Dj Aon Plc Stock Rises Wednesday, Outperforms Market

Shares of Regional Management Corp. RM have lost 9.3% since it reported third-quarter 2024 results on Nov. 6, after the closing bell. Despite an earnings beat, investors might be concerned about the impact of Hurricane Helene and rising provision for credit losses on the company’s earnings. Higher interest and fee income and net financial receivables partially offset the negatives.

It reported third-quarter 2024 adjusted earnings per share (EPS) of $1.18, which beat the Zacks Consensus Estimate by 12.4%. The bottom line increased 29.7% year over year.

RM's total revenues climbed 3.9% year over year to $146.3 million. The top line missed the consensus mark by a whisker.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Regional Management Corp. Price, Consensus and EPS Surprise

Regional Management Corp. price-consensus-eps-surprise-chart | Regional Management Corp. Quote

Operational Update

Interest and fee income increased 7.1% year over year to $133.9 million, which beat the Zacks Consensus Estimate by 2.2%. Net insurance income of $7.4 million fell 34.8% in the third quarter and missed the consensus mark by 35.2%. Other income of $5 million grew 11.3% year over year and beat the consensus mark by 6%.

Provision for credit losses increased 6.7% year over year to $54.3 million.

Total general and administrative expenses rose 0.6% in the third quarter to $62.5 million due to occupancy, marketing and other costs. The efficiency ratio, which depicts the general and administrative expenses as a percentage of revenues, was at 42.7% in the third quarter, down from 44.1% a year ago. It was much lower than the Zacks Consensus Estimate of 44.1%. Interest expenses increased 14.2% year over year to $19.4 million in the quarter under review.

Regional Management recorded a net income of $7.7 million in the third quarter of 2024 compared with $8.8 million a year ago. The third-quarter hurricane activity in North Carolina impacted the results.

At the end of the third quarter, net finance receivables were $1.8 billion, up 3.9% from a year ago. While small loans rose 10.7% year over year to $524.8 million, large loans increased 1.7% year over year to $1.3 billion. It had 340 branches at the third-quarter end, with net finance receivables per branch at $5.4 million, up 6.1% year over year. This indicates rising efficiency in its branches.

The company recorded total loan originations of $426.2 million during the September quarter, which rose 0.3% year over year because of controlled growth from credit-tightening actions.

Financial Position (as of Sept. 30, 2024)

Regional Management exited the third quarter with total assets of $1.82 billion, which rose from $1.79 at 2023-end. The cash amount rose to $4.7 million from $4.5 million at 2023-end.

Net debt fell from $1.395 billion at 2023-end to $1.391 billion. Total liabilities of $1.47 billion at the third-quarter end were lower than $1.47 billion at 2023-end. Total shareholders’ equity rose from $322.3 million at 2023-end to $352.9 million.

Dividend Update

For the fourth quarter of 2024, Regional Management announced a dividend of 30 cents per share, which will be paid on Dec. 11 to shareholders of record as of Nov. 21, 2024.

Outlook

Regional Management expects to improve credit loss performance in 2025. It will boost investments in strategic initiatives and portfolio growth. The company expects to open seven new branch locations by the year-end and three more by the beginning of 2025.

Ending Net Finance Receivables are expected to grow in the range of $65-$70 million in the fourth quarter of 2024. It expects general and administrative expenses for the fourth quarter of 2024 to be around $65.5 million.

Total revenue yield is likely to increase 60 basis points sequentially in the fourth quarter. Net credit losses are likely to be around $50.5 million in the fourth quarter. Loan loss reserve rate is expected to decline to 10.5% in the fourth quarter.

RM foresees about 60-70 basis points sequential growth in total revenue yield for the fourth quarter of 2024. It anticipates the effective tax rate to be around 24.5% for the fourth quarter. The company expects a full-year 2024 net income around $40 million.

Zacks Rank

Regional Management currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Sector Players

Marsh & McLennan Companies, Inc. MMC posted third-quarter 2024 adjusted earnings per share of $1.63, which beat the Zacks Consensus Estimate by 1.2%. The bottom line advanced 3.8% year over year. Consolidated revenues rose 6% year over year to $5.7 billion. The figure also improved 5% on an underlying basis. The top line, however, fell 0.2% short of the consensus mark.

Marsh & McLennan’s adjusted operating income was $1.19 billion in the third quarter, which grew 12% year over year but missed our estimate of $1.21 billion.

Arthur J. Gallagher & Co. AJG reported third-quarter 2024 adjusted net earnings of $2.26 per share, meeting the Zacks Consensus Estimate. The bottom line increased 13% on a year-over-year basis. Total adjusted revenues of $2.7 billion missed the Zacks Consensus Estimate by 0.1%. However, the top line improved 11.1% year over year.

EBITDAC grew 14.3% from the prior-year quarter to $808.8 million.

Aon plc AON reported third-quarter 2024 adjusted earnings of $2.72 per share, which beat the Zacks Consensus Estimate by 11%. The bottom line advanced 17% year over year. Total revenues of $3.72 billion improved 26% year over year. The top line beat the consensus mark by 0.5%. It consisted of organic revenue growth of 7% and a 19% revenue rise from acquisitions.

Revenues are expected to register mid-single-digit or higher organic growth for 2024 and beyond. The company anticipates the adjusted operating margin to expand in 2024.

Zacks Investment Research

ProAssurance Corporation’s PRA shares gained 6.4% since it reported third-quarter 2024 results on Nov. 7, 2024. The strong quarterly earnings benefited from strong underwriting results in the Specialty P&C segment, significant growth in investment income, higher yields and a decline in expenses. Deteriorating profitability in the Segregated Portfolio Cell Reinsurance unit acted as a partial offset.

PRA reported a third-quarter 2024 adjusted operating income of 34 cents per share, which surpassed the Zacks Consensus Estimate of 12 cents. The bottom line rose significantly from a loss of 7 cents in the year-ago period.

Operating revenues declined by a whisker year over year to $278.2 million. However, the top line beat the consensus mark by 2.8%.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

ProAssurance Corporation Price, Consensus and EPS Surprise

ProAssurance Corporation price-consensus-eps-surprise-chart | ProAssurance Corporation Quote

Quarterly Operational Update

Gross premiums written of $307.9 million slipped 3.7% year over year. Net premiums earned rose 0.3% year over year to $243.2 million, resulting from renewal pricing increases in the medical professional liability business. The reported figure outpaced the Zacks Consensus Estimate of $231.3 million and our estimate of $231.9 million.

Net investment income was $37.3 million, which rose 13.8% year over year, aided by higher book yields on PRA’s fixed maturity investments. The metric beat the consensus mark of $36.6 million and our estimate of $36 million.

Total expenses of $264.2 million decreased 19.9% year over year and came lower than our estimate of $272.3 million. The year-over-year decrease resulted from a decline in net losses and loss adjustment expenses.

ProAssurance’s net income soared 133% year over year to $16.4 million. The combined ratio of 105.6% improved 1,110 basis points (bps) year over year.

Segmental Update

Specialty P&C Segment

Revenues from the segment declined 3.6% year over year to $189.7 million but came in higher than the Zacks Consensus Estimate of $186 million and our estimate of $181.1 million. Net premiums earned of $188.7 million declined 3.6% year over year due to PRA’s decision to discontinue participation in Lloyd. The metric outpaced the consensus mark of $185.5 million and our estimate of $180.1 million.

Total expenses dipped 11.4% year over year to $187.8 million. The unit reported a gain of $1.9 million, up 112% year over year. The combined ratio of 99.5% improved 880 bps year over year.

Workers' Compensation Insurance Segment

The segment’s revenues of $42.4 million rose 5.3% year over year, higher than Zacks Consensus Estimate of $40.8 million and our estimate of $41 million. Net premiums earned increased 4.9% year over year to $41.8 million, which beat the consensus mark of $40.2 million and our estimate of $40.5 million.

Total expenses declined 14.9% year over year to $46.6 million. The unit incurred a loss of $4.2 million, narrower than the prior-year quarter’s loss of $14.5 million. The combined ratio of 111.4% improved 2,590 bps year over year.

Segregated Portfolio Cell Reinsurance Segment

Gross premiums written amounted to $13.7 million, which surged 72.1% year over year and beat our estimate of $6.7 million. Net premiums earned rose 86.7% year over year to $12.6 million, which beat the Zacks Consensus Estimate of $11.4 million and our estimate of $11.3 million.

Underwriting, policy acquisition and operating expenses rose 12.9% year over year to $4.1 million. The unit reported a quarterly profit of $0.6 million, which plummeted 35.5% year over year due to increased loss activity, partially offset by favorable prior accident year development. The combined ratio improved 3,360 bps year over year to 94.6%.

Corporate Segment

The segment’s net investment income improved 12.8% year over year to $36.3 million and beat our estimate of $35 million. The metric gained on improved average book yields from PRA’s fixed maturity investments.

Operating expenses increased 35.9% year over year to $11.3 million. The unit’s profit of $18.2 million declined 17.3% year over year. Interest expenses increased 3.3% year over year to $5.7 million.

Financial Position (as of Sept. 30, 2024)

ProAssurance exited the third quarter with cash and cash equivalents of $45.3 million, which dropped 31.3% from the 2023-end level. Total investments were $4.5 billion, which rose 2.6% from the figure at 2023-end.

Total assets of $5.7 billion increased 1.8% from the 2023-end level.

Debt-less unamortized debt issuance costs amounted to $425.9 million, which reflects a slight decrease from the figure as of Dec. 31, 2023.

Total shareholders’ equity of $1.2 billion rose 10.7% from the level at 2023-end.

Net cash used in operating activities amounted to $10.5 million in the first nine months of 2024 compared with $46.6 million in the prior-year comparable period.

Book value per share was $24.07 as of Sept. 30, 2024, up 10.3% from the 2023-end level. Adjusted operating return on equity was 5.9%, which improved 780 bps year over year.

Share Repurchase Update

ProAssurance did not repurchase any common shares in the first nine months of 2024. A leftover capacity of $55.9 million remained in place to be utilized for common share repurchases or retirement of outstanding debt as of Sept. 30, 2024.

Zacks Rank

ProAssurance currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Sector Players

Marsh & McLennan Companies, Inc. MMC posted third-quarter 2024 adjusted earnings per share of $1.63, which beat the Zacks Consensus Estimate by 1.2%. The bottom line improved 3.8% year over year. Consolidated revenues rose 6% year over year to $5.7 billion. The figure also improved 5% on an underlying basis. The top line, however, fell 0.2% short of the consensus mark.

Marsh & McLennan’s adjusted operating income was $1.19 billion in the third quarter, which grew 12% year over year but missed our estimate of $1.21 billion.

Arthur J. Gallagher & Co. AJG reported third-quarter 2024 adjusted net earnings of $2.26 per share, meeting the Zacks Consensus Estimate. The bottom line increased 13% on a year-over-year basis. Total adjusted revenues of $2.7 billion missed the Zacks Consensus Estimate by 0.1%. However, the top line improved 11.1% year over year.

EBITDAC grew 14.3% from the prior-year quarter to $808.8 million.

Aon plc AON reported third-quarter 2024 adjusted earnings of $2.72 per share, which beat the Zacks Consensus Estimate by 11%. The bottom line increased 17% year over year. Total revenues of $3.72 billion improved 26% year over year. The top line beat the consensus mark by 0.5%. It consisted of organic revenue growth of 7% and a 19% revenue rise from acquisitions.

Revenues are expected to register mid-single-digit or higher organic growth for 2024 and beyond. The company anticipates the adjusted operating margin to expand in 2024.

Zacks Investment Research

PRA Group, Inc.’s PRAA shares gained 17.8% since it reported third-quarter 2024 results on Nov. 6, 2024. The strong quarterly results benefited from strong cash collections and purchases in the third quarter. Moreover, the company showed optimism in achieving its 2024 targets and expects accelerated progress in 2025, driving investor confidence upward. However, rising expenses partially offset the positives.

PRAA reported third-quarter 2024 earnings per share of 49 cents, which beat the Zacks Consensus Estimate by 44.1%. A loss of 31 cents per share was incurred in the prior-year quarter.

Total revenues climbed 30.1% year over year to $281.5 million. The top line surpassed the consensus mark by 6.4%.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

PRA Group, Inc. Price, Consensus and EPS Surprise

PRA Group, Inc. price-consensus-eps-surprise-chart | PRA Group, Inc. Quote

Quarterly Operational Update

PRA Group’s cash collections were $477.1 million, which increased 13.7% year over year but missed the Zacks Consensus Estimate of $483 million. The metric benefited on the back of improved cash collections across the United States and Europe.

Portfolio income rose 13.8% year over year to $216.1 million but missed the consensus mark of $218 million. Other revenues of $4.7 million increased 9.9% year over year and beat the Zacks Consensus Estimate of $2.3 million.

Total operating expenses escalated 10.4% year over year to $191.5 million due to increased compensation and employee services, legal collection costs and fees, agency fees and other operating expenses.

PRAA reported a net income of $27.2 million against a loss of $12.2 million in the prior-year quarter.

The company purchased nonperforming loan portfolios of $350 million, up 12% year over year. The cash efficiency ratio was 60.1%. The estimated remaining collections (ERC) amounted to $7.3 billion at the third-quarter end.

Financial Update (as of Sept. 30, 2024)

PRA Group exited the third quarter with cash and cash equivalents of $141.1 million, which grew 25.4% from the 2023-end level. It had $1 billion remaining under its credit facilities at the third-quarter end.

Total assets of $4.9 billion increased 9.1% from the figure at 2023-end.

Borrowings were $3.3 billion, up 13.1% from the figure as of Dec. 31, 2023.

Total equity of $1.3 billion increased 3.4% from the 2023-end level.

Revised Outlook

For 2024, the company still expects solid portfolio investment levels on the back of higher U.S. portfolio supply and favorable returns. PRAA continues to forecast cash collections to witness double-digit growth. Management expects legal collection costs in the fourth quarter to be in the low $30 million. Modest expense growth is expected for 2024.

The effective tax rate is expected to be in the high to mid-teens range this year. The cash efficiency ratio is projected at around 60% for 2024. It now expects a return on average tangible equity of more than 8%. PRA Group is likely to collect an ERC balance of $1.7 billion within the next 12 months.

For 2025, the company expects portfolio purchases to surpass $1 billion. Cash collections are expected to grow in the range of 8%-10% in 2025. The cash efficiency ratio is projected to be around 60% for 2025. PRAA anticipates a double digit return on average tangible equity for 2025.

Zacks Rank

PRA Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Sector Players

Marsh & McLennan Companies, Inc. MMC posted third-quarter 2024 adjusted earnings per share of $1.63, which beat the Zacks Consensus Estimate by 1.2%. The bottom line advanced 3.8% year over year. Consolidated revenues rose 6% year over year to $5.7 billion. The figure also improved 5% on an underlying basis. The top line, however, fell 0.2% short of the consensus mark.

Marsh & McLennan’s adjusted operating income was $1.19 billion in the third quarter, which grew 12% year over year but missed our estimate of $1.21 billion.

Arthur J. Gallagher & Co. AJG reported third-quarter 2024 adjusted net earnings of $2.26 per share, meeting the Zacks Consensus Estimate. The bottom line increased 13% on a year-over-year basis. Total adjusted revenues of $2.7 billion missed the Zacks Consensus Estimate by 0.1%. However, the top line improved 11.1% year over year.

EBITDAC grew 14.3% from the prior-year quarter to $808.8 million.

Aon plc AON reported third-quarter 2024 adjusted earnings of $2.72 per share, which beat the Zacks Consensus Estimate by 11%. The bottom line advanced 17% year over year. Total revenues of $3.72 billion improved 26% year over year. The top line beat the consensus mark by 0.5%. It consisted of organic revenue growth of 7% and a 19% revenue rise from acquisitions.

Revenues are expected to register mid-single-digit or higher organic growth for 2024 and beyond. The company anticipates the adjusted operating margin to expand in 2024.

Zacks Investment Research