Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 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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7 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 7 undervalued stocks in the Insurance - Property & Casualty industry for Wednesday, August 07, 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.

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 91, which is considered to be undervalued.

When you look at Fairfax Financial Holdings Ltd’s price-to-sales ratio at 0.64 compared to the industry median at 1.32, this company has a lower price relative to revenue compared to its peers. This could make Fairfax Financial Holdings Ltd’s stock more attractive for value investors.

Fairfax Financial Holdings Ltd’s price-earnings ratio is 6.61 compared to the industry median at 13.40. This means it has a lower share price relative to earnings compared to its peers. This could make Fairfax Financial Holdings Ltd more attractive for value investors.

Now, let’s assess Fairfax Financial Holdings Ltd’s EV/EBITDA ratio, also known as enterprise multiple. At 7.2, when compared to the industry median of 6.5, the company may be considered overvalued 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. Fairfax Financial Holdings Ltd’s shareholder yield is higher than its industry median ratio of 2.09%. 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. Fairfax Financial Holdings Ltd’s price-to-book ratio is lower than its industry median ratio of 1.37. This could make Fairfax Financial Holdings Ltd more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Fairfax Financial Holdings Ltd’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Fairfax Financial Holdings Ltd’s price-to-free-cash-flow ratio is higher than its industry median ratio of 9.64. This could make Fairfax Financial Holdings Ltd less attractive because the higher P/FCF ratio indicates that Fairfax Financial Holdings Ltd 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 77, which is considered to be undervalued.

Horace Mann Educators Corporation’s price-earnings ratio is 21.6 compared to the industry median at 13.4. 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 1.37.

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.

Mercury General Corp’s Value Grade

Value Grade:

Mercury General Corporation is an insurance holding company engaged in writing personal automobile insurance business. The Company writes homeowners, commercial automobile, commercial property, mechanical protection and umbrella insurance. The Company’s automobile coverages include collision, property damage, bodily injury, personal injury protection, underinsured, and uninsured motorist and other hazards. Its homeowners’ coverage includes dwelling, liability, personal property, fire and other hazards. The Company offers standard, non-standard and preferred private passenger automobile insurance. It also offers homeowners insurance in approximately 10 states, commercial automobile insurance in approximately four states, and mechanical protection insurance in various states. Its subsidiaries include Mercury Casualty Company, California Automobile Insurance Company, Orion Indemnity Company, American Mercury Insurance Company, Animas Funding LLC, and Mercury Insurance Company of Illinois.

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.

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

Mercury General Corp’s price-earnings ratio is 10.4 compared to the industry median at 13.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Mercury General Corp more attractive for value investors.

Mercury General Corp’s price-to-book ratio is lower than its peers. This could make Mercury General Corp more attractive for value investors when compared to the industry median at 1.37.

You can read more about Mercury General 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.

Markel Group Inc’s Value Grade

Value Grade:

Markel Group Inc. is a holding company comprised of various businesses and investments. The Company's segments include Insurance, Reinsurance, Investing and Markel Ventures. Insurance segment includes all direct business and facultative reinsurance placements written on a risk-bearing basis within the Company's underwriting operations. Its insurance operations include underwriting, program services and other fronting, and Insurance-linked securities. Reinsurance segment includes all treaty reinsurance written on a risk-bearing basis within the Company's underwriting operations. Reinsurance segment product offerings are underwritten primarily by its Global Reinsurance division, which operates from platforms in the United States, Bermuda and United Kingdom. Investing segment includes all investing activities related to the Company's insurance operations. Markel Ventures segment consists of controlling interests in a diverse portfolio of businesses that operate in various industries.

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.

Markel Group Inc has a Value Score of 84, which is considered to be undervalued.

Markel Group Inc’s price-earnings ratio is 9.8 compared to the industry median at 13.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Markel Group Inc more attractive for value investors.

Markel Group Inc’s price-to-book ratio is higher than its peers. This could make Markel Group Inc less attractive for value investors when compared to the industry median at 1.37.

You can read more about Markel 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.

MGIC Investment Corp’s Value Grade

Value Grade:

MGIC Investment Corporation is a holding company. The Company, through its wholly owned subsidiaries, provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services. The Company's mortgage insurance product offers Primary Insurance and Pool and Other Insurance. Primary insurance provides mortgage default protection on individual loans and covers a percentage of the unpaid loan principal, delinquent interest and certain expenses associated with the default and subsequent foreclosure on the mortgage or sale of the underlying property. Pool insurance is generally used as an additional credit enhancement for certain secondary market mortgage transactions. Pool insurance generally covers the amount of the loss on a defaulted mortgage loan that exceeds the claim payment under the primary coverage.

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.

MGIC Investment Corp has a Value Score of 77, which is considered to be undervalued.

MGIC Investment Corp’s price-earnings ratio is 8.8 compared to the industry median at 13.4. This means that it has a lower price relative to its earnings compared to its peers. This makes MGIC Investment Corp more attractive for value investors.

MGIC Investment Corp’s price-to-book ratio is higher than its peers. This could make MGIC Investment Corp less attractive for value investors when compared to the industry median at 1.37.

You can read more about MGIC Investment 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.

Tokio Marine Holdings Inc (ADR)’s Value Grade

Value Grade:

Tokio Marine Holdings, Inc. is a Japan-based company engaged in the domestic non-life insurance business, domestic life insurance business, overseas insurance business, as well as financial and general business. The Company operates through four business segments. The Domestic Non-life Insurance segment is engaged in no-life insurance underwriting business and asset management business in Japan. The Domestic Life Insurance segment is engaged in life insurance underwriting and asset management services in Japan. The Overseas Insurance segment is engaged in overseas insurance underwriting and asset management services. The Financial and General segment is mainly engaged in the provision of investment advisory services, investment trust outsourcing services, staffing services, as well as real estate management and nursing care business.

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.

Tokio Marine Holdings Inc (ADR) has a Value Score of 64, which is considered to be undervalued.

Tokio Marine Holdings Inc (ADR)’s price-earnings ratio is 13.8 compared to the industry median at 13.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Tokio Marine Holdings Inc (ADR) less attractive for value investors.

Tokio Marine Holdings Inc (ADR)’s price-to-book ratio is lower than its peers. This could make Tokio Marine Holdings Inc (ADR) more attractive for value investors when compared to the industry median at 1.37.

You can read more about Tokio Marine Holdings Inc (ADR)’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.

White Mountains Insurance Group Ltd’s Value Grade

Value Grade:

White Mountains Insurance Group, Ltd. is a financial services holding company. The Company operates through four segments: Ark/WM Outrigger, HG Global/BAM, Kudu and Bamboo. The Ark/WM Outrigger segment is engaged in specialty property and casualty insurance and reinsurance business that offers a range of niche insurance and reinsurance products, including property, specialty, marine and energy, accident and health, and casualty. The HG Global/BAM segment is engaged in the mutual municipal bond insurance business in the United States. The Kudu segment provides capital solutions for boutique asset and wealth managers for a variety of purposes including generational ownership transfers, management buyouts, acquisition and growth finance and legacy partner liquidity. The Bamboo segment includes capital-light, tech- and data-enabled insurance distribution platform, which provides homeowners' insurance and related products to the residential property market in California.

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.

White Mountains Insurance Group Ltd has a Value Score of 78, which is considered to be undervalued.

White Mountains Insurance Group Ltd’s price-earnings ratio is 7.9 compared to the industry median at 13.4. This means that it has a lower price relative to its earnings compared to its peers. This makes White Mountains Insurance Group Ltd more attractive for value investors.

White Mountains Insurance Group Ltd’s price-to-book ratio is higher than its peers. This could make White Mountains Insurance Group Ltd less attractive for value investors when compared to the industry median at 1.37.

You can read more about White Mountains Insurance Group 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 7 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.

• Fairfax Financial Holdings Ltd stock has a Value Grade of A.
• Horace Mann Educators Corporation stock has a Value Grade of B.
• Mercury General Corp stock has a Value Grade of A.
• Markel Group Inc stock has a Value Grade of A.
• MGIC Investment Corp stock has a Value Grade of B.
• Tokio Marine Holdings Inc (ADR) stock has a Value Grade of B.
• White Mountains Insurance Group Ltd stock has a Value Grade of B.

Now that you have a bit more background about each of the 7 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.

• 7 Undervalued Insurance - Property & Casualty Stocks for Wednesday, August 07
• 7 Undervalued Insurance - Property & Casualty Stocks for Tuesday, August 06
• What You Need to Know About American Financial Group Inc's Q2 Earnings
• What You Need to Know About Hagerty Inc's Q2 Earnings

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