ProAssurance (PRA) Set To Grow On Buyouts: Will You Hold?

On Jun 29, 2016 we issued an updated research report on ProAssurance Corporation (NYSE:PRA) .

ProAssurance possesses a solid inorganic portfolio with strategic acquisitions that have been driving its core business. These coupled with growth in the new physician business have improved gross premiums at a five-year CAGR of 8.8%. The impressive inorganic story also bears testimony to the company’s financial size and strength.

The insurer is poised for long-term growth on solid competitive market position, prudent operating and financial leverage, responsible pricing, loss reserve practice and conservative investments in assets.

Backed by operational performance, the company possesses a solid capital position that enables it to engage in effective capital deployment. This also includes boosting shareholder value via dividend hikes, special dividend and share buybacks.

However, the company operates in a competitive environment. As such ProAssurance has been facing volatility in premium retention in its physician business for quite some time. Also, a low interest rate environment weighs on its investment results. Moreover, higher underwriting, policy acquisition and operating expenses weigh on margin expansion of the company.

With respect to the surprise trend, this Zacks Rank #3 (Hold) property and casualty insurer beat earnings in only one of the last four quarters. Also, due to the absence of any near-term catalysts, there were no upward revisions in the Zacks Consensus Estimate over the last 60 days.

PROASSURANCE CP Price and Consensus

PROASSURANCE CP Price and Consensus | PROASSURANCE CP Quote

The Zacks Consensus Estimate for the second quarter is currently pegged at 56 cents. However, our proven model cannot conclusively state if the bottom line will beat estimate because though a Zacks Rank #3 is favorable for an earnings beat, an Earnings ESP of 0.00% makes prediction difficult.

Stocks to Consider

Some better-ranked property and casualty insurers are Markel Corp. (NYSE:MKL) , National General Holdings Corp (NASDAQ:NGHC) and OneBeacon Insurance Group, Ltd (NYSE:OB) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).