NEW YORK ( TheStreet) -- Insurance shares this year have been to investors what kryptonite is to Superman. That's why conservative investors looking for attractive insurance stocks favor the likes of Progressive ( PGR) or Loews ( L). But there are better alternatives. The following companies aren't risk-free but are safer than many of their peers and may generate good returns in the next year. They were selected based on low price-to-earnings ratios, low-to-average price-to-book values, a low beta (a tendency to follow broader stock-market trends) and high dividend yield. (SNL Financial provided a significant amount of the data.)
With the recent announcement that the insurance regulator plans to introduce a new risk calculation for RMBS portfolios, American Financial Group is in a strong position to receive a boost to its capital and surplus of $900 million, and, thus, its risk-based capital position. The stock price has fallen about 6% in the past three months, bringing the 12-month gain to 7.6%. With a P/E ratio of 5.4, price to book of 74.6%, low interest in the stock and a short-interest ratio of only 2, American Financial Group is alluring. It's the proverbial market follower, with a beta of 1.01 (almost a perfect correlation), and trades at 24% below analysts' mean target price. The insurer offers a dividend yield of 2.21% to sweeten the pot.