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5 Solid Reasons to Hold ProAssurance in Your Portfolio


ProAssurance Corporation PRA has been witnessing solid improvement over the past few quarters, majorly driven by acquisitions, accretive to premiums.

Shares of this Zacks Rank #3 (Hold) company have gained 5.5% quarter to date, outperforming 2.2% growth recorded by the industry. The company flaunts a value score of B. If you haven’t taken advantage of the share price appreciation yet, it is time for you to retain the stock in your portfolio as it looks promising and is poised to carry the momentum ahead, driven by the following factors.

Let’s discuss some of the factors which make it good to hold.

Rising Premium Income: ProAssurance’s core business has been improving for the past few quarters despite low rates and challenges in writing new business. It is also moving toward its joint marketing and shared risk programs. Gross premiums written increased by 5.6% and 4.8% in 2016 and 2017, respectively. Additionally, the company witnessed an increase of 5% year over year in gross premiums in the first quarter of 2018, due to the solid performances of Specialty P&C Insurance and Workers' Compensation segments. It is expected that the company will add profitable businesses to expand its core business in the future.

Inorganic Growth: ProAssurance has experienced steady inorganic growth, backed by acquisitions and integration of companies, which was further supported by its financial strength. Some of such acquisitions include American Physicians Service Group, Medmarc and Eastern Insurance Holdings, which has been beneficial to the Worker’s compensation business.

Capital Deployment: The company has been quite active when it comes to capital deployment. It has rewarded its shareholders with dividend hikes and special dividends for increasing the value. The company’s dividend has witnessed 6-year CAGR of 16%, which is quite impressive. It has around $110 million of shares available under its board-authorized stock repurchase program as of Apr 30, 2018. It has successfully been able to return more than $2 billion over 11 years to its shareholders.

Underpriced: Looking at ProAssurance’s price-to-earnings ratio, shares are underpriced at the current level, which seems to be attractive for the investors. The company has a trailing P/E ratio of 20.78, below the industry average of 26.7.

Positive Earnings Surprise History: The company has an average positive earnings surprise of 2.32%, beating estimates in two out of four quarters.

Stocks to Consider

Investors interested in the insurance industry might take a look at a few better-ranked stocks like The Progressive Corporation PGR, Lincoln National Corporation LNC and First American Financial Corporation FAF.

Progressive provides personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance and related services, primarily in the United States.

Currently sporting a Zacks Rank #1 (Strong Buy), the company managed to deliver a positive earnings surprise of 6.2% in trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lincoln and its subsidiaries operate multiple insurance and retirement businesses in the United States. With a Zacks Rank #2 (Buy), the company recorded average earnings surprise of 5.2% in four quarters.

First American and its subsidiaries provide financial services to its customers. It currently has a Zacks Rank of 2 and pulled off an average earnings surprise of 8.33% in four quarters.

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