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ProAssurance Grows Inorganically Led by Strong Capital Level

Zacks Equity Research
Updated

ProAssurance Corporation PRA continues to display robust inorganic growth supported by a strong capital position. The company has enhanced shareholders’ value by taking up several capital deployments like share buybacks as well as quarterly and special dividend payments. In addition, prudent operating and financial leverage, disciplined pricing, loss reserve practice and conservative investments in assets also bolster the company’s growth potential.

The company’s top line has displayed consistent growth over the past few quarters on the back of its strategic acquisitions that have been accretive to premiums. Its gross premiums written has been growing since 2010.

ProAssurance has achieved inorganic growth via successful acquisitions and integration of companies. It has already acquired major firms like American Physicians Service Group, Medmarc and Eastern Insurance Holdings. These buyouts have enabled the company to strengthen its position in the workers’ compensation market.

The company further aims to boost its competitive strength and earnings and book value by launching new products to capture a larger market share. Its liability protection product — CaPAssurance — has been generating new business and higher premiums as well.

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The company’s financial position remains a positive. It deploys capital effectively through its stock buyback programs and dividend payments. We believe that it will be able to continue its capital deployment activities in the coming quarters on the back of substantial cash inflow, thereby retaining shareholders’ confidence in the stock.

The company maintains a solid record of earnings. In each of the last four quarters, its bottom line surpassed the Zacks Consensus Estimate with an average beat of 18%. The company has also seen its Zacks Consensus Estimate for 2017 and 2018 earnings being revised upward by 4.5% and 2%, respectively, in the last 60 days.

Although shares of ProAssurance have gained 1% year to date, underperforming a 17% rally of the Zacks Property & Casualty Insurance industry, the stock is expected to bounce back soon given its strong fundamentals.

Zacks Rank & Other Stocks to Consider

ProAssurance presently holds a Zacks Rank #2 (Buy)

Investors can also consider some other stocks in the insurance space like CNA Financial Corporation CNA, Infinity Property and Casualty Corporation IPCC and NMI Holdings, Inc. NMIH.Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

CNA Financial provides commercial property and casualty insurance products primarily in the United States. The company came up with positive surprises in three of the last four quarters with an average beat of 39.87%. Shares of the company have gained 25.7% year to date.

Infinity Property and Casualty Corporation provides personal automobile insurance products in the United States. The company pulled off positive surprises in three of the last four quarters with an average beat of 300.65%. Shares of the companyhave rallied 20.5% year to date.

NMI Holdingsprovides private mortgage guaranty insurance services in the United States. The company came up with a four-quarter average positive surprise of 11.75%.Shares of the companyhave surged 63.4% year to date.

Zacks Editor-in-Chief Goes "All In" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>


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 Corporation (PRA) : Free Stock Analysis Report
 
CNA Financial Corporation (CNA) : Free Stock Analysis Report
 
Infinity Property and Casualty Corporation (IPCC) : Free Stock Analysis Report
 
NMI Holdings Inc (NMIH) : Free Stock Analysis Report
 
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