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ProAssurance (PRA) Poised for Growth on Higher Premiums
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On Aug 9, 2016, we issued an updated research report on ProAssurance Corporation (PRA - Free Report) .
The company’s second-quarter 2016 operating earnings per share of 67 cents surpassed the Zacks Consensus Estimate by 19.6% and improved 4.6% year over year on higher net premiums earned. However, operating revenues decreased 0.6% year over year on lower net investment income and missed the Zacks Consensus Estimate.
With respect to the surprise trend, this Zacks Rank #2 (Buy) properties and casualty insurer delivered an average positive earnings surprise of 4.24% for the last four quarters. The Zacks Consensus Estimate also has been witnessing upward revisions over the last seven days.
Despite low rates and challenges in writing new business, ProAssurance’s core operations have been witnessing substantial improvement over the past few quarters. Gross premiums written inched up 0.5% year over year in the second quarter. Net earned premiums also grew on the back of increase in prior-period writings in work comp and Lloyd’s.
ProAssurance has achieved substantial inorganic growth backed by successful acquisitions and integrations. The company’s financial strength has helped it in this regard. The insurer is on track to boost its operating efficiency by merging its subsidiaries to simplify its business structure.
We expect ProAssurance’s impressive track record, solid competitive market position, prudent operating and financial leverage, responsible pricing, loss reserve practice and conservative investments in assets as well as efficient capital deployment to support fundamental growth.
With respect to capital deployment, ProAssurance bought back about 0.02 million shares worth around $0.8 million in the second quarter and has $109.6 million remaining under its authorization.
However, volatility in premium retention in the company’s physician business due to increased competition; weak investment portfolio primarily containing fixed income securities adversely impacted by low interest rates remains concern. Moreover less control on expenses due to higher underwriting, policy acquisition and operating expenses are headwinds.
Stocks that Warrant a Look
Investors can also look at stocks from the same industry like Allied World Assurance Company Holdings, AG (AWH - Free Report) , Argo Group International Holdings, Ltd. and MS&AD Insurance Group Holdings, Inc. (MSADY - Free Report) . Each of these stocks sports 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 >>
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ProAssurance (PRA) Poised for Growth on Higher Premiums
On Aug 9, 2016, we issued an updated research report on ProAssurance Corporation (PRA - Free Report) .
The company’s second-quarter 2016 operating earnings per share of 67 cents surpassed the Zacks Consensus Estimate by 19.6% and improved 4.6% year over year on higher net premiums earned. However, operating revenues decreased 0.6% year over year on lower net investment income and missed the Zacks Consensus Estimate.
With respect to the surprise trend, this Zacks Rank #2 (Buy) properties and casualty insurer delivered an average positive earnings surprise of 4.24% for the last four quarters. The Zacks Consensus Estimate also has been witnessing upward revisions over the last seven days.
Despite low rates and challenges in writing new business, ProAssurance’s core operations have been witnessing substantial improvement over the past few quarters. Gross premiums written inched up 0.5% year over year in the second quarter. Net earned premiums also grew on the back of increase in prior-period writings in work comp and Lloyd’s.
ProAssurance has achieved substantial inorganic growth backed by successful acquisitions and integrations. The company’s financial strength has helped it in this regard. The insurer is on track to boost its operating efficiency by merging its subsidiaries to simplify its business structure.
We expect ProAssurance’s impressive track record, solid competitive market position, prudent operating and financial leverage, responsible pricing, loss reserve practice and conservative investments in assets as well as efficient capital deployment to support fundamental growth.
With respect to capital deployment, ProAssurance bought back about 0.02 million shares worth around $0.8 million in the second quarter and has $109.6 million remaining under its authorization.
However, volatility in premium retention in the company’s physician business due to increased competition; weak investment portfolio primarily containing fixed income securities adversely impacted by low interest rates remains concern. Moreover less control on expenses due to higher underwriting, policy acquisition and operating expenses are headwinds.
Stocks that Warrant a Look
Investors can also look at stocks from the same industry like Allied World Assurance Company Holdings, AG (AWH - Free Report) , Argo Group International Holdings, Ltd. and MS&AD Insurance Group Holdings, Inc. (MSADY - Free Report) . Each of these stocks sports 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 >>