ProAssurance (PRA) Hits 52-Week High On Solid Q2 Earnings

On Aug 10, 2016, shares of ProAssurance Corporation (NYSE:PRA) hit a 52-week high of $54.92, driven by strong second-quarter 2016 results. About 0.2 million shares exchanged hands in the last trading session and the stock finally closed at $54.69, up 0.2%. Year to date, the stock has returned 12.7%. This is better than 6.4% returned by the S&P 500.

ProAssurance delivered operating earnings per share of 67 cents in the second quarter that surpassed the Zacks Consensus Estimate by 19.6%. The bottom line also improved 4.6% year over year on higher net premiums earned. This Zacks Rank #2 (Buy) Property and Casualty (P&C) insurer delivered an average positive surprise of 4.7% in last four quarters.

The company’s gross premiums grew 0.5% year over year driven by 3.1% increase in Specialty P&C premiums. ProAssurance witnessed development in the quarter due to better-than-expected loss severity trends. Operating ratio improved 330 basis points (bps) in the quarter. ProAssurance improves its return on equity by 230 bps on the back of its strong quarterly performance. Book value per share increased 3.4% from year-end 2015.

ProAssurance also engages in prudent capital deployment to enhance shareholder value. The company spent $2.1 million to buy back shares till date and has $109.6 million remaining under its authorization

Recently, A.M. Best reiterated the issuer credit ratings (ICR) of “a-” of ProAssurance. Concurrently, the rating giant affirmed the financial strength rating and the issuer credit ratings (ICR) of its indirect subsidiaries. Outlook remains stable. The rating affirmations came on the back of strong risk-adjusted capitalization, favorable operating performance and strong business profile. Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence as well as in maintaining credit worthiness. We believe that the ratings will help ProAssurance to retain investor confidence and in writing more businesses, going forward.

Backed by earnings outperformance, the Zacks consensus Estimate was also moved north as most of the estimates were revised higher over the last 7 days. The same increased 4% to $2.36 for 2016 and $2.39 for 2017.

Stocks that Warrant a Look

Investors can also consider other stocks from the same industry like Allied World Assurance Company Holdings, AG (NYSE:AWH) , Argo Group International Holdings, Ltd. (NASDAQ:AGII) and MS&AD Insurance Group Holdings, Inc. (OTC:MSADY) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).