Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Insurance 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 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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6 Undervalued Insurance Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Insurance industry for Thursday, November 07, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Insurance 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.

Brighthouse Financial, Inc.’s Value Grade

Value Grade:

Brighthouse Financial, Inc. provides annuity and life insurance products in the United States. It operates through three segments: Annuities, Life, and Run-off. The Annuities segment consists of variable, fixed, index-linked, and income annuities for contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer, and income security. The Life segment offers term, universal, whole, and variable life products for policyholders’ needs for financial security and protected wealth transfer. The Run-off segment manages structured settlements, pension risk transfer contracts, certain company-owned life insurance policies, funding agreements, and universal life with secondary guarantees. Brighthouse Financial, Inc. was founded in 1863 and is headquartered in Charlotte, North Carolina.

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.

Brighthouse Financial, Inc. has a Value Score of 91, which is considered to be undervalued.

When you look at Brighthouse Financial, Inc.’s price-to-sales ratio at 0.85 compared to the industry median at 1.09, this company has a lower price relative to revenue compared to its peers. This could make Brighthouse Financial, Inc.’s stock more attractive for value investors.

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. Brighthouse Financial, Inc.’s shareholder yield is higher than its industry median ratio of 1.50%. 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. Brighthouse Financial, Inc.’s price-to-book ratio is lower than its industry median ratio of 1.63. This could make Brighthouse Financial, Inc. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Brighthouse Financial, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Brighthouse Financial, Inc.’s price-to-free-cash-flow ratio is higher than its industry median ratio of 8.90. This could make Brighthouse Financial, Inc. less attractive because the higher P/FCF ratio indicates that Brighthouse Financial, 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.

Donegal Group Inc.’s Value Grade

Value Grade:

Donegal Group Inc., an insurance holding company, provides property and casualty insurance to businesses and individuals. It operates through three segments: Investment Function, Personal Lines of Insurance, and Commercial Lines of Insurance. The company offers private passenger automobile policies that provide protection against liability for bodily injury and property damage arising from automobile accidents, as well as protection against loss from damage to automobiles; and homeowners policies, which provide coverage for damage to residences and their contents from a range of perils, including fire, lightning, windstorm, and theft, as well as liability of the insured arising from injury to other persons or their property. It also offers commercial automobile policies that provide protection against liability for bodily injury and property damage arising from automobile accidents and protection against loss from damage to automobiles owned by the insured; commercial multi-peril policies that provide protection to businesses against combining liability and physical damage coverages; and workers’ compensation policies, which provide benefits to employees for injuries sustained during employment. The company markets its insurance products primarily to Mid-Atlantic, Midwestern, New England, Southern, and Southwestern regions through independent insurance agencies. Donegal Group Inc. was incorporated in 1986 and is based in Marietta, Pennsylvania. Donegal Group Inc. operates as a subsidiary of Donegal Mutual Insurance Company.

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.

Donegal Group Inc. has a Value Score of 62, which is considered to be undervalued.

Donegal Group Inc.’s price-earnings ratio is 21.1 compared to the industry median at 13.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Donegal Group Inc. less attractive for value investors.

Donegal Group Inc.’s price-to-book ratio is higher than its peers. This could make Donegal Group Inc. less attractive for value investors when compared to the industry median at 1.63.

You can read more about Donegal 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.

F&G; Annuities & Life, Inc.’s Value Grade

Value Grade:

F&G; Annuities & Life, Inc. provides fixed annuities and life insurance products in the United States. The company portfolio includes fixed indexed annuities, multi-year guarantee annuities, and pension risk transfer solution, as well as indexed universal life insurance, institutional funding agreements, and index-linked annuities. It serves retail annuity and life customers, as well as institutional clients. The company was founded in 1959 and is headquartered in Des Moines, Iowa. F&G; Annuities & Life, Inc. operates as a subsidiary of Fidelity National Financial, Inc.

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.

F&G; Annuities & Life, Inc. has a Value Score of 86, which is considered to be undervalued.

F&G; Annuities & Life, Inc.’s price-earnings ratio is 18.5 compared to the industry median at 13.6. This means that it has a higher price relative to its earnings compared to its peers. This makes F&G; Annuities & Life, Inc. less attractive for value investors.

F&G; Annuities & Life, Inc.’s price-to-book ratio is lower than its peers. This could make F&G; Annuities & Life, Inc. more attractive for value investors when compared to the industry median at 1.63.

You can read more about F&G; Annuities & Life, 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.

Fundamental Global Inc.’s Value Grade

Value Grade:

Fundamental Global Inc. engages in reinsurance, merchant banking, and asset management business. The company offers initial public offering services. It also offers specialty property and casualty reinsurance services. In addition, the company provides investment advisory services. Fundamental Global Inc. was founded in 1932 and is based in Mooresville, North Carolina.

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.

Fundamental Global Inc. has a Value Score of 66, which is considered to be undervalued.

Fundamental Global Inc.’s price-to-book ratio is higher than its peers. This could make Fundamental Global Inc. less attractive for value investors when compared to the industry median at 1.63.

You can read more about Fundamental Global 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.

SelectQuote, Inc.’s Value Grade

Value Grade:

SelectQuote, Inc. operates a technology-enabled, direct-to-consumer distribution platform that sells insurance policies and healthcare services in the United States. The company operates through four segments: Senior, Healthcare Services, Life, and Auto & Home. It distributes senior health policies, such as medicare advantage, medicare supplement, medicare part D, and other ancillary senior health insurance related products, including prescription drugs, dental, vision, and hearing plans; life insurance products, such as term life, final expense, and other ancillary products, which include critical illness, accidental death, and juvenile insurance; homeowners, auto, dwelling fire, and other ancillary insurance products; and non-commercial auto and home property, and casualty policies. The company also provides SelectRx, a patient-centered pharmacy home accredited pharmacy, which offers essential prescription medications, OTC medications, customized medication packaging, medication therapy management, and long-term pharmacy care; and population health that helps members understand the benefits available under their health plans, and contracts with insurance carriers. SelectQuote, Inc. was incorporated in 1999 and is headquartered in Overland Park, Kansas.

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.

SelectQuote, Inc. has a Value Score of 61, which is considered to be undervalued.

SelectQuote, Inc.’s price-to-book ratio is higher than its peers. This could make SelectQuote, Inc. less attractive for value investors when compared to the industry median at 1.63.

You can read more about SelectQuote, 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.

UTG, Inc.’s Value Grade

Value Grade:

UTG, Inc., an insurance holding company, provides individual life insurance products and services in the United States. Its individual life insurance includes servicing of existing insurance business in-force; the acquisition of other companies in the insurance business; and the administration processing of life insurance business for other entities. In addition, it offers reinsurance products. UTG, Inc. was founded in 1966 and is headquartered in Stanford, Kentucky.

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.

UTG, Inc. has a Value Score of 95, which is considered to be undervalued.

UTG, Inc.’s price-earnings ratio is 3.3 compared to the industry median at 13.6. This means that it has a lower price relative to its earnings compared to its peers. This makes UTG, Inc. more attractive for value investors.

UTG, Inc.’s price-to-book ratio is higher than its peers. This could make UTG, Inc. less attractive for value investors when compared to the industry median at 1.63.

You can read more about UTG, 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 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 stocks as well as other industrys.

Choosing Which of the 6 Best Insurance 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.

• Brighthouse Financial, Inc. stock has a Value Grade of A.
• Donegal Group Inc. stock has a Value Grade of B.
• F&G; Annuities & Life, Inc. stock has a Value Grade of A.
• Fundamental Global Inc. stock has a Value Grade of B.
• SelectQuote, Inc. stock has a Value Grade of B.
• UTG, Inc. stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 undervalued stocks in the Insurance 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 Stocks

Want to learn more about Insurance 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.

• 6 Undervalued Insurance Stocks for Thursday, November 07
• 5 Undervalued Insurance Stocks for Wednesday, November 06
• 7 Undervalued Insurance Stocks for Tuesday, November 05
• 7 Undervalued Insurance Stocks for Monday, November 04

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.