) -- Are insurance stocks due for another growth spurt?


(CNO) - Get Report


PMI Group

( PMI) and

Genworth Financial

(GNW) - Get Report

led the pack from March's low in stock prices, tripling or quadrupling in a short span.


(RDN) - Get Report

ran ahead over the summer, more than doubling, but by the beginning of September, investors' concerns mounted as the economy continued to show signs of weakness. Nine insurance stocks had recorded share-price declines over the previous three months, including


( AGP) and


(MBI) - Get Report


In the past three months, companies that have been most exposed to the economy have fared the worst. They include

Kingsway Financial Services

(KFS) - Get Report



( ABK) and MBIA, down 68%, 48% and 41%, respectively. Forty-seven percent of insurance stocks have fallen in the past three months.

Gainers include


(WCG) - Get Report

, up 42%, and


(AMP) - Get Report

, up 32%. Insurance shares, on average, have risen 0.2%, reflecting uncertainty even as


(MET) - Get Report

released positive earnings projections.

Price-to-earnings ratios are little changed, according to SNL Financial. The average insurance stock has a P/E ratio of 6.77 versus 6.61 in June. The average price-to-book value has dropped from 90.4% to 88.7%.

There has been waning interest in insurance stocks. Trading volume stands at 78% of the past month's. Short sellers, who bet on share-price declines, have helped to lower the short ratio from 5 to 4.56 in the past week.

It's unlikely investors will find the stocks as attractively priced again. The combination of good value, low P/E ratios and some volatility suggest the insurance sector is primed to take off with the economy.

What's more, health-insurance stocks may rise if mandatory coverage under health-reform legislation is approved. Life and annuity insurers are benefiting from the stock-market rally and falling bond yields. So-called monolines, and property and casualty insurers will be picked up by the rebounding economy.

Conservative investors might prefer stable stocks such as


(PGR) - Get Report



(L) - Get Report

. Those with a higher risk appetite could consider

Lincoln National

(LNC) - Get Report


Hartford Financial Services

(HIG) - Get Report

. Speculators might prefer Ambac or Kingsway Financial Services.

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.