PRA
ProAssurance Corporation
$24.62
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 35.3% above fair value
You pay
$24.62
Bear
$12.74
Fair
$18.20
Bull
$23.66
Bear
$12.74
-48.2%
ROTCE 4.0% → 0.30x TBV
Fair
$18.20
-26.1%
ROTCE 4.1% → 0.30x TBV
Bull
$23.66
-3.9%
ROTCE 4.7% → 0.37x TBV
Key Value Driver
ROTCE (4.1%) vs. cost of equity (6.0%)
Implied Market Multiple
1.03x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $18.33 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $18.20 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (4.1%) is below the minimum investors require (6.0%). This means the bank is worth less than the net assets on its books.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly