Reviewing ProAssurance Corporation (PRA) & Selective Insurance Group (SIGI)
ProAssurance Corporation (NYSE: PRA) and Selective Insurance Group (NASDAQ:SIGI) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, dividends, earnings, profitability and institutional ownership.
This is a breakdown of recent ratings and target prices for ProAssurance Corporation and Selective Insurance Group, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Selective Insurance Group||0||4||0||0||2.00|
ProAssurance Corporation presently has a consensus price target of $58.33, suggesting a potential upside of 8.93%. Selective Insurance Group has a consensus price target of $46.91, suggesting a potential downside of 8.46%. Given ProAssurance Corporation’s higher possible upside, equities analysts clearly believe ProAssurance Corporation is more favorable than Selective Insurance Group.
Volatility and Risk
ProAssurance Corporation has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, Selective Insurance Group has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500.
Earnings and Valuation
This table compares ProAssurance Corporation and Selective Insurance Group’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|ProAssurance Corporation||$890.60 million||3.21||$212.38 million||$2.78||19.26|
|Selective Insurance Group||$2.38 billion||1.26||$313.01 million||$2.88||17.80|
Selective Insurance Group has higher revenue and earnings than ProAssurance Corporation. Selective Insurance Group is trading at a lower price-to-earnings ratio than ProAssurance Corporation, indicating that it is currently the more affordable of the two stocks.
ProAssurance Corporation pays an annual dividend of $1.24 per share and has a dividend yield of 2.3%. Selective Insurance Group pays an annual dividend of $0.64 per share and has a dividend yield of 1.2%. ProAssurance Corporation pays out 44.6% of its earnings in the form of a dividend. Selective Insurance Group pays out 22.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
This table compares ProAssurance Corporation and Selective Insurance Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Selective Insurance Group||7.13%||10.82%||2.32%|
Institutional & Insider Ownership
79.8% of ProAssurance Corporation shares are owned by institutional investors. Comparatively, 77.7% of Selective Insurance Group shares are owned by institutional investors. 1.8% of ProAssurance Corporation shares are owned by insiders. Comparatively, 3.0% of Selective Insurance Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
About ProAssurance Corporation
ProAssurance Corporation (ProAssurance) is a holding company for property and casualty insurance companies. The Company provides professional liability insurance for healthcare professionals and facilities, professional liability insurance for attorneys, liability insurance for medical technology and life sciences risks, and workers’ compensation insurance. The Company operates through four segments. The Specialty property and casualty segment includes the Company’s professional liability business, and medical technology and life sciences business. The Workers’ compensation segment includes its workers’ compensation business. Lloyd’s Syndicate 1729 (Syndicate 1729) segment includes business of Syndicate 1729, which underwrites risks over a range of property and casualty insurance and reinsurance lines. The Corporate segment includes the Company’s investment operations managed at the corporate level and non-premium revenues generated outside of its insurance entities.
About Selective Insurance Group
Selective Insurance Group, Inc. is a holding company. As of December 31, 2016, the Company had 10 insurance subsidiaries, nine of which were licensed by various state departments of insurance to write specific lines of property and casualty insurance business. The remaining subsidiary is authorized by various state insurance departments to write property and casualty insurance in the excess and surplus lines (E&S) market. Its segments include Standard Commercial Lines, which consists of insurance products and services provided in the standard marketplace; Standard Personal Lines, which consists of insurance products and services, including flood insurance coverage that it writes through the National Flood Insurance Program (NFIP); E&S Lines, which consists of insurance products and services provided to customers not obtaining coverage in the standard marketplace, and investment segment invests insurance premiums, as well as amounts generated through its capital management strategies.
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