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ProAssurance Corporation (PRA)
NYSE:PRA
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ProAssurance
(NYSE:PRA)
74Outperform
Positive Factors
Acquisition
The stock price of PRA has increased significantly following the news of the acquisition.
Financial Performance
ProAssurance reported 4Q24 operating EPS of $0.36/share, beating expectations and estimates.
Market Valuation
ProAssurance's shares are trading at a significant 40%+ discount to ex-AOCI book value, which is seen as an overreaction.
Negative Factors
Downgrade
The rating has been downgraded to Underperform due to limited upside potential in the stock price while the acquisition by The Doctors Co. is pending regulatory approval.
Market Environment
ProAssurance has been playing defense amidst a difficult market backdrop, struggling to grow due to strong competition.
Revenue Decline
The revenue is expected to experience a low single-digit decline, with margins improving but still below the levels of specialty peers.
ProAssurance (PRA) vs. S&P 500 (SPY)
Market Cap
$1.18B
Dividend YieldN/A
Average Volume (3M)1.65M
Price to Earnings (P/E)22.3
Beta (1Y)0.37
Revenue Growth1.16%
EPS GrowthN/A
CountryUS
Employees1,036
SectorFinancial
Sector Strength88
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)1.03
Shares Outstanding51,156,822
10 Day Avg. Volume749,115
30 Day Avg. Volume1,648,376
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.07
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit1.10
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.00Price Target Upside-21.74% Downside
Rating ConsensusHold
Number of Analyst Covering4
ProAssurance Business Overview & Revenue Model
Company DescriptionProAssurance Corporation, through its subsidiaries, provides property and casualty insurance, and reinsurance products in the United States. The company operates through Specialty Property and Casualty, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, and Lloyd's Syndicate segments. It offers professional liability insurance for healthcare providers and institutions, and attorneys; liability insurance for medical technology and life sciences risks; and workers' compensation insurance, such as guaranteed cost policies, policyholder dividend policies, retrospectively rated policies, and deductible policies, as well as alternative market solutions that include program design, fronting, claims administration, risk management, SPC rental, asset management, and SPC management services for individual companies, agencies, groups, and associations. The company also participates in Lloyd's of London Syndicate 1729, which underwrites property and casualty insurance, and reinsurance. It markets its products through independent agencies and brokers, as well as an internal sales force. The company was founded in 1976 and is headquartered in Birmingham, Alabama.
How the Company Makes MoneyProAssurance makes money primarily through the underwriting of insurance policies. Its key revenue streams include premiums collected from policyholders in the healthcare professional liability sector, which is its largest segment. The company also generates income from investment activities, leveraging the premiums collected to invest in a diversified portfolio of fixed-income securities, and to a lesser extent, equities. Additionally, ProAssurance may engage in reinsurance transactions, which can either involve ceding a portion of its underwritten risks to other insurers or assuming risks from other companies. Strategic partnerships with healthcare and legal associations also contribute to its ability to attract and retain clients, thereby enhancing its revenue generation capabilities.
ProAssurance Financial Statement Overview
Summary
ProAssurance has shown a positive trend in revenue and profitability, with a strong gross profit margin and improved net profit margin. The balance sheet is stable with low debt, but cash flow management needs improvement despite turning positive.Income Statement
ProAssurance has shown a positive revenue growth trend with a 1.16% increase from 2023 to 2024. The gross profit margin remains strong at 100%, indicating efficient management of production costs. However, net profit margin improved from a negative in 2023 to 4.58% in 2024, showing a recovery in profitability. The EBIT margin at 84% is robust, but EBITDA is not reported in 2024, limiting full margin analysis.68
Positive
Balance Sheet
The company has a low debt-to-equity ratio of 0.01 in 2024, showcasing strong leverage management. Stockholders' equity increased, enhancing stability. However, the equity ratio decreased slightly, indicating a rise in liabilities compared to assets. ROE improved significantly to 4.39% from a negative in 2023, reflecting better returns for shareholders.72
Positive
Cash Flow
Free cash flow turned positive in 2024 but remains modest. Operating cash flow to net income ratio improved, indicating better cash earnings quality. Despite this, the free cash flow growth and the free cash flow to net income ratio highlight potential fluctuations and the need for better cash flow management.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.15B | 1.14B | 1.10B | 1.08B | 886.86M | Gross Profit |
| 1.15B | 1.14B | 1.10B | 1.08B | 886.86M | EBIT |
| 966.50M | 0.00 | 14.16M | 137.67M | -223.53M | EBITDA |
| 0.00 | 10.02M | 52.22M | 203.57M | -180.18M | Net Income Common Stockholders |
| 52.74M | -38.60M | -402.00K | 144.12M | -175.73M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 309.80M | 65.90M | 3.75B | 4.19B | 3.01B | Total Assets |
| 5.57B | 5.63B | 6.44B | 6.61B | 5.02B | Total Debt |
| 17.39M | 444.31M | 446.99M | 445.83M | 304.83M | Net Debt |
| -37.49M | 378.41M | 417.03M | 302.23M | 89.05M | Total Liabilities |
| 4.37B | 4.52B | 4.60B | 4.76B | 3.31B | Stockholders Equity |
| 1.20B | 1.11B | 1.84B | 1.85B | 1.72B |
| Cash Flow | Free Cash Flow | |||
| 10.33M | -54.67M | -34.19M | 70.13M | 84.86M | Operating Cash Flow |
| 10.33M | -49.88M | -29.84M | 73.97M | 92.34M | Investing Cash Flow |
| -13.89M | 141.14M | -62.00M | -85.53M | -8.48M | Financing Cash Flow |
| -7.25M | -55.31M | -21.80M | -60.62M | -43.45M |
ProAssurance Technical Analysis
Positive
23.00
Price Trends
20.23
Positive
17.81
Positive
16.06
Positive
Market Momentum
0.64
Positive
65.89
Neutral
66.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRA, the sentiment is Positive. The current price of 23 is below the 20-day moving average (MA) of 23.15, above the 50-day MA of 20.23, and above the 200-day MA of 16.06, indicating a neutral trend. The MACD of 0.64 indicates Positive momentum. The RSI at 65.89 is Neutral, neither overbought nor oversold. The STOCH value of 66.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PRA.
ProAssurance Risk Analysis
ProAssurance disclosed 35 risk factors in its most recent earnings report. ProAssurance reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ProAssurance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $727.01M | 11.98 | 8.18% | 2.23% | 14.41% | ― | |
74 Outperform | $1.18B | 22.33 | 4.56% | ― | 1.16% | ― | |
72 Outperform | $1.59B | 16.62 | 28.26% | 1.08% | 36.21% | 18.17% | |
71 Outperform | $1.73B | 17.06 | 8.35% | 3.24% | 6.92% | 129.52% | |
70 Outperform | $1.24B | 31.92 | 13.60% | ― | 50.21% | 37.28% | |
69 Neutral | $1.16B | 16.21 | 8.66% | 4.64% | 21.61% | 273.90% | |
64 Neutral | $12.64B | 9.74 | 8.05% | 17044.60% | 12.66% | -4.62% |
* Financial Sector Average
Performance Comparison
PRA
ProAssurance
23.00
9.18
66.43%
HMN
Horace Mann Educators
42.25
5.31
14.37%
SAFT
Safety Insurance Group
77.58
0.09
0.12%
UFCS
United Fire Group
28.63
5.96
26.29%
HCI
HCI Group
147.69
38.47
35.22%
BOW
Bowhead Specialty Holdings Inc.
41.42
15.72
61.17%
ProAssurance Earnings Call Summary
Earnings Call Date:Feb 24, 2025
(Q4-2024)
| % Change Since: 63.00%|
Next Earnings Date:May 12, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant improvements in operating earnings, investment income, and strategic initiatives in both the Specialty P&C and workers' compensation segments. However, these positives were counterbalanced by challenges such as the negative impact from Lloyd's Syndicate losses, a decline in net written premiums, and increased expense ratios. While the company showed steady progress in its core operations, some financial setbacks were noted.Q4-2024 Updates
Positive Updates
Improved Operating Earnings
ProAssurance reported its fifth consecutive quarter of improved operating earnings, highlighting progress in the medical professional liability business.
Specialty P&C Segment Progress
The Specialty P&C segment's full-year combined ratio improved by nearly five points to 104%, with favorable prior accident year reserve development.
Renewal Premium Increases
Renewal premium increases in the fourth quarter were 10% for standard MPL business and 8% for specialty MPL, leading to a cumulative increase of almost 70% since 2018.
Workers' Compensation Segment Initiatives
The workers' compensation segment improved its combined ratio for the quarter and the year, leveraging new systems and AI tools to enhance profitability and efficiency.
Investment Income Growth
Net investment income rose 9% for the quarter and 12% for the year, taking advantage of the rate environment with new purchase yields of approximately 5.8%.
Book Value Per Share Increase
Reported book value per share rose by $1.67 to $23.49, with adjusted book value per share increasing to $26.86.
Negative Updates
Lloyd's Syndicate Loss Impact
A significant fourth-quarter increase in IBNR reserve from aviation risks reduced fourth-quarter net income by $5.3 million, affecting the Specialty P&C segment's combined ratio by about three points.
Decline in Net Written Premiums
Net written premiums declined for both the fourth quarter and full year in the Specialty P&C segment, reflecting disciplined pricing strategies.
Higher Expense Ratios
Increased incentive-based compensation costs led to higher expense ratios in all segments, impacting the overall expense management.
Company Guidance
In the fourth quarter 2024 earnings call, ProAssurance Corporation reported its fifth consecutive quarter of improved operating earnings, highlighting a Specialty P&C segment combined ratio of 101%, improved by nearly nine points from favorable prior accident year reserve development. Full-year 2024 saw a nearly five-point enhancement in the combined ratio to 104%, alongside a 20-point improvement in the accident year loss and LAE ratio since 2019, due to strategic initiatives and premium increases. The company achieved a 10% renewal premium increase in standard MPL and 8% in the specialty portion, bringing cumulative increases since 2018 to nearly 70%. Retention of existing premiums was solid at 83%. In workers' compensation, net written premiums rose by $4 million, with a full-year combined ratio of 114% and a net loss ratio of 77%, reflecting strategic pricing and underwriting efforts. ProAssurance emphasized disciplined underwriting, use of predictive analytics, and investment in innovation tools to maintain a competitive edge, resulting in a full-year operating earnings of $0.95 per share and a reported book value per share increase to $23.49.ProAssurance Corporate Events
Business Operations and StrategyFinancial Disclosures
ProAssurance Reports Strong Q4 2024 Financial Results
Positive
Feb 24, 2025
ProAssurance Corporation reported its financial results for the fourth quarter and full-year 2024, showing a net income of $16.2 million for the quarter and $52.7 million for the year. The company highlighted a specialty P&C segment combined ratio of 100.9% and an 8% increase in specialty P&C renewal premiums, reflecting ongoing efforts to achieve sustained profitability. Despite a slight decrease in gross premiums written, the company benefited from increased net investment income and solid returns from limited partnership investments. ProAssurance continues to focus on disciplined claims management and underwriting in targeted healthcare market segments, while strategically shrinking in areas where market conditions are challenging.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.