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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Insurance Stocks for the Conservative Investor

OneBeacon Insurance Group

OneBeacon Insurance Group (OB) has a small challenge. Recently revised by S&P to "stable," Moody's last week put the company under review for a possible downgrade following the disclosure that it had sold renewal rights to Hanover Insurance Group (THG) for $490 million in business. Hanover said this week its board had approved an increase of $100 million to the company's existing share-repurchase program, providing for aggregate repurchases of up to $300 million of the company's common stock.

So why buy OneBeacon's stock? First, it has risen 44% over the past year, proving it has been able to escape the pain of the insurance market. With a beta of only 0.92, OneBeacon doesn't correlate with the broader stock market.

A P/E ratio of 2.9 and a book value of 92% are attractive. Trading is at normal levels and short interest is dropping, down from more than 4 to 2.6 in the past week. Price might not be the main attraction, as the stock is just over the top of analysts' mean projection, but the dividend yield of 6.31% is exceptional.

-- Reported by Gavin Magor in Jupiter, Fla.

Gavin Magor is the senior analyst responsible for assigning financial-strength ratings to insurance companies. He conducts industry analysis and supports consumer products. Magor has more than 22 years of international experience in operations and credit-risk management, commercial lending and analysis. His experience includes international assignments in Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.
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