ProAssurance Corporation’s PRA has been suffering from volatility in premium retention, weakening investment portfolio and rising expenses. These headwinds have adversely affected shareholders’ confidence as evident from its price performance. Year to date, its shares have lost 3.4%, underperforming the industry’s gain of nearly 10%.
ProAssurance Corporation Price and Consensus
ProAssurance Corporation Price and Consensus | ProAssurance Corporation Quote
The company’s physician business has been underperforming due to volatility in premium retention. Increased competition has led to a decline in retention rate since 2011. This continuous loss of insured clients has also been putting pressure on premiums. This severely weighs on the top line.
Deteriorating net investment results has been a headwind for ProAssurance. The company’s net investment results have been deteriorating since 2011. However, the recent interest rate hikes have raised optimism for the company.
ProAssurance has also been facing a rise in underwriting, policy acquisition and operating expenses since 2009. Underwriting expenses started increasing since 2010. This in turn, has been putting pressure on the bottom line.
The stock also seems to be overvalued. Looking at its price-to-book ratio, investors may not agree to pay further premiums. Its trailing 12-month price-to-book ratio of 1.6 is higher than the median of 1.2 of its range and near the highest point of 1.8. It is also pegged slightly higher than the industry average of 1.5.
Zacks Rank and Stocks to Consider
ProAssurance presently has a Zacks Rank #5 (Strong Sell).
Investors interested in the finance sector can consider better-ranked stocks like Markel Corporation MKL, Health Insurance Innovations, Inc.HIIQ and Credit Acceptance Corporation CACC. While Markel and Health Insurance Innovations sport a Zacks Rank #1 (Strong Buy), Credit Acceptance carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Markel Corporation, the property and casualty insurer, delivered positive surprises in two of the last four quarters with an average of 21.1%.
Health Insurance Innovations, the life insurer, delivered positive surprises in all of the last four quarters with an average of 87.5%.
Credit Acceptance, a consumer loans providing company, delivered positive surprises in the trailing four quarters with an average of 6.7%.
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