ProAssurance (NYSE: PRA) and RLI (NYSE:RLI) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, institutional ownership, profitability, dividends, analyst recommendations and valuation.
Insider & Institutional Ownership
80.2% of ProAssurance shares are held by institutional investors. Comparatively, 83.7% of RLI shares are held by institutional investors. 1.8% of ProAssurance shares are held by company insiders. Comparatively, 6.1% of RLI shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares ProAssurance and RLI’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of recent ratings and target prices for ProAssurance and RLI, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
ProAssurance currently has a consensus target price of $58.00, suggesting a potential downside of 5.92%. RLI has a consensus target price of $41.67, suggesting a potential downside of 28.59%. Given ProAssurance’s stronger consensus rating and higher possible upside, analysts clearly believe ProAssurance is more favorable than RLI.
Volatility and Risk
ProAssurance has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500. Comparatively, RLI has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500.
ProAssurance pays an annual dividend of $1.24 per share and has a dividend yield of 2.0%. RLI pays an annual dividend of $0.84 per share and has a dividend yield of 1.4%. ProAssurance pays out 46.1% of its earnings in the form of a dividend. RLI pays out 46.7% 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. RLI has increased its dividend for 40 consecutive years. ProAssurance is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation & Earnings
This table compares ProAssurance and RLI’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|ProAssurance||$870.21 million||3.78||$151.08 million||$2.69||22.92|
|RLI||$816.33 million||3.15||$114.92 million||$1.80||32.42|
ProAssurance has higher revenue and earnings than RLI. ProAssurance is trading at a lower price-to-earnings ratio than RLI, indicating that it is currently the more affordable of the two stocks.
ProAssurance beats RLI on 9 of the 16 factors compared between the two stocks.
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.
RLI Corp. is a specialty insurance company. The Company underwrites selected property and casualty insurance through subsidiaries, as well as offers insurance coverages in both the specialty admitted, and excess and surplus markets. It operates through Casualty, Property and Surety segments. Its Casualty segment consists of commercial and personal umbrella, general liability, commercial transportation, professional services, small commercial, executive products, medical professional liability and other casualty businesses. Its property segment consists of commercial property, marine, specialty personal, property reinsurance and crop reinsurance businesses. Its surety segment consists of miscellaneous, commercial, contract and energy businesses. The Company conducts its operations principally through three insurance companies: RLI Insurance Company (RLI Ins.), Mt. Hawley Insurance Company (Mt. Hawley) and Contractors Bonding and Insurance Company (CBIC).
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