We all have insurance of some kind – home, auto, life, medical, and host of others. The bills come every year or month and ideally we never use them. However, the companies that we pay to have insurance earn money and if there are not many payouts, the insurance companies earn profits and pay dividends. Recently Mr. Bowman of Wickham Investment Counsel (Michael@wickhaminvestments.com) did some homework on insurance companies. To narrow the field, his criteria was market capitalization greater than a billion, and dividend yield of 1.5% or higher. The list was further narrowed by a ROE or Return on Equity of greater than 8% – this is a measure of cash generation divided by what shareholders have invested. The higher the better. The other screens are ROA or Return of Assets indicating how profitable a company is or how a company uses its assets to generate returns. The criteria was great than .4 %.
Notice the total return on insurance companies. The average return for the past 12 months was 29% because after the hurricane season many of the companies’ stock prices went down. Now days most hurricane seasons are going to put downward pressure on insurance company stock prices. It maybe a strategy to sell before the hurricane season and buy quality companies afterwards. If the hurricane season is particularly bad, the stocks will be driven down and as what is termed normal comes back, the good companies should return to normal prices. The key is stay with quality companies.
| Company | Ticker | Recent Price $ | Market Cap ($-bil) | ROE % | ROA % | P/B | Forward P/E | Dvd Yld (%) | Total Return % (Trailing 12 mos) |
|---|---|---|---|---|---|---|---|---|---|
| Aflac Inc. | AFL-N | 56.60 | 26.39 | 20.38 | 2.52 | 1.7 | 8.9 | 2.39 | 34.17 |
| Allstate Corp. | ALL-N | 48.47 | 22.72 | 11.30 | 1.78 | 1.1 | 9.8 | 1.86 | 40.27 |
| Amer. Financial Group | AFG-N | 49.18 | 4.42 | 10.63 | 1.31 | 0.9 | 11.6 | 2.00 | 27.58 |
| Assurant Inc. | AIZ-N | 50.43 | 3.88 | 8.62 | 1.54 | 0.8 | 9.0 | 1.65 | 44.83 |
| Average | 10.88 | 2.27 | 1.3 | 10.9 | 2.88 | 29.10 | |||
| Chubb Corp. | CB-N | 85.13 | 22.06 | 10.76 | 3.30 | 1.4 | 12.1 | 1.95 | 18.21 |
| Cincinnati Financial | CINF-Q | 46.32 | 7.57 | 8.90 | 2.96 | 1.3 | 19.1 | 3.49 | 25.22 |
| First American Fin. | FAF-N | 21.79 | 2.36 | 13.67 | 5.17 | 1.0 | 10.5 | 1.84 | 28.78 |
| Great-West Lifeco | GWO-T | 28.01 | 26.51 | 15.49 | 0.79 | 2.3 | 12.4 | 4.14 | 37.38 |
| Indus. Alliance Ins. | IAG-T | 40.12 | 3.90 | 12.75 | 0.89 | 1.5 | 12.7 | 2.33 | 74.39 |
| Intact Financial | IFC-T | 56.90 | 7.52 | 13.26 | 3.10 | 1.7 | 10.0 | 2.77 | -3.09 |
| Principal Financial | PFG-N | 36.97 | 10.85 | 8.34 | 0.44 | 1.2 | 10.5 | 2.20 | 42.80 |
| ProAssurance Corp. | PRA-N | 52.14 | 3.22 | 14.53 | 6.49 | 1.4 | 13.9 | 6.22 | 22.13 |
| Progressive Corp. | PGR-N | 25.45 | 15.35 | 15.08 | 4.16 | 2.4 | 15.7 | 4.99 | 29.98 |
| RLI Corp. | RLI-N | 77.53 | 1.65 | 12.05 | 3.78 | 2.0 | 18.2 | 8.02 | 20.98 |
| Sun Life Financial | SLF-T | 29.86 | 17.92 | 9.55 | 0.65 | 1.3 | 11.7 | 4.57 | 45.80 |
| Travelers Cos. | TRV-N | 80.40 | 30.26 | 10.13 | 2.46 | 1.2 | 10.4 | 2.28 | 28.55 |
| Unum Group | UNM-N | 29.67 | 7.92 | 10.67 | 1.47 | 0.9 | 8.8 | 1.64 | 55.15 |
| WR Berkley Corp. | WRB-N | 41.54 | 5.65 | 11.57 | 2.51 | 1.3 | 13.6 | 3.27 | 8.89 |
There are more questions than answers, till the next time – to raising questions
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