We have retained our Neutral recommendation on
) as core business volatility and sustained low interest rates
will likely weigh on the positives. This liability insurance
provider currently carries a Zacks Rank #3 (Hold).
Over the last 30 days, one out of six estimates moved north while
one was nudged down. The Zacks Consensus Estimate for the fourth
quarter thus remains unchanged at $1.41, also suggesting a 34%
year over year decline.
ProAssurance has experienced core business instability over the
past several years. The incumbent volatility is further stressed
by the current low interest environment. The investment income
metrics are moving downwards as the low interest rate compels the
company to reinvest its matured investments at comparatively
lower interest rates. Moreover, although operating expenses
declined in the third quarter of 2012, the recent acquisition of
Medmarc and adoption of FASB guidance is expected to weigh on
Nevertheless, ProAssurance's continuous efforts to expand its
operations, penetrate into newer markets and merge its
subsidiaries to simplify its business structure have increased
its operational efficiency despite the volatility in the medical
liability business. The positives are also reflected in the
company's return on equity which is consistent with the
increasing trend since 2010. The rising ROE and the company's
future prospect to generate higher returns are expected to boost
shareholders' value. The company also scores strongly with the
credit rating agencies.
ProAssurance continues to increase shareholders' value. The
strong cash position enabled management to initiate a cash
dividend policy in Sep 2011. In Dec 2012, the Board also
authorized a special dividend of $2.50 per share.
ProAssurance is scheduled to release its fourth quarter and full
year 2012 results on Feb 19, after the closing bell.
Other Stocks to Consider
Among others from the industry,
Fidelity National Financial
HCC Insurance Holdings
First American Financial Corporation
) carry Zacks Rank #1 (Strong Buy) and are worth considering.
FIRST AMER FINL (FAF): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
HCC INS HLDGS (HCC): Free Stock Analysis
PROASSURANCE CP (PRA): Free Stock Analysis
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