NEW YORK (TheStreet) -- More than three-quarters of insurance-company shares have fallen in the past week. Here are five that have risen.
5. Axis Capital Holdings
is a Bermuda-based specialty insurer and reinsurer.
Solid financials but with disappointing net income. Operating return on average equity of 15.5%, compared with the peer average 10.4%. Debt-to-capital ratio, 8.32%; average, 14.3%. Net income, 2.8% of total revenue; average, 3.5%.
A price-to-earnings ratio of 4, which is low, and an analysts' consensus price target that's 19.5% below the current price indicate this is a cheap stock.
Moody's affirmed its ratings with a "stable" outlook Wednesday.
4. Horace Mann Educators
is an Illinois-based multiline insurer specializing in educators' financial needs.
Net income was good despite high leverage and low operating results. Operating ROAE of 9.7%; peer average, 11.8%. Debt-to-capital ratio, 24.8%; average, 17.7%. Net income, 7.8% of total revenue; average, 3.4%.
A P/E ratio of 5.9, trading volume that's 30% below normal and a 22% price gap to analysts' consensus price target make this stock a "buy."
Standard & Poor's revised its outlook to "stable" from "negative" at the end of January before the company's earnings release.
3. First Acceptance
is a Tennessee-based non-standard auto insurer.
Operating ROAE of negative 34.6%; peer average, positive 13%. Debt-to-capital ratio, 19.8%; average, 15.2%. Policy reserves, 0.76 time equity; average, 2.1.
A P/E ratio of 17.3 and a short-interest ratio of 29.5 suggest the stock may drop. It's a risky investment at the current price.
A.M. Best upgraded the company Tuesday and revised the outlook to "positive" from "stable," citing reduced underwriting leverage, and consistent fee and investment income.
2. OneBeacon Insurance Group
is a Bermuda-based financial-guarantee insurer, a subsidiary of
White Mountains Insurance Group
Average operating results coupled with high debt and below-average net income. Operating ROAE of 14.1%; peer average, 14.5%. Debt-to-capital ratio, 30%; average, 10.8%. Net income, 14.5% of total revenue; average, 23.4%.
A P/E ratio of 4.7, which is low, and a dividend yield of 5.8%, which is high, make the stock attractive.
Look for expansion in 2010 as capital freed up from sales is used to boost specialty lines.
1. American International Group
is a New York-based financial-services company and multiline insurer.
Negative operating results and high debt levels, combined with a complex financial structure, make this ward of the state a head-scratcher. Operating ROAE of negative 44.8%; peer average, 6.6%. Debt-to-capital ratio, 69.4%; average, 18.4%. Net income, negative 126% of total revenue; average, 3.7%.
Analysts consider this stock overpriced by 31%. It has an above-average P/E ratio of 9.9 and a price-to-book value of 71.5%. The numbers don't add up to a "buy."
has confirmed its interest in buying AIG's Alico life-insurance unit, but the Federal Reserve Bank of New York holds $9 billion in preferred shares, and no cash is expected to be generated for debt reduction.
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.