Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Insurance - Property & Casualty industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Insurance - Property & Casualty Stock News

Before choosing which top Insurance - Property & Casualty stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The sub-industry of property and casualty insurance has a promising fundamental outlook. Despite some inflation in claim costs brought on by pandemics and some uncertainty regarding the size of claims resulting from the conflict in Ukraine, industry profitability is expected to increase in 2022 due to an anticipated decrease in the number of significant global catastrophe claims that have plagued most insurers in recent years. However, it's likely that these losses will force the insurance industry to release adequate extra underwriting capacity, leading to firmer rates across many lines of coverage. The state of the global and domestic economies overall, as well as how well they recover from the recession brought on by COVID19, will determine how much demand there is for specific types of insurance products, particularly those in the commercial lines sector. The sector has $989 billion in surplus (or capital) from policyholders as of September 30, 2021 (the most recent date known), which helped to fund its $701 billion written premium base. Less than a 1:1 ratio was being used by the sector to leverage its capital. The industry has "excess" capital of close to $600 billion by assuming a historical (and somewhat theoretical) benchmark 2:1 leverage of capital. Insurers will be able to take advantage of higher rates and a rise in coverage demand during an economic recovery thanks to this "extra" capital (or underwriting capacity). The S&P Property & Casualty Insurance Index increased by 8.6% year-to-date until March 18, 2022, while the S&P 1500 Index fell by 6.2%. The S&P Property & Casualty Insurance Index increased by 16% in 2021, while the S&P 1500 Index increased by 26.7%.

Why Focus on Undervalued Insurance - Property & Casualty Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Insurance - Property & Casualty Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Insurance - Property & Casualty industry for Thursday, February 01, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Insurance - Property & Casualty industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Enact Holdings Inc’s Value Grade

Value Grade:

Enact Holdings, Inc. is a private mortgage insurance company. The Company is engaged in the business of writing and assuming residential mortgage guaranty insurance. The Company operates its business through its primary insurance subsidiary, Enact Mortgage Insurance Corporation, (EMICO). The insurance protects lenders and investors against certain losses resulting from nonpayment of loans secured by mortgages, deeds of trust, or other instruments constituting a lien on residential real estate. The Company offers private mortgage insurance products predominantly insuring prime-based, individually underwritten residential mortgage loans. Its primary mortgage insurance enables borrowers to buy homes with a down payment. Its primary mortgage insurance also facilitates the sale of these low-down payment mortgage loans in the secondary mortgage market, which are sold to government-sponsored enterprises. It also performs fee-based contract underwriting services for mortgage lenders.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Enact Holdings Inc has a Value Score of 76, which is considered to be undervalued.

When you look at Enact Holdings Inc’s price-to-sales ratio at 4.02 compared to the industry median at 1.23, this company has a higher price relative to revenue compared to its peers. This could make Enact Holdings Inc’s stock less attractive for value investors.

Enact Holdings Inc’s price-earnings ratio is 7.10 compared to the industry median at 12.17. This means it has a lower share price relative to earnings compared to its peers. This could make Enact Holdings Inc more attractive for value investors.

Now, let’s assess Enact Holdings Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 4.9, when compared to the industry median of 6.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Enact Holdings Inc’s shareholder yield is higher than its industry median ratio of 2.76%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Enact Holdings Inc’s price-to-book ratio is lower than its industry median ratio of 1.36. This could make Enact Holdings Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Enact Holdings Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Enact Holdings Inc’s price-to-free-cash-flow ratio is higher than its industry median ratio of 9.10. This could make Enact Holdings Inc less attractive because the higher P/FCF ratio indicates that Enact Holdings Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Allstate Corp’s Value Grade

Value Grade:

The Allstate Corporation is a holding company for Allstate Insurance Company. The Company's business is conducted principally through Allstate Insurance Company and other subsidiaries. It is primarily engaged in the property and casualty insurance business in the United States and Canada. The Company?s segments include Allstate Protection, Run-off Property-Liability, Protection Services, Allstate Health and Benefits, and Other. The Allstate Protection segment offers private passenger auto, homeowners, other personal lines, and commercial insurance through agents, contact centers and online. The Run-off Property-Liability segment includes property and casualty insurance coverage. The Protection Services segment includes Allstate Protection Plans, Allstate Dealer Services, Allstate Roadside, Arity and Allstate Identity Protection. The Allstate Health and Benefits segment offers voluntary benefits and individual life and health products, and other health insurance products.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Allstate Corp has a Value Score of 67, which is considered to be undervalued.

Allstate Corp’s price-to-book ratio is lower than its peers. This could make Allstate Corp more attractive for value investors when compared to the industry median at 1.36.

You can read more about Allstate Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Cincinnati Financial Corporation’s Value Grade

Value Grade:

Cincinnati Financial Corporation is engaged in the business of property casualty insurance, which markets through independent insurance agencies in approximately 46 states. The Company operates through five segments: Commercial lines insurance, Personal lines insurance, Excess and surplus lines insurance, Life insurance, and Investments. The Commercial lines insurance segment includes five commercial business lines, such as commercial casualty, commercial property, commercial auto, workers? compensation, and other commercial lines. The Personal lines insurance segment includes three business lines, including personal auto, homeowner, and other personal lines. The Excess and surplus lines insurance segment includes commercial casualty and commercial property. The Life insurance segment includes term life insurance, worksite products, whole life insurance, and universal life insurance. The Investments segment invests in fixed-maturity investments and equity investments.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cincinnati Financial Corporation has a Value Score of 71, which is considered to be undervalued.

Cincinnati Financial Corporation’s price-earnings ratio is 10.4 compared to the industry median at 12.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Cincinnati Financial Corporation more attractive for value investors.

Cincinnati Financial Corporation’s price-to-book ratio is lower than its peers. This could make Cincinnati Financial Corporation more attractive for value investors when compared to the industry median at 1.36.

You can read more about Cincinnati Financial Corporation’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Cna Financial Corp’s Value Grade

Value Grade:

CNA Financial Corporation is an insurance holding company. The Company?s segments include Specialty, Commercial, International, Life & Group and Corporate & Other. Its Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters. Its Commercial segment works with a network of brokers and independent agents to market a range of property and casualty insurance products to all types of insureds targeting small business, construction, middle markets and other commercial customers. The International segment underwrites property and casualty coverages on a global basis through a branch operation in Canada, a European business consisting of insurance companies based in the United Kingdom and Luxembourg and Hardy, its Lloyd's syndicate. The Life & Group segment includes the results of its long-term care business that is in run-off.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cna Financial Corp has a Value Score of 87, which is considered to be undervalued.

Cna Financial Corp’s price-earnings ratio is 11.0 compared to the industry median at 12.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Cna Financial Corp more attractive for value investors.

Cna Financial Corp’s price-to-book ratio is lower than its peers. This could make Cna Financial Corp fairly attractive for value investors when compared to the industry median at 1.36.

You can read more about Cna Financial Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Fairfax Financial Holdings Ltd’s Value Grade

Value Grade:

Fairfax Financial Holdings Limited is a Canada-based holding company. The Company, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and the associated investment management. The Company’s segments include Property and Casualty Insurance and Reinsurance, Life insurance and Run-off and Non-insurance companies. The Property and Casualty Insurance and Reinsurance segment includes North American Insurers, Global Insurers and Reinsurers and International Insurers and Reinsurers. The Life Insurance and Run-off segment include Eurolife and Run-off. The Non-insurance companies segment includes restaurants and retail, Fairfax India, Thomas Cook India and others. Eurolife underwrites traditional life insurance policies (endowments, deferred annuities, whole life and term life), group benefits, including retirement benefits, and accident and health insurance policies. The North American Insurers include Northbridge, Crum & Forster and Zenith National.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Fairfax Financial Holdings Ltd has a Value Score of 93, which is considered to be undervalued.

Fairfax Financial Holdings Ltd’s price-earnings ratio is 5.4 compared to the industry median at 12.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Fairfax Financial Holdings Ltd more attractive for value investors.

Fairfax Financial Holdings Ltd’s price-to-book ratio is higher than its peers. This could make Fairfax Financial Holdings Ltd less attractive for value investors when compared to the industry median at 1.36.

You can read more about Fairfax Financial Holdings Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Insurance - Property & Casualty Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Insurance - Property & Casualty stocks as well as other industrys.

Choosing Which of the 5 Best Insurance - Property & Casualty Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Enact Holdings Inc stock has a Value Grade of B.
• Allstate Corp stock has a Value Grade of B.
• Cincinnati Financial Corporation stock has a Value Grade of B.
• Cna Financial Corp stock has a Value Grade of A.
• Fairfax Financial Holdings Ltd stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 undervalued stocks in the Insurance - Property & Casualty industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Insurance - Property & Casualty Stocks

Want to learn more about Insurance - Property & Casualty stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Insurance - Property & Casualty Stocks for Thursday, February 01
• 3 Undervalued Insurance - Property & Casualty Stocks for Wednesday, January 31
• What You Need to Know About Hanover Insurance Group Inc's Q4 Earnings
• What You Need to Know About MGIC Investment Corp's Q4 Earnings

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