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.

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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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, May 31, 2023. 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.

Donegal Group Inc’s Value Grade

Value Grade:

Donegal Group Inc. (DGI) is an insurance holding company. The Company?s subsidiaries include Atlantic States Insurance Company (Atlantic States), Southern Insurance Company of Virginia (Southern), The Peninsula Insurance Company and Peninsula Indemnity Company (Peninsula), and Michigan Insurance Company. The Company, through its subsidiaries offers personal and commercial lines of property and casualty insurance to businesses and individuals in 24 Mid-Atlantic, Midwestern, New England, Southern and Southwestern regions through approximately 2,300 independent insurance agencies. It operates through three segments: investment function, commercial lines of insurance and personal lines of insurance. The commercial lines products of its insurance subsidiaries consist primarily of commercial automobile, commercial multi-peril, and workers? compensation policies. The personal lines products of insurance subsidiaries consist primarily of homeowners and private passenger automobile policies.

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 88, which is considered to be undervalued.

When you look at Donegal Group Inc’s price-to-sales ratio at 0.56 compared to the industry median at 0.93, this company has a lower price relative to revenue compared to its peers. This could make Donegal Group Inc’s stock more attractive for value investors.

Now, let’s assess Donegal Group Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 3.7, when compared to the industry median of 7.3, 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. Donegal Group Inc’s shareholder yield is lower than its industry median ratio of 2.57%. 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. Donegal Group Inc’s price-to-book ratio is lower than its industry median ratio of 1.14. This could make Donegal Group Inc more attractive to investors looking for a new addition to their portfolio.

Hallmark Financial Services, Inc.’s Value Grade

Value Grade:

Hallmark Financial Services, Inc. is an insurance holding company, which is engaged in the sale of property/casualty insurance products to businesses and individuals. The Company?s business includes marketing, distributing, underwriting, and servicing its insurance products, as well as providing other insurance related services. Its segments include Commercial Lines, Personal Lines and Runoff. The Standard Commercial Segment includes the package and monoline property/casualty and the Aviation business unit, which offers general aviation property/casualty insurance products and services. The Personal Segment includes the non-standard personal automobile and renters insurance products and services. The Runoff Segment consists of its Specialty Runoff business unit, which consists of the senior care facilities liability insurance business, the contract binding line of primary automobile insurance, and the satellite launch property/casualty insurance products, as well as specialty programs.

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.

Hallmark Financial Services, Inc. has a Value Score of 96, which is considered to be undervalued.

Hallmark Financial Services, Inc.’s price-to-book ratio is higher than its peers. This could make Hallmark Financial Services, Inc. less attractive for value investors when compared to the industry median at 1.14.

You can read more about Hallmark Financial Services, 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.

Loews Corp’s Value Grade

Value Grade:

Loews Corporation is a holding company. The Company?s segments consist of individual operating subsidiaries, including CNA Financial Corporation (CNA), Boardwalk Pipeline Partners, LP and Loews Hotels Holding Corporation (Loews Hotels) and the Corporate segment. The CNA segment provides insurance products, such as commercial property and casualty coverage, including surety, 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 natural gas liquids and hydrocarbons. Boardwalk Pipelines owns and operates approximately 13,515 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 85, which is considered to be undervalued.

Loews Corp’s price-earnings ratio is 13.0 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 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 1.14.

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.

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 82, which is considered to be undervalued.

Mercury General Corp’s price-to-book ratio is lower than its peers. This could make Mercury General Corp fairly attractive for value investors when compared to the industry median at 1.14.

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.

NI Holdings Inc’s Value Grade

Value Grade:

NI Holdings, Inc. is the stock holding company of Nodak Insurance Company (Nodak Insurance). Nodak Insurance is a domestic property and casualty insurance company in North Dakota. The Company?s segments include Private Passenger Auto, Non-standard Auto, Home and Farm, Crop and Commercial. Private Passenger Auto insurance provides 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. Non-standard Auto insurance provides liability coverage. Home and Farm provides coverage for damage buildings, equipment, and contents for a range of perils, including fire, lightning, wind, hail and theft. The Company?s Crop segment offers hail and multi-peril crop insurance. Its hail insurance is a private insurance product designed to provide protection against losses to farmer?s crops due primarily to hail damage. Its Commercial segment writes commercial multi-peril policies.

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.

NI Holdings Inc has a Value Score of 71, which is considered to be undervalued.

NI Holdings Inc’s price-to-book ratio is lower than its peers. This could make NI Holdings Inc fairly attractive for value investors when compared to the industry median at 1.14.

You can read more about NI Holdings 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.

Old Republic International Corporation’s Value Grade

Value Grade:

Old Republic International Corporation is a holding company. The Company is engaged in the business of insurance underwriting and related services. It operates through three segments: General Insurance (property and liability insurance), Title Insurance, and Republic Financial Indemnity Group (RFIG) Run-off. Its General Insurance provides property and liability insurance primarily to commercial clients. Title Insurance consists of the issuance of policies to real estate purchasers and investors based upon searches of the public records which contain information concerning interests in real property. The policies insure against losses arising out of defects, liens, and encumbrances. RFIG Run-off segment offers private mortgage insurance, which protects mortgage lenders and investors from default-related losses on residential mortgage loans made primarily to homebuyers. The RFIG Run-off mortgage guaranty operations insures only first mortgage loans, primarily on residential properties.

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.

Old Republic International Corporation has a Value Score of 74, which is considered to be undervalued.

Old Republic International Corporation’s price-earnings ratio is 12.6 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 Old Republic International Corporation more attractive for value investors.

Old Republic International Corporation’s price-to-book ratio is lower than its peers. This could make Old Republic International Corporation fairly attractive for value investors when compared to the industry median at 1.14.

You can read more about Old Republic International 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.

United Fire Group Inc’s Value Grade

Value Grade:

United Fire Group, Inc. is engaged in the business of writing property and casualty insurance through a network of independent agencies. It operates in the property and casualty insurance segment, which comprises commercial lines insurance, including surety bonds, and assumed reinsurance. Its commercial lines insurance includes other liability, construction defect losses, commercial fire and allied lines, commercial automobile and fidelity and surety. Its other liability is business insurance covering bodily injury and property damage arising from general business operations, accidents on the insured's premises and products manufactured or sold. Its commercial fire and allied lines include fire, allied lines, commercial multiple peril and inland marine. Its commercial automobile insurance covers physical damage to an insured's vehicle and liabilities to third parties. Its assumed reinsurance portfolio is comprised of contracts that provide reinsurance protection to insurance companies.

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.

United Fire Group Inc has a Value Score of 92, which is considered to be undervalued.

United Fire Group Inc’s price-to-book ratio is higher than its peers. This could make United Fire Group Inc less attractive for value investors when compared to the industry median at 1.14.

You can read more about United Fire 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 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.

• Donegal Group Inc stock has a Value Grade of A.
• Hallmark Financial Services, Inc. stock has a Value Grade of A.
• Loews Corp stock has a Value Grade of A.
• Mercury General Corp stock has a Value Grade of A.
• NI Holdings Inc stock has a Value Grade of B.
• Old Republic International Corporation stock has a Value Grade of B.
• United Fire Group Inc stock has a Value Grade of A.

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, May 31
• 7 Undervalued Insurance - Property & Casualty Stocks for Tuesday, May 30
• Why Lemonade Inc’s (LMND) Stock Is Up 9.70%
• 6 Undervalued Insurance - Property & Casualty Stocks for Monday, May 29

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