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 Monday, November 11, 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.

Fidelity National Financial, Inc.’s Value Grade

Value Grade:

Fidelity National Financial, Inc., together with its subsidiaries, provides various insurance products in the United States. The company operates through Title, F&G;, and Corporate and Other segments. It offers title insurance, escrow, and other title related services, including trust activities, trustee sales guarantees, recordings and reconveyances, and home warranty products. The company also provides technology and transaction services to the real estate and mortgage industries; and mortgage transaction services, including title-related services and facilitation of production and management of mortgage loans. In addition, it offers annuity and life insurance products, such as deferred and immediate annuities, as well as indexed universal life insurance products; and funding agreements and pension risk transfer (PRT) solutions. Further, the company engages in the real estate brokerage business. Fidelity National Financial, Inc. was incorporated in 2005 and is headquartered in Jacksonville, Florida.

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.

Fidelity National Financial, Inc. has a Value Score of 71, which is considered to be undervalued.

When you look at Fidelity National Financial, Inc.’s price-to-sales ratio at 1.21 compared to the industry median at 1.07, this company has a higher price relative to revenue compared to its peers. This could make Fidelity National Financial, Inc.’s stock less attractive for value investors.

Fidelity National Financial, Inc.’s price-earnings ratio is 21.80 compared to the industry median at 13.30. This means it has a higher share price relative to earnings compared to its peers. This could make Fidelity National Financial, Inc. less 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. Fidelity National Financial, Inc.’s shareholder yield is higher than its industry median ratio of 1.60%. 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. Fidelity National Financial, Inc.’s price-to-book ratio is higher than its industry median ratio of 1.70. This could make Fidelity National Financial, Inc. less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Fidelity National 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. Fidelity National Financial, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 9.10. This could make Fidelity National Financial, Inc. more attractive because the lower P/FCF ratio indicates that Fidelity National 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.

HCI Group, Inc.’s Value Grade

Value Grade:

HCI Group, Inc., together with its subsidiaries, engages in the property and casualty insurance, insurance management, reinsurance, real estate, and information technology businesses in Florida. It provides residential insurance products, such as homeowners, fire, flood, and wind-only insurance to homeowners, condominium owners, and tenants for properties, as well as offers reinsurance programs. The company also owns and operates waterfront properties and retail shopping centers, and an office building, as well as commercial properties for investment purposes. In addition, it designs and develops web-based applications and products for mobile devices, including SAMS, an online policy administration platform; Harmony, a policy administration platform; ClaimColony, an end-to-end claims management platform; and AtlasViewer, a mapping and data visualization platform. The company was formerly known as Homeowners Choice, Inc. and changed its name to HCI Group, Inc. in May 2013. HCI Group, Inc. was incorporated in 2006 and is headquartered in Tampa, Florida.

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.

HCI Group, Inc. has a Value Score of 69, which is considered to be undervalued.

HCI Group, Inc.’s price-earnings ratio is 10.3 compared to the industry median at 13.3. This means that it has a lower price relative to its earnings compared to its peers. This makes HCI Group, Inc. more attractive for value investors.

HCI Group, Inc.’s price-to-book ratio is lower than its peers. This could make HCI Group, Inc. more attractive for value investors when compared to the industry median at 1.70.

You can read more about HCI 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.

The Hartford Financial Services Group, Inc.’s Value Grade

Value Grade:

The Hartford Financial Services Group, Inc., together with its subsidiaries, provides insurance and financial services to individual and business customers in the United States, the United Kingdom, and internationally. Its Commercial Lines segment offers insurance coverages, including workers’ compensation, property, automobile, general and professional liability, package business, umbrella, fidelity and surety, marine, livestock, accident, health, and reinsurance through regional offices, branches, sales and policyholder service centers, independent retail agents and brokers, wholesale agents, and reinsurance brokers. The company's Personal Lines segment provides automobile, homeowners, and personal umbrella coverages through direct-to-consumer channels and independent agents. Its Property & Casualty Other Operations segment offers coverage for asbestos and environmental exposures. The company's Group Benefits segment provides group life, disability, and other group coverages to members of employer groups, associations, and affinity groups through direct insurance policies; reinsurance to other insurance companies; employer paid and voluntary product coverages; disability underwriting, administration, and claims processing to self-funded employer plans; and leave management solution. This segment also distributes its group insurance products and services through brokers, consultants, third-party administrators, trade associations, and private exchanges. Its Hartford Funds segment offers managed mutual funds across various asset classes; and exchange-traded funds through broker-dealer organizations, independent financial advisers, defined contribution plans, financial consultants, bank trust groups, and registered investment advisers, as well as investment management, distribution, and administrative services, such as product design, implementation, and oversight. The company was founded in 1810 and is headquartered in Hartford, Connecticut.

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.

The Hartford Financial Services Group, Inc. has a Value Score of 84, which is considered to be undervalued.

The Hartford Financial Services Group, Inc.’s price-earnings ratio is 11.8 compared to the industry median at 13.3. This means that it has a lower price relative to its earnings compared to its peers. This makes The Hartford Financial Services Group, Inc. more attractive for value investors.

The Hartford Financial Services Group, Inc.’s price-to-book ratio is lower than its peers. This could make The Hartford Financial Services Group, Inc. more attractive for value investors when compared to the industry median at 1.70.

You can read more about The Hartford Financial Services 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.

Horace Mann Educators Corporation’s Value Grade

Value Grade:

Horace Mann Educators Corporation, together with its subsidiaries, operates as an insurance holding company in the United States. The company operates through Property & Casualty, Life & Retirement, and Supplemental & Group Benefits segments. Its Property & Casualty segment offers insurance products, including private passenger auto insurance, residential home insurance, and personal umbrella insurance; and provides auto coverages including liability and collision, and property coverage for homeowners and renters. The Life & Retirement segment markets tax-qualified fixed, fixed indexed, and variable annuities; and internal revenue code for educator, which allows public school employees and employees of other tax-exempt organizations, such as not-for-profit private schools, to utilize pretax income to make periodic contributions to a qualified retirement plan. The Supplemental & Group Benefits segment offers employer-sponsored products including accident, critical illness, limited-benefit fixed indemnity insurance, term life, and short-term and long-term disability, as well as worksite direct products, such as supplemental heart, cancer, disability, and accident coverage. The company was founded in 1945 and is headquartered in Springfield, 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.

Horace Mann Educators Corporation has a Value Score of 80, which is considered to be undervalued.

Horace Mann Educators Corporation’s price-earnings ratio is 16.2 compared to the industry median at 13.3. 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 1.70.

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.

Lincoln National Corporation’s Value Grade

Value Grade:

Lincoln National Corporation, through its subsidiaries, operates multiple insurance and retirement businesses in the United States. It operates in four segments: Life Insurance, Annuities, Group Protection, and Retirement Plan Services. The Life Insurance segment provides life insurance products, including term insurance, universal life insurance (UL), indexed universal life insurance, variable universal life insurance (VUL), linked-benefit UL and VUL products, and critical illness and long-term care riders. The Annuities segment offers variable, fixed, and registered index-linked annuities. The Group Protection segment offers group non-medical insurance products consisting of short and long-term disability and statutory disability; paid family medical leave administration and absence management services; term life; dental and vision; and accident, critical illness, and hospital indemnity benefits and services to the employer marketplace through various forms of employee-paid and employer-paid plans. The Retirement Plan Services segment provides employers with retirement plan products and services primarily in the defined contribution retirement plan marketplace; individual and group variable annuities, group fixed annuities, and mutual fund-based programs; and various plan services, including plan recordkeeping, compliance testing, participant education, and trust and custodial services. The company distributes its products through consultants, brokers, planners, agents, financial advisors, third-party administrators, and other intermediaries. Lincoln National Corporation was founded in 1905 and is headquartered in Radnor, Pennsylvania.

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.

Lincoln National Corporation has a Value Score of 62, which is considered to be undervalued.

Lincoln National Corporation’s price-earnings ratio is 22.7 compared to the industry median at 13.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Lincoln National Corporation less attractive for value investors.

Lincoln National Corporation’s price-to-book ratio is higher than its peers. This could make Lincoln National Corporation less attractive for value investors when compared to the industry median at 1.70.

You can read more about Lincoln National 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.

TWFG, Inc.’s Value Grade

Value Grade:

TWFG, Inc. operates an independent distribution platform for personal and commercial insurance products in the United States. Its personal and commercial insurance products include auto, home, renters, life, health, motorcycle, umbrella, boat, recreational vehicle, flood, wind, event, luxury item, general liability, property, business auto, workers’ compensation, business owner policy, and professional liability insurance products, as well as commercial bonds and group benefits. The company was founded in 2001 and is based in The Woodlands, Texas. TWFG, Inc. operates as a subsidiary of Bunch Family Holdings, LLC.

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.

TWFG, Inc. has a Value Score of 79, which is considered to be undervalued.

TWFG, Inc.’s price-earnings ratio is 0.8 compared to the industry median at 13.3. This means that it has a lower price relative to its earnings compared to its peers. This makes TWFG, Inc. more attractive for value investors.

TWFG, Inc.’s price-to-book ratio is higher than its peers. This could make TWFG, Inc. less attractive for value investors when compared to the industry median at 1.70.

You can read more about TWFG, 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.

• Fidelity National Financial, Inc. stock has a Value Grade of B.
• HCI Group, Inc. stock has a Value Grade of B.
• The Hartford Financial Services Group, Inc. stock has a Value Grade of A.
• Horace Mann Educators Corporation stock has a Value Grade of B.
• Lincoln National Corporation stock has a Value Grade of B.
• TWFG, Inc. stock has a Value Grade of B.

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 Monday, November 11
• 6 Undervalued Insurance Stocks for Friday, November 08
• 6 Undervalued Insurance Stocks for Thursday, November 07
• 5 Undervalued Insurance Stocks for Wednesday, November 06

AAII Disclaimer

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