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.

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 Tuesday, May 28, 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.

American International Group Inc’s Value Grade

Value Grade:

American International Group, Inc. (AIG) is a global insurance company. The Company provides insurance solutions that help businesses and individuals in approximately 190 countries and jurisdictions protect their assets and manage risks through AIG operations and network partners. The Company operates through three segments: General Insurance, Life and Retirement, and Other Operations. Its General Insurance segment consists of two segments: North America and International. Its Life and Retirement segment consists of four segments: Individual Retirement, Group Retirement, Life Insurance and Institutional Markets. Its North America and International segments consist of two product categories: Commercial Lines, which consists of Liability, Financial Lines, Property and Global Specialty, and Personal Insurance, which consists of Personal Lines, and Accident and Health. Its individual retirement consists of fixed annuities, fixed index annuities and variable annuities.

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.

American International Group Inc has a Value Score of 89, which is considered to be undervalued.

When you look at American International Group Inc’s price-to-sales ratio at 1.10 compared to the industry median at 1.27, this company has a lower price relative to revenue compared to its peers. This could make American International Group Inc’s stock more attractive for value investors.

American International Group Inc’s price-earnings ratio is 11.65 compared to the industry median at 12.34. This means it has a lower share price relative to earnings compared to its peers. This could make American International Group Inc more attractive for value investors.

Now, let’s assess American International Group Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 5.3, when compared to the industry median of 7.1, 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. American International Group Inc’s shareholder yield is higher than its industry median ratio of 2.14%. 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. American International Group Inc’s price-to-book ratio is lower than its industry median ratio of 1.34. This could make American International Group Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at American International Group Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. American International Group Inc’s price-to-free-cash-flow ratio is higher than its industry median ratio of 9.56. This could make American International Group Inc less attractive because the higher P/FCF ratio indicates that American International Group 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.

Horace Mann Educators Corporation’s Value Grade

Value Grade:

Horace Mann Educators Corporation is a financial services company focused on helping America's educators and others who serve the community. The Company's segments include Property & Casualty, Life & Retirement, Supplemental & Group Benefits, and Corporate & Other. The Property & Casualty segment's primary insurance products include private passenger auto insurance, residential home insurance, and personal umbrella insurance. The Life & Retirement segment markets 403(b) tax-qualified fixed, fixed indexed and variable annuities; the Horace Mann Retirement Advantage open architecture platform for 403(b)(7) and other defined contribution plans, and traditional term and whole life insurance products and indexed universal life (IUL) products. The Supplemental & Group Benefits segment offers employer-sponsored products including accident, critical illness, short-term disability and long-term disability, as well as worksite direct products including supplemental heart and supplemental cancer.

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.

Horace Mann Educators Corporation has a Value Score of 79, which is considered to be undervalued.

Horace Mann Educators Corporation’s price-earnings ratio is 21.6 compared to the industry median at 12.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Horace Mann Educators Corporation less attractive for value investors.

Horace Mann Educators Corporation’s price-to-book ratio is higher than its peers. This could make Horace Mann Educators Corporation less attractive for value investors when compared to the industry median at 1.34.

You can read more about Horace Mann Educators 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.

James River Group Holdings Ltd’s Value Grade

Value Grade:

James River Group Holdings, Ltd. is a Bermuda-based insurance holding company that owns and operates a group of specialty insurance companies. It operates through two specialty property-casualty insurance segments: Excess and Surplus Lines and Specialty Admitted Insurance. The Excess and Surplus Lines segment offers excess and surplus commercial lines liability and property insurance in every United States state, the District of Columbia, Puerto Rico and the United States Virgin Islands through James River Insurance and its wholly owned subsidiary, James River Casualty. The Specialty Admitted Insurance segment focuses on niche classes within the standard insurance markets with a primary focus on fronting business. Through Falls Lake National and its subsidiaries, it has admitted licenses and the authority to write excess and surplus lines insurance in 50 states and the District of Columbia and distributes through a variety of sources, including program administrators and MGAs.

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.

James River Group Holdings Ltd has a Value Score of 99, which is considered to be undervalued.

James River Group Holdings Ltd’s price-earnings ratio is 4.5 compared to the industry median at 12.3. This means that it has a lower price relative to its earnings compared to its peers. This makes James River Group Holdings Ltd more attractive for value investors.

James River Group Holdings Ltd’s price-to-book ratio is higher than its peers. This could make James River Group Holdings Ltd less attractive for value investors when compared to the industry median at 1.34.

You can read more about James River Group 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.

Loews Corp’s Value Grade

Value Grade:

Loews Corporation is a diversified company with businesses in the insurance, energy, hospitality and packaging industries. Its segments consist of individual operating subsidiaries, including CNA Financial Corporation (CNA), Boardwalk Pipeline Partners, LP and Loews Hotels Holding Corporation (Loews Hotels). The CNA segment provides insurance products, such as commercial property and casualty coverage, and its services also include risk management, information services, warranty and claims administration. The CNA segment's commercial property and casualty insurance operations include Specialty, Commercial and International lines of business. The Boardwalk Pipelines segment is engaged in the business of transportation and storage of natural gas and liquids, and hydrocarbons. Boardwalk Pipelines owns and operates approximately 13,455 miles of interconnected natural gas pipelines directly serving customers in 13 states. Loews Hotels segment is engaged in operating a chain of hotels.

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.

Loews Corp has a Value Score of 90, which is considered to be undervalued.

Loews Corp’s price-earnings ratio is 11.1 compared to the industry median at 12.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Loews Corp more attractive for value investors.

Loews Corp’s price-to-book ratio is higher than its peers. This could make Loews Corp less attractive for value investors when compared to the industry median at 1.34.

You can read more about Loews 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.

Radian Group Inc’s Value Grade

Value Grade:

Radian Group Inc. is a diversified mortgage and real estate services company. The Company provides mortgage insurance and other products and services to the real estate and mortgage finance industries. The Company operates through its two business segments: Mortgage and homegenius. The Company’s Mortgage segment aggregates, manages and distributes United States mortgage credit risk on behalf of mortgage lending institutions and mortgage credit investors, principally through private mortgage insurance on residential first-lien mortgage loans, and also provides other credit risk management, contract underwriting and fulfillment solutions. The Company's homegenius segment offers an array of title, real estate and technology products and services to consumers, mortgage lenders, mortgage and real estate investors, Government-sponsored enterprises (GSE) and real estate brokers and agents, and corporations for their employees.

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.

Radian Group Inc has a Value Score of 72, which is considered to be undervalued.

Radian Group Inc’s price-earnings ratio is 8.3 compared to the industry median at 12.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Radian Group Inc more attractive for value investors.

Radian Group Inc’s price-to-book ratio is higher than its peers. This could make Radian Group Inc less attractive for value investors when compared to the industry median at 1.34.

You can read more about Radian Group Inc’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.

• American International Group Inc stock has a Value Grade of A.
• Horace Mann Educators Corporation stock has a Value Grade of B.
• James River Group Holdings Ltd stock has a Value Grade of A.
• Loews Corp stock has a Value Grade of A.
• Radian Group Inc stock has a Value Grade of B.

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 Tuesday, May 28
• 5 Undervalued Insurance - Property & Casualty Stocks for Monday, May 27
• 7 Undervalued Insurance - Property & Casualty Stocks for Friday, May 24
• Why American Coastal Insurance Corp’s (ACIC) Stock Is Down 6.81%

AAII Disclaimer

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