ProAssurance Corporation PRA is well-poised for growth with cost-controlling efforts and growing net investment income. Also, new business growth is expected to benefit its Workers' Compensation Segment.
ProAssurance — with a market cap of $682.9 million — is a leading property and casualty insurance and reinsurance product provider in the United States. Due to its solid prospects, this currently Zacks Rank #3 (Hold) stock is worth retaining at the moment.
The Zacks Consensus Estimate for ProAssurance’s 2023 earnings is pegged at 52 cents per share, indicating a 15.6% rise from the prior-year reported figure. PRA beat earnings in two of the last four quarters and missed the same on two occasions, the average being 4.6%.
ProAssurance Corporation Price and EPS Surprise
ProAssurance Corporation price-eps-surprise | ProAssurance Corporation Quote
However, the consensus mark for revenues is pegged at $1.1 billion for 2023. This indicates a 4.7% rise from the year-ago period’s reading.
Numerous operational and structural changes are helping the company reduce its costs and boost operational efficiency. This is also improving its expense ratio. Our estimate for total expenses in 2023 and 2024 suggests a 9.3% and 6.7% year-over-year decline, respectively. This will bolster ProAssurance’s earnings.
PRA’s net investment income is on the rise due to improved average book yields stemming from fixed maturity investments. Our estimate for the metric for 2023 indicates 14.5% year-over-year growth.
Its strong dividend payment history is impressive. Its dividend yield of 1.6% remains way above the industry average of 0.3%. The company also declares special dividends from time to time. Strategic acquisitions help PRA scale its business and bring in more cash.
Improved audit premiums and new business growth are likely to continue supporting its Workers' Compensation Insurance Segment. The unit reported gross premiums written of $73.4 million in the first quarter, which grew 1.8% year over year.
Of late, there are a few factors that are impeding the stock’s growth.
Its total debt-to-total capital of 27.3% remains above the industry’s average of 19.7%. PRA exited the first quarter with cash and cash equivalents of $56.4 million, while debt-less unamortized debt issuance costs came in at $427.5 million.
ProAssurance’s return on equity of 0.8% is significantly lower than the industry average of 6.9%, reflecting a comparatively inefficient utilization of its capital. Nevertheless, we believe that a systematic and strategic plan of action bodes well in the long run.
Some better-ranked stocks in the broader finance space are Allianz SE ALIZY, Lemonade, Inc. LMND and Argo Blockchain plc ARBK, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Allianz’s 2023 earnings is pegged at $2.53 per share, indicating 48% year-over-year growth. Over the past 60 days, ALIZY has witnessed one upward estimate revision against none in the opposite direction.
The Zacks Consensus Estimate for Lemonade’s 2023 earnings suggests 15.9% year-over-year growth. Also, the consensus mark for LMND’s 2023 revenues implies a 53.6% year-over-year rise.
The Zacks Consensus Estimate for Argo Blockchain’s 2023 bottom line has improved 47.9% over the past month. During this time, ARBK witnessed two upward estimate revisions against none in the opposite direction.
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