +9% .

PROASSURANCE CORP (PRA)·Q4 2024 Earnings Summary