ProAssurance Continues To Impress: Time To Buy The Stock?

On Sep 12, 2016, we issued an updated research report on ProAssurance Corporation (NYSE:PRA) .

The Birmingham-based company caters to the property and casualty insurance needs of physicians, dentists, other healthcare providers and healthcare facilities through its subsidiaries. A major portion of the company’s economic and geographic growth is driven by mergers and acquisitions, which are supported by its financial strength. Moreover, the company is on track to bolster its operating efficiency. In keeping with this, it has started to simplify its business structure by merging its subsidiaries.

Despite persistently low interest rates and continuous threats from new entrants, ProAssurance’s core operations have been improving significantly over the past few quarters. Both gross premiums written and net premiums earned reflected steady growth in the initial quarters of 2016.

The company’s secure capital position has not only helped it grow inorganically, but has also supported it to create value for investors by returning more via share buybacks as well as paying quarterly dividends and special dividends. ProAssurance bought back about 0.02 million shares worth approximately $0.8 million in the last reported quarter and still has $109.6 million remaining under its authorization. This month, the board of directors of the company announced a cash dividend of $0.31 per common share, which is payable on Oct 7.

This Zacks Rank #2 (Buy) insurer also carries an investment grade rating by virtue of its strong risk-adjusted capitalization, favorable operating performance and strong business profile. Recently, A.M. Best reiterated the issuer credit ratings (ICR) of “a-” of the company and affirmed both the financial strength rating (FSR) and the ICR of its indirect subsidiaries.

However, volatility in premium retention in the company’s physician business, weak investment portfolio containing fixed income securities, poor expense management remain headwinds.

Stocks to Consider

Some better-ranked stocks from the same space include Allied World Assurance Company Holdings, AG (NYSE:AWH) , National Interstate Corporation (NASDAQ:NATL) and NMI Holdings Inc (NASDAQ:NMIH) . All of the stocks sport Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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