ProAssurance Corporation (PRA Quick QuotePRA - Free Report) is well-poised to grow due to the rising investment returns and new business growth across business lines. Its disciplined inorganic growth strategy and cost-cutting efforts are also aiding its performance.

Outperformance & Zacks Rank

Over the past three months, shares of ProAssurance have gained 36.4%, outperforming the industry’s 6.9% growth. Headquartered in Birmingham, AL, PRA operates as a provider of property and casualty insurance, as well as reinsurance products. It has a market cap of $899.2 million.

Due to its solid prospects, this Zacks Rank #1 (Strong Buy) stock is worth adding to your portfolio at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s delve deeper.

The Zacks Consensus Estimate for ProAssurance’s current-year earnings is pegged at 31 cents per share, which has witnessed four upward estimate revisions in the past 30 days against none in the opposite direction. The estimate has improved 19.2% during this period. ProAssurance beat on earnings in two of the last four quarters and missed the same on the other occasions.

The consensus mark for current-year revenues is pegged at $1.1 billion. Rising premiums from Segregated Portfolio Cell Reinsurance are likely to support its top line. Our estimate for the unit’s 2023 net premiums written suggests more than 16% year-over-year growth.

Life sciences and traditional workers’ compensation business lines are expected to drive PRA’s growth in the long term. Also, higher investment returns, thanks to a high interest rate environment, will keep benefiting the company’s results. Our estimate for 2023 net investment income suggests more than 30% year-over-year growth.

We expect favorable price increases in most of its lines of business will likely drive growth for ProAssurance. Also, a gradual recovery in underwriting results over the long run will benefit its operations.

PRA’s numerous operational and structural changes to boost operational efficiency are working. This has helped the company lower its expense growth rate. Our estimate for its total expenses in 2023 indicates a 3.3% year-over-year decline, primarily due to lower underwriting, policy acquisition and operating expenses.

A Risk

However, there is a factor that investors should keep a careful eye on.

ProAssurance’s decreasing cash reserves are concerning. Notably, in the first half of 2023, net cash used in operating activities of PRA stood at $61.8 million, higher than the prior-year quarter’s figure of $3.7 million. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.

Other Key Picks

Some other top-ranked stocks in the broader finance space are Aegon N.V. (AEG Quick QuoteAEG - Free Report) , Trupanion, Inc. (TRUP Quick QuoteTRUP - Free Report) and Employers Holdings, Inc. (EIG Quick QuoteEIG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present.

The Zacks Consensus Estimate for Aegon’s current year earnings has improved 16.7% in the past 60 days. During this period, AEG has witnessed one upward estimate revision against none in the opposite direction.

The Zacks Consensus Estimate for Trupanion’s current year earnings has improved 9.2% in the past 30 days. It has witnessed four upward estimate revisions during this time against no movement in the opposite direction. Also, the consensus mark for TRUP’s revenues in 2023 suggests 19.5% year-over-year growth.

The consensus mark for Employers Holdings’ current year earnings indicates a 10.2% year-over-year increase. It has witnessed one upward estimate revision in the past month against no downward movement. Furthermore, the consensus estimate for EIG’s revenues in 2023 suggests 20.5% year-over-year growth.