On Jul 12, 2013, Zacks Investment Research raised ProAssurance Corporation (PRA - Analyst Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
ProAssurance generated positive earnings surprise in the last 4 quarters, with an average beat of 17.69%. We expect the company to outperform estimates in the second quarter of 2013 as well as it has the right combination of Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method) of 13.3% and Zacks Rank #1. The Zacks Consensus Estimate for ProAssurance’s second-quarter earnings stands at 90 cents per share.
Moreover, ProAssurance should benefit from geographic diversity, improved credit ratings, product launches, prudent capital management and inorganic growth. The company significantly expanded its geographic footprint through successful acquisition and integration of companies.
ProAssurance also tries to improve its earnings and book value by launching new products aimed at capturing a larger market share. On Mar 21, 2013, ProAssurance collaborated with the Cooperative of American Physicians Inc. to provide a new liability protection product, CAPAssurance in California.
Based on the strong capital base, sustained trend of operating profitability, sturdy business profile, favorable underwriting result, strong market position, diverse business lines and well established enterprise risk management programs and policies, A.M. Best Co. raised the issuer credit rating of ProAssurance to “a-” from “bbb+” in Jun 2013.
Additionally, the rating agency increased the indicative debt rating under the shelf registration to “a-” from “bbb+” on the senior unsecured debt, “bbb+” from “bbb” on the subordinated debt and “bbb” from “bbb-” on the preferred stock.
Other Stocks to Consider
Other property and casualty companies worth considering are Alleghany Corporation (Y - Snapshot Report), American Safety Insurance Holdings Ltd. and AmTrust Financial Services, Inc. (AFSI - Snapshot Report). All these companies carry a Zacks Rank #1 (Strong Buy).