NEW YORK (TheStreet) --Two-thirds of insurers still pay dividends. The exceptions tend to be in health care, such as WellPoint (WLP) , or among firms still struggling, such as PMI Group( PMI). These five stocks offer strong growth potential and the biggest yields.
( UTR) is a Chicago-based multiline insurer.
Cash and equivalents up 4.8% in the third quarter. Investments rose 1.8%. Liabilities fell 2.4%. Policy income rose 2.8%. Profit climbed to $62 million on cost cuts.
Price-to-earnings ratio is 5.6. Price-to-book value is 74%. There's little short interest. Price has risen 1.7% this month and 53% during the past year. The beta is 1.21, indicating some volatility. The price is 16% less than the average price target of analysts.
Fourth-quarter earnings are scheduled for Feb. 1.
4. Fidelity National Financial
is a Jacksonville-based title insurer.
Cash and equivalents fell 33% in the third quarter. Investments rose 6%. Overall assets fell 3% to $8.1 billion and liabilities fell 7%. Policy income was down 6% for the quarter, but up 61% from a year earlier. The company generated its second straight quarter of profit, with $75 million in net income.
Book value per share is at a 12-month high with a price-to-book value of 94.5%. P/E ratio is 10.4. Short interest is limited, with a ratio of 1.2. Stock price has dropped 1.1% this month and 19% during the past year. Beta of 0.8 indicates little correlation to market movements. The price is 28% less than the average price target of analysts.
Employees from two units have been accused of engaging in fraudulent mortgage schemes in lawsuits. Company considers litigation a normal occurrence. The company plans to close its Missouri office by the end of January and cut 15 jobs. Quarterly results are scheduled for Feb. 3.
3. Mercury General
is a Los Angeles-based auto and home insurance company.
Cash and equivalents in the third quarter were up 5%. Investments rose 4.5% and total assets were up 3%. Liabilities also rose fractionally. Policy income was down 6% from the previous quarter. The company generated a $157.7 million profit as it reduced underwriting and policy expenses.
P/E ratio of 3.3. Price-to-book value of 118%. Volume is 49% below average for this stock. Short interest ratio is high at 10. Stock price is down 3.2% this month and 12% during the past year. Beta of 0.8 indicates limited correlation to market. The price is 2.7% more than the average price target of analysts.
Analysts expect weak fourth-quarter results from property and casualty, according to SNL Financial, but underwriting profitability increased. Quarterly results are scheduled for Feb. 8.
2. OneBeacon Insurance Group
is a Bermuda-based property and casualty insurer.
Cash and equivalents rose 65% in the third quarter. Investments were up 6.5% and total assets were up 1%. Liabilities were down marginally. Policy income of $493 million was up 5% from a year earlier. Its $118 million gain on securities compared with a $356 million loss a year earlier. The company generated net income of $108.6 million.
P/E of 3. Price-to-book value of 93.2%. Trading volume is 57% below average. Short interest is 5.5. Stock price has fallen 2.3% this month, but is up 43% during the past year. Its stock price is close to analysts' average price target.
Fourth quarter earnings scheduled for Feb. 3.
1. Zenith National Insurance
( ZNT) is a Woodland Hills, Calif.-based insurer that specializes in workers' compensation.
Cash and equivalents rose 16% during the third quarter. Investments rose 3%. Liabilities fell 2%. Policy income continues 12 month fall, down 24% on the comparable period. Drop in recurring revenue has slowed significantly to 6%.
P/E ratio is 14.4. Price-to-book value is 102%. Activity is 46% below normal for this stock, which has significant short interest of 13.5. Its stock price has dropped 1.1% this month and 11% during the past year. It's trading for 8.1% less than the average target price.
The former chief executive of the California State Compensation Insurance Fund was just appointed chief operating officer of Zenith's main subsidiary. A California workers' compensation judge has resigned to join the legal team. Fourth-quarter earnings are scheduled for Jan. 28.
Reported by Gavin Magor of 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.