BOSTON ( TheStreet) -- Insurance stocks are in vogue as companies are making money on investments and writing policies. Plus, the crazy half-brother known as AIG ( AIG) has been lying low, giving insurance companies a breather from bad-news flow.

Indianapolis-based Baldwin & Lyons ( BWINB) is rising in investment stature, according to TheStreet.com's stock model, which upgraded the insurer two months ago following impressive third-quarter results. Baldwin & Lyons has risen 3% since then and recently broke into our list of the top-100-ranked stocks.

Baldwin & Lyons endured a difficult 2008. It posted net losses in three out of four quarters. Management watched the company's share price plummet from a high of $27.39 to a low of $16.50. In 2009, losses subsided and profitability resumed. In the third quarter, Baldwin & Lyons swung to a profit of $14 million, or 97 cents a share, from a loss of $7 million, or 48 cents, a year earlier. The company's gross and operating margins climbed from negative territory to 20%.

Baldwin & Lyons' balance sheet improved considerably. Cash and marketable securities more than doubled to $189 million as debt increased 23% to $9 million. The insurer is modestly levered. Its two U.S.-based subsidiaries, Protective Insurance and Sagamore Insurance, receive strong marks from our insurance model. Protective earns a grade of "A" (excellent) and Sagamore merits a grade of "B" (good). Our stock model gives the holding company a financial-strength score of 7.9 out of 10, higher than the "buy"-list average of 7.1.

In addition, the stock pays a quarterly dividend of 25 cents, which translates to an annual yield of 4.2%. The company's payout ratio, a measure of dividend safety, clocks in at a stable 46%. The quarterly dividend peaked at 35 cents a share in 2007, prior to the onset of the recession. If operating conditions continue to improve, it's feasible for management to raise the distribution again. Baldwin & Lyons has amassed a record of consistent payouts and dividend growth starting in the 1980s.

The stock trades at a price-to-earnings ratio of 11 and a price-to-book ratio of 1, discounts to insurance-industry averages. However, the shares are comparatively expensive when considering sales and cash flow per share. Baldwin & Lyons is a lesser-known insurance company, which makes it attractive to value-conscious investors. But its daily trading volume, around 17,000 shares, is notably low, so the stock is susceptible to a major slide if an institutional owner jumps ship.

Baldwin & Lyons's shares increased 29% over the past year, matching the Dow Jones Industrial Average, but trailing the Russell 2000, a small-cap barometer. We rate the insurer "buy."

-- Reported by Jake Lynch in Boston.

More from Opinion

Intel's Next CEO Should Try Harder to Protect Its Flanks Against AMD and Others

Intel's Next CEO Should Try Harder to Protect Its Flanks Against AMD and Others

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

Wednesday Wrap-Up: GE and Facebook

Wednesday Wrap-Up: GE and Facebook

PayPal Strikes Again, Facebook, and AT&T -- 3 Tech Stories You Must Know

PayPal Strikes Again, Facebook, and AT&T -- 3 Tech Stories You Must Know

How to Invest Like Warren Buffett

How to Invest Like Warren Buffett