Insurers Thrown in Bargain Bin: Is It Safe?

"Is It Safe?" is a feature by TheStreet.com that looks at a company's risk-and-reward potential. Find out if your stocks are safe Tuesday and Thursday mornings at 4.

If you invested in the 10 U.S. insurance stocks with the lowest price-to-book values during the past six weeks, you would have made a 61% return.

But fear not, you have not missed the boat. The top performers were Radian Group(RDN Quote), up 170%; MGIC Investment(MTG Quote), with a gain of 120%; Conseco(CNO Quote), up 83%; and Hartford Financial Services(HIG Quote), which rose 65%.

As most insurers have reported second-quarter results, it's time to review those that offer the best bargains. The criterion is book value -- how much you pay for the stock compared with the company's net asset value. Many past winners are still worth considering.

Insurance Leads Past winners still worth it Company Name (Ticker ) Ticker Market Cap.($M) Closing Price ($) 6/24/09 Price/ Book (%) 6/24/09 Closing Price ($) 8/7/09 Price/ Book (%) 8/7/09 PMI Group, Inc. (PMI) PMI 225.1 2.02 14.3 2.74 19.4 Phoenix Companies, Inc.(PNX) PNX 210.4 1.52 20.3 1.82 22.8 American International Gr., Inc. (AIG) AIG 3,652.4 *28.4 65.3 27.14 24.0 Conseco, Inc. (CNO) CNO 612.0 1.89 22.0 3.31 25.3 Radian Group Inc. (RDN) RDN 562.3 2.58 11.7 6.83 27.2 Genworth Financial, Inc. (GNW) GNW 3,773.3 6.57 34.6 8.71 37.9 MBIA Inc. (MBI) MBI 1,225.1 4.26 54.9 5.89 44.3 Kingsway Financial Services Inc. (KFS) KFS 174.6 3.00 44.6 3.17 47.1 MGIC Investment Corp.(MTG) MTG 988.3 3.70 19.9 7.90 49.0 First Acceptance Corp. (FAC) FAC 119.8 2.22 47.2 2.48 52.8 Source: SNL Financial LC *AIG stock price has been adjusted for the 20:1 reverse split on July 1, 2009

As insurers recover from the beating they took since last year, some insurers are still cheap. PMI Group(PMI Quote) leads with a 19% price-to-book value. It was also on the June list with a 14% price-to-book, as the price has since risen 36%.

Any investment should be reviewed regularly -- at least quarterly -- if you're using book value as the benchmark. There are opportunities, and some risk, in investing in the stocks, but the rewards may be high. Mitigating risk by investing in all or a number of the shares might provide growth opportunities with lower risk.

The current top 10 stocks aren't for the faint-hearted and include one, American International Group(AIG Quote), that shouldn't be a part of a retirement plan. It has a current price-to-book value of 24%.

The balance of the top-five stocks for consideration consists of survivors from the prior quarter's top-10 list. Phoenix(PNX Quote), at 23% of book value, still represents great value despite a 28% rise in the share price. Conseco, one of the biggest gainers in the past six weeks, has a current price-to-book value of 25%. Radian, which posted the biggest stock-price increase, is still worth a look. It has a price-to-book value of 27%.