The much hyped acquisition of
Eastern Insurance Holdings Inc.
) by leading specialty insurer
) has finally closed on Jan 1, 2014, for a cash consideration of
The deal was announced in Sep 2013 and was pending regulatory and
Eastern Insurance shareholders' approval. On Dec 27, 2013, the
deal received approval from the Eastern Insurance shareholders.
As previously decided, Eastern Insurance will now become a wholly
owned subsidiary of ProAssurance. It will merge with a newly
formed subsidiary of ProAssurance to form an entity that will
enhance the medically focused product lines of ProAssurance.
The aforementioned deal will help ProAssurance to foray into the
workers' compensation market that provides substantial growth
opportunities. Eastern Insurance has performed impressively in
healthcare workers' compensation and has delivered strong growth
and underwriting profit. Thus, with the completion of the deal,
ProAssurance is set to provide its policyholders with superior
workers' compensation solution, which will help it to capitalize
on market opportunities.
Moreover, the acquisition will provide scope for product line
diversification for the combined entity. Finally, the deal is
anticipated to be moderately accretive to ProAssurance's 2014
earnings. The Zacks Consensus Estimate for full-year 2014 is
currently pegged at $3.28. We expect the estimate to move up as
analysts start incorporating the news in their estimates.
ProAssurance has been undertaking strategic initiatives to
establish an insurance platform that will help it to cater to
prospective clients and shareholders. Thus, it seeks to acquire
entities that have a promising working team and insurance
expertise. We believe that the aforementioned deal will help
ProAssurance to tap on alternative market opportunities in
medical professional liability and workers' compensation, thus,
boosting long-term growth. The overall long-term expected
earnings growth rate for this stock is 7.5%.
ProAssurance currently carries a Zacks Rank #2 (Buy). Other
players in the property and casualty insurance space, which look
attractive at current levels, include
Allied World Assurance Company Holdings, AG
Aspen Insurance Holdings Ltd.
). Both stocks sport a Zacks Rank #1 (Strong Buy).
ASPEN INS HLDGS (AHL): Free Stock Analysis
ALLIED WORLD AS (AWH): Free Stock Analysis
PROASSURANCE CP (PRA): Free Stock Analysis
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