Head-To-Head Review: United Fire Group (UFCS) and ProAssurance (NYSE:PRA)

ProAssurance (NYSE: PRA) and United Fire Group (NASDAQ:UFCS) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Institutional & Insider Ownership

80.1% of ProAssurance shares are owned by institutional investors. Comparatively, 58.4% of United Fire Group shares are owned by institutional investors. 1.8% of ProAssurance shares are owned by company insiders. Comparatively, 5.8% of United Fire Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

ProAssurance has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, United Fire Group has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Profitability

This table compares ProAssurance and United Fire Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ProAssurance 16.18% 6.75% 2.50%
United Fire Group 1.49% 1.32% 0.30%

Valuation and Earnings

This table compares ProAssurance and United Fire Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ProAssurance $870.21 million 3.37 $151.08 million $2.69 20.43
United Fire Group $1.14 billion 0.98 $49.90 million $0.63 70.91

ProAssurance has higher earnings, but lower revenue than United Fire Group. ProAssurance is trading at a lower price-to-earnings ratio than United Fire Group, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations for ProAssurance and United Fire Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ProAssurance 0 4 0 0 2.00
United Fire Group 0 2 1 0 2.33

ProAssurance currently has a consensus target price of $58.33, indicating a potential upside of 6.16%. United Fire Group has a consensus target price of $46.33, indicating a potential upside of 3.72%. Given ProAssurance’s higher possible upside, equities analysts clearly believe ProAssurance is more favorable than United Fire Group.

Dividends

ProAssurance pays an annual dividend of $1.24 per share and has a dividend yield of 2.3%. United Fire Group pays an annual dividend of $1.12 per share and has a dividend yield of 2.5%. ProAssurance pays out 46.1% of its earnings in the form of a dividend. United Fire Group pays out 177.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

ProAssurance beats United Fire Group on 9 of the 16 factors compared between the two stocks.

About ProAssurance

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 United Fire Group

United Fire Group, Inc., formerly United Fire & Casualty Company, is engaged in the business of writing property and casualty insurance and life insurance and selling annuities. The Company operates in two segments: property and casualty insurance, and life insurance. The Company’s property and casualty insurance segment consists of commercial lines insurance, including surety bonds, personal lines insurance and assumed insurance. Its life insurance segment consists of deferred and immediate annuities, universal life insurance products and traditional life insurance products. Its life insurance segment consists solely of the operations of United Life Insurance Company. On February 1, 2012, the Company completed a holding company reorganization of United Fire Group, Inc., United Fire & Casualty Company and UFC MergeCo, Inc. On March 28, 2011, the Company acquired Mercer Insurance Group, Inc. (Mercer Insurance Group).

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