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Is it the Right Time to Offload ProAssurance (PRA) Stock?
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In the last six months, ProAssurance Corporation (PRA - Free Report) stock has underperformed the Zacks Property & Casualty Insurance industry. The stock has gained 13% while the industry has registered an increase of 16%. This underperformance may be attributed to the headwinds faced by the company over the past few years.
ProAssurance’s physician business remains a drag due to volatility in premium retention. Increased competition has led to a decline in retention rate since 2011. This continuous loss of insured clients is likely to put pressure on premiums, in turn, limiting top-line growth.
Another area of concern is the company’s investment portfolio, which primarily consists of fixed income securities. The company’s net investment results have been deteriorating since 2011. However, the interest rate hikes in Dec 2016 and Mar 2017 raised optimism for the company. The company hopes to see better days as interest rates have started increasing.
The company has also been witnessing a rise in underwriting, policy acquisition and operating expenses since 2009. Underwriting expense ratio has also been deteriorating since 2010. The company needs to implement a strong expense management program in order to secure its margins.
The stock also seems to be overvalued. Its Price to Cash flow (PCF) ratio of 26.8 is higher than the industry’s 8.3. Another important valuation ratio – Price to Sales (PS) – is 3.77 compared with the industry average of 1.22.
Zacks Rank and Stocks to Consider:
ProAssurance presently has a Zacks Rank #4 (Sell).
American Financial offers property and casualty (P&C) insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Argo Group International Holdings underwrites specialty insurance and reinsurance products in the P&C market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%.
The Progressive Corporation offers personal and commercial P&C insurance, and other specialty P&C insurance and related services primarily in the United States. The company delivered positive surprises in two of the last four quarters with an average beat of 1.32%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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Is it the Right Time to Offload ProAssurance (PRA) Stock?
In the last six months, ProAssurance Corporation (PRA - Free Report) stock has underperformed the Zacks Property & Casualty Insurance industry. The stock has gained 13% while the industry has registered an increase of 16%. This underperformance may be attributed to the headwinds faced by the company over the past few years.
ProAssurance’s physician business remains a drag due to volatility in premium retention. Increased competition has led to a decline in retention rate since 2011. This continuous loss of insured clients is likely to put pressure on premiums, in turn, limiting top-line growth.
Another area of concern is the company’s investment portfolio, which primarily consists of fixed income securities. The company’s net investment results have been deteriorating since 2011. However, the interest rate hikes in Dec 2016 and Mar 2017 raised optimism for the company. The company hopes to see better days as interest rates have started increasing.
The company has also been witnessing a rise in underwriting, policy acquisition and operating expenses since 2009. Underwriting expense ratio has also been deteriorating since 2010. The company needs to implement a strong expense management program in order to secure its margins.
The stock also seems to be overvalued. Its Price to Cash flow (PCF) ratio of 26.8 is higher than the industry’s 8.3. Another important valuation ratio – Price to Sales (PS) – is 3.77 compared with the industry average of 1.22.
Zacks Rank and Stocks to Consider:
ProAssurance presently has a Zacks Rank #4 (Sell).
Some better-ranked stocks from the insurance industry include American Financial Group, Inc. (AFG - Free Report) , Argo Group International Holdings, Ltd. and The Progressive Corporation (PGR - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
American Financial offers property and casualty (P&C) insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Argo Group International Holdings underwrites specialty insurance and reinsurance products in the P&C market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%.
The Progressive Corporation offers personal and commercial P&C insurance, and other specialty P&C insurance and related services primarily in the United States. The company delivered positive surprises in two of the last four quarters with an average beat of 1.32%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>