By Zacks Equity Research

ProAssurance Corporation (PRA) stated that A.M. Best reiterated Financial Strength Rating (FSR) at 'A' of ProAssurance Group, while upgrading the outlook to positive.

ProAssurance Group comprises of ProAssurance Casualty, ProAssurance Indemnity and ProAssurance Specialty.

The credit rating agency reiterated FSR at 'A' (excellent) for Podiatry Insurance Company of America (PICA) and 'A-' for ProAssurance National Casualty and PACO Assurance Company.  The outlook for PACO is upgraded to stable but the agency affirmed the stable outlook for PICA and ProAssurance National Casualty.

The rating reflects ProAssurance's dominant market position, strong capital, solid business profile and continued favorable operational results. The credit rating agency also noted that the company continues to generate strong underwriting results on the back of traditional reserving practices, regulated standards and the ability to mitigate claims prudently.

We believe that the company's strong ratings scores will help retain investor confidence and augment its business going forward.

ProAssurance reported first-quarter operating earnings per share of $1.56, striding ahead of the Zacks Consensus Estimate of $1.41 and the year-ago quarter earnings per share of $1.46.

Improved earnings in the quarter were aided by higher revenues, which were partially offset by lower net investment results.

The Zacks Consensus Estimate for the second quarter and full year 2012 earnings per share is currently pegged at $1.53 and $7.57 respectively. This reflects a year-over-year decline of 12.1% and 16.3%.

Though it is dealing with intense price and product competition, weak rate environment, loss cost trends and regulatory challenges limit the desired upside in the sector, we believe the benefits of geographic diversity, aggressive claims defense, stable ratings, improving return-on-equity and strong financial position are likely to have a positive impact on the company over time.

We retain our "outperform" recommendation on ProAssurance. The quantitative Zacks #2 Rank (short-term "buy" rating) for the company indicates slight upward boost on the stock over the near term.

Headquartered in Birmingham, Alabama, ProAssurance Corporation operates as a holding company for property and casualty insurance companies. It competes with Berkshire Hathaway Inc. (BRK.A).

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