ProAssurance Corporation (NYSE: PRA) and American Financial Group (NYSE:AFG) are both mid-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, valuation, profitability, dividends, risk and analyst recommendations.

Profitability

This table compares ProAssurance Corporation and American Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ProAssurance Corporation 16.80% 6.59% 2.50%
American Financial Group 11.89% 11.66% 1.07%

Insider & Institutional Ownership

79.8% of ProAssurance Corporation shares are held by institutional investors. Comparatively, 62.2% of American Financial Group shares are held by institutional investors. 1.8% of ProAssurance Corporation shares are held by insiders. Comparatively, 13.7% of American Financial Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

ProAssurance Corporation pays an annual dividend of $1.24 per share and has a dividend yield of 2.2%. American Financial Group pays an annual dividend of $1.40 per share and has a dividend yield of 1.3%. ProAssurance Corporation pays out 44.6% of its earnings in the form of a dividend. American Financial Group pays out 15.7% 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. American Financial Group has increased its dividend for 11 consecutive years.

Earnings & Valuation

This table compares ProAssurance Corporation and American Financial Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ProAssurance Corporation $890.60 million 3.38 $212.38 million $2.78 20.25
American Financial Group $6.49 billion 1.43 $1.16 billion $8.89 11.89

American Financial Group has higher revenue and earnings than ProAssurance Corporation. American Financial 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.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for ProAssurance Corporation and American Financial Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ProAssurance Corporation 0 4 0 0 2.00
American Financial Group 0 2 1 0 2.33

ProAssurance Corporation presently has a consensus price target of $58.00, indicating a potential upside of 3.02%. American Financial Group has a consensus price target of $93.00, indicating a potential downside of 11.98%. Given ProAssurance Corporation’s higher possible upside, analysts clearly believe ProAssurance Corporation is more favorable than American Financial Group.

Volatility & Risk

ProAssurance Corporation has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, American Financial Group has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.

Summary

American Financial Group beats ProAssurance Corporation on 10 of the 17 factors compared between the two stocks.

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 American Financial Group

American Financial Group, Inc. (AFG) is a holding company engaged primarily in property and casualty insurance businesses. The Company, through Great American Insurance Group, focuses on commercial products for businesses, and is engaged in the sale of fixed and fixed-indexed annuities in the retail, financial institutions and education markets. It has four segments: Property and casualty insurance, Annuity, Run-off long-term care and life, and Other. It reports its property and casualty insurance business in specialty sub-segments, including Property and transportation, Specialty casualty and Specialty financial. AFG sells traditional fixed and fixed-indexed annuities in the retail, financial institutions and education markets through independent producers and through direct relationships with certain financial institutions. AFG also sells single premium annuities in financial institutions through direct relationships with certain banks and through independent agents and brokers.

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