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5 Insurance Stocks in Hurricane Sandy's Crosshairs

While we can't predict what effect Sandy will have on the insurers with the largest P&C market shares in New York and the Northeast, all it takes is one storm to change the story for an insurer's underwriting profit or loss for a year.

According to information provided by the Insurance Information Institute, based on data from SNL Financial, the three carries with the largest property & casualty underwriting business in New York State are all publicly traded: Berkshire Hathaway (BRK.B), with a 7.98% of direct premiums written in 2011, followed by Allstate (ALL), with a market share of 7.71%, and The Travelers Companies (TRV), with a 6.29% share.

For the Northeast, Liberty Mutual had the highest 2011 market share, with 9.65% of direct premiums written during 2011, followed by Travelers, with a 7.08% market share, MAPFRE -- held by MAPFRE SA -- with a 6.00% market share, and American International Group (AIG), with a 3.92% share. Next was Allstate, with a 3.42% Northeast market share, and Chubb (CB), with a 3.41% share.

For the Mid-Atlantic region, State Farm led with a 7.66% share of direct P&C premiums written during 2011, followed by Allstate, with a 7.27% share, Berkshire, with 6.68%, Liberty Mutual, with a 6.12% market share, Travelers, with a 5.94% share, AIG with 5.21%, Nationwide Mutual, with 4.09%, and Chubb, with a 3.21% market share.

Here's a quick summary of year-to-date stock and underwriting performance, for the five companies listed above that are publicly traded in the United States. Some of the companies have not yet reported their third-quarter results.

  • Berkshire Hathaway's Class-B shares closed at $87.15 Thursday, returning 14% year-to-date. The shares trade for 16 times the consensus 2013 earnings estimate of $5.50 a share, among analysts polled by Thomson Reuters. For the first half of 2012, Berkshire reported net earnings of $6.353 billion, or $2.56 per Class-B share, increasing from $4.928 billion, or $1.99 billion per Class-B share, during the first half of 2011. Insurance-underwriting earnings for the first half of 2012 were $673 million, compared to an underwriting loss of $828 million a year earlier.
  • Allstate's shares closed at $40.51 Thursday, returning 51% year-to-date. The shares trade for nine times the consensus 2013 EPS estimate of $4.44. Based on a quarterly payout of 22 cents, the shares have a dividend yield of 2.17%. During the first half of 2012, Allstate earned $1.189 billion, or $2.40 a share, improving from a net loss of $100 million, or 19 cents a share, a year earlier. First-half underwriting income totaled $657 million, compared to an underwriting loss of $1.174 billion during the first half of 2011.
  • Shares of Travelers closed at $72.12 Thursday, returning 25% year-to-date and trade for 10 times the consensus 2013 EPS estimate of $6.88. Based on a quarterly payout of 46 cents, the shares have a dividend yield of 2.55%. The company reported net income of $1.169 billion, or $5.50 a share, for the first three quarters of 2012, increasing from $808 million, or $1.88 a share, during the first three quarters of 2011. The company's pre-tax underwriting gain for the first three quarters was $845 million, improving from an underwriting loss of $1.453 billion, a year earlier.
  • AIG's shares closed at $34.98 Thursday, rising 51% year-to-date, as the government has wound-down its stake in the company's common shares, mainly through AIG buybacks. The shares trade for 10 times the consensus 2013 EPS estimate of $3.50. Leaving aside AIG's epic bailout, and the equally fascinating story of how the company is nearly finished paying the government back, the company reported after-tax operating income of $4.955 billion or $2.73 a share, for the first half of 2012, increasing from $3.329 billion, or $1.96 a share, a year earlier. The company's underwriting loss narrowed to $397 million in the first half of 2012, from $1.962 billion, during the first half of 2011.
  • Shares of Chubb closed at $79.39 Thursday, returning 17% year-to-date. The shares trade for 13 times the consensus 2013 EPS estimate of $6.08. Based on a quarterly payout of 41 cents, the shares have a dividend yield of 2.07%. For the first three quarters of 2012, the company reported net income of $1.443 billion, or $5.29 a share, increasing from $1.226 billion, or $4.16 a share, during the first three quarters of 2011. Underwriting income for the first three quarters totaled $880 million, rising from $290 million a year earlier.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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