Markets

ProAssurance's (PRA) Acquisitions & Capital Position Impress

Pointing towards a line graph

We issued an updated research report on ProAssurance CorporationPRA on Aug 12, 2015.

Last week, ProAssurance reported second-quarter 2015 earnings that surpassed the Zacks Consensus Estimate by 4.9%. Notably, the company has delivered positive earnings surprises in two of the trailing four quarters with an average beat of 6.49%.

ProAssurance's core business has been witnessing substantial improvement over the past few quarters on the back of strategic acquisitions that have been accretive to premiums. The company is also moving toward its joint marketing and shared risk programs, particularly with Ascension.

ProAssurance has achieved significant inorganic growth via successful acquisitions supported by its financial size and strength. Over the long run, the company's solid track record, strong competitive market position, prudent operating and financial leverage, responsible pricing, loss reserve practice and conservative investments in assets should generate growth.

ProAssurance and its subsidiaries enjoy a secure capital position. Further, the company deploys capital effectively through stock buyback programs and dividend payments. Given ProAssurance's stable capital position, we believe that capital deployment will continue in the coming quarters, thereby retaining shareholders' confidence.

However, ProAssurance has been facing volatility in premium retention in its physician business for quite some time now mainly due to intense competition. Another major risk is associated with ProAssurance's investment portfolio, which primarily consists of fixed income securities. The declining interest rate forces the company to reinvest its matured investments at comparatively lower interest rates, in turn lowering investment income and the top line.

Moreover, ProAssurance has been incurring high underwriting, policy acquisition and operating expenses for some time. The company needs a strong expense management program as any substantial increase in operating expenses could weigh heavily on its margins and bottom line.

ProAssurance currently holds a Zacks Rank #2 (Buy). Investors interested in the property and casualty insurance space may consider stocks like Hallmark Financial Services Inc. HALL , Selective Insurance Group Inc. SIGI and First American Financial Corporation FAF . All the three stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

PROASSURANCE CP (PRA): Free Stock Analysis Report

FIRST AMER FINL (FAF): Free Stock Analysis Report

HALLMARK FINL (HALL): Free Stock Analysis Report

SELECT INS GRP (SIGI): Free Stock Analysis Report

To read this article on Zacks.com click here.

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.


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

In This Story

SIGI HALL FAF PRA

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More