Recently, the issuer credit ratings of the subsidiaries of ProAssurance CorporationPRA were upgraded to "a+" from "a" by credit rating giant, A. M. Best Company. Additionally, the financial strength ratings of its affiliates were affirmed at "A". These subsidiaries include Eastern Alliance Insurance Company, Allied Eastern Indemnity Company and Eastern Advantage Assurance Company (collectively Eastern Alliance Insurance Group or EAIG) and Eastern Re Ltd., SPC (Eastern Re). All the ratings carried a stable outlook.
The rating actions on EAIG came on the back of its strong risk-adjusted capitalization, robust underwriting and operating performance and well-developed business profile. On the other hand, Eastern Re's ratings were based on its impressive stand-alone capitalization, profitable operating results and its association with EAIG. A. M. Best also took into consideration ProAssurance's financial strength and support to its subsidiaries for the rating upgrade.
However, A. M. Best recognizes aspects that might offset the positive rating factors. These are risks associated with the product line of ProAssurance's subsidiaries and geographic concentration in workers' compensation, particularly in Pennsylvania. Nevertheless, proficiency in the workers' compensation business and geographic expansion initiatives mitigate the negatives to some extent.
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence in the stock as well as maintaining creditworthiness in the market. We believe that the company's present score with the credit rating agency will help it write more business going forward.
ProAssurance currently holds a Zacks Rank #2 (Buy). Other stocks worth considering from the property and casualty insurance space include The Chubb Corporation CB , Hallmark Financial Services Inc. HALL and The Travelers Companies, Inc. TRV . All three stocks sport a Zacks Rank #1 (Strong Buy).
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