PRA Ups Div, Enhances Repurchase - Analyst Blog


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In order to boost shareholder value, ProAssurance Corporation ( PRA ) increased its quarterly dividend by 20%. This translates into a quarterly cash dividend of 30 cents per share, up from 25 cents per share paid on Nov 10, 2013. The increased dividend will be paid on Jan 9, 2014, to shareholders of record as of Dec 27, 2013.

Based on the closing share price of $48.22 on Dec 4, 2013, the increased dividend implies a dividend yield of 2.49%. ProAssurance's current dividend yield is better than the industry yield of 1.85% and that of some other property and casualty insurers - RLI Corp. ( RLI ) with a yield of 1.39%, Allied World Assurance Company Holdings, AG ( AWH ) with a yield of 1.80% and Montpelier Re Holdings ( MRH ) with a yield of 1.74%.

ProAssurance's board of directors also approved a $100 million share repurchase program. This authorization is an extension to the previous share buyback program under which $127 million was remaining. With this increase, the company's total authorization currently stands at $227 million.

The dividend hike and the new share repurchase program reflect the financial strength of the company. ProAssurance will require $18.6 million every quarter for the dividend payment, based on the outstanding share count of 62.04 million as of Sep 30, 2013. The company has ample liquidity for the payment, with total cash and cash equivalents of $279.05 million as of Sep 30, 2013.

ProAssurance has always been active in taking up strategic initiatives to gain investor confidence, be it through share repurchases, dividend hikes or debt repayment. Last year in December, ProAssurance declared a stock-split (2: 1 ), so as to make the shares affordable for investors. In terms of share repurchases, ProAssurance has deployed $329 million over the past six years to buy back 6.3 million shares.

During the third quarter of 2013, ProAssurance repaid the entire outstanding amount in its credit facility and ended the quarter with no long-term debt. Although the company issued a $250 million debt on Nov 19, 2013, the proceeds from the issuance are mainly aimed towards efficient capital management.

ProAssurance delivered operating earnings per share of 88 cents per share in the third quarter of 2013, improving 2.3% over the year-ago earnings. Share buybacks should boost the bottom line further.

ProAssurance currently carries a Zacks Rank #3 (Hold). Montpelier, RLI Corp and Allied World are some better-ranked stocks in the property casualty insurance space. While Montpelier and RLI Corp. carry a Zacks Rank #1 (Strong Buy), Allied World carries a Zacks Rank #2 (Buy).

ALLIED WORLD AS (AWH): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

PROASSURANCE CP (PRA): Free Stock Analysis Report

RLI CORP (RLI): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: AWH , MRH , PRA , RLI

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