On Feb 16, Zacks Investment Research upgraded ProAssurance Corp. ( PRA - Analyst Report ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

ProAssurance has remained steady based on its strong third-quarter results, followed by the closure of two acquisitions – Independent Nevada Doctors Insurance Exchange (INDIE) and Medmarc Insurance Group – in the past two months. While the recent stock split makes the stock more attractive to a diverse group of investors, the special dividend payout in Dec 2012 boosted shareholders’ confidence in the stock.

Moreover, this independently traded specialty writer of medical professional liability insurancedelivered positive earnings surprises in all of the last 4 quarters with an average beat of 38.7%. The long-term expected earnings growth rate for this stock is 7.5%.

On Nov 6, ProAssurance reported third-quarter 2012 operating earnings per share of $1.71, striding ahead of the Zacks Consensus Estimate of $1.61 by 6.2%. Growth was driven by a 8.6% year-over-year accretion in total revenue to $176 million, while total expenses witnessed a decline of 6.8% to $92.4 million.

Consequently, the Zacks Consensus Estimate for 2012 remained flat at $4.01 per share as no revisions were made to estimates over the last 30 days. Following a similar revision trend, the Zacks Consensus Estimate rose by a penny to $3.67 per share for 2014.

This reflects that though intense price and product competition along with regulatory challenges limit the desired upside, benefits of geographic diversity, stable ratings, improving ROE and strong financial position are likely to have a positive impact on ProAssuarnce over time.

Other Stocks to Consider

Other strong performers in the insurance sector include XL Group Plc ( XL - Analyst Report ) , First American Financial Corp. ( FAF - Snapshot Report ) and Aegon NV ( AEG - Snapshot Report ) , all of which carry a Zacks Rank #1 (Strong Buy).