Logan asked in Business & FinanceInvesting · 8 years ago

which is the best insurance company to invest in?

I'm doing a school project to present a stock and really don't know that much about them. I have to do my project on insurance companies either buying it or selling it short. I know that if there was a a good answer to my question then everyone would be investing in the company.

Are there any insurance companies that plan on doing something that could potentially raise stock (merging with another company, changing CEO, paying a very large sum)? Also what should be some good indications that the stock is worth investing in?

Thank you in advance!

2 Answers

  • 8 years ago
    Favorite Answer

    I have no clue how you'd research an insurance company rumor that might push its stock price.

    In any sector, a good stock pick can be made because the options trade well, the stock has a high dividend yield or the underlying value is expected to increase nicely in an acceptable time frame.

    For high dividend yield Google "high dividend yield insurance stock" - I found Cincinnati Financial Corp. (CINF) is a $6 billion property and casualty insurance company. It pays the fifth highest yield among the S&P500 Dividend Aristocrats. Its yield of 4.4% is 155 basis points above the average yield for the overall index. The company's competitors The Chubb Corporation (CB) and Hartford Financial Services Group (HIG) pay yields of 2.3% and 2.4%, respectively. Cincinnati Financial Corp. has a dividend payout ratio at 138%. The sustainability of the dividend at the current level is questionable. The insurance provider is expected to grow EPS at an average rate of 5% per year in the next five years, following a sharp contraction in EPS over the past five years. Currently, the stock is trading at $36.7 a share, which is close to its 52-week high. Fund manager Jean-Marie Eveillard (First Eagle Investment Management - check out its top picks) holds an 8% stake in the company.

    For best optionable insurance stocks I Googled those words and found Aspen Insurance Holdings Ltd. (AHL). Seems reasonable. Search those harder. Remember time has a value. Option prices in November and December will be significantly better than October's because of that.

    For stocks to buy and hold, I look for the following:

    5-Year Annual Revenue Growth > 15%

    1-Year Revenue Growth > 12%

    Gross Margin > 35%

    Net Margin > 15%

    Debt to Equity < 50%

    Current Ratio > 1.3

    Return on Equity > 15%

    Normalized P/E < 20

    PEG Ratio Close to 1

    Dividends Current Yield > 2%

    I do not sell short so I can't help you there. You can read about it at Motley Fool. And Google "highest short interest stocks" for a list from highshortinterest.com and other sites.

    Good luck!

  • Anonymous
    4 years ago

    Sit back and calm down my buddy. The very fact of the topic is that insurance corporations do not go bankrupt in the normal sense. They readily get obtained by using other insurers. Sounds like your dad may have had a hybrid coverage that has an investment element to it. The investment shouldn't be doing well and isn't covering the price of keeping the coverage expenses. Tough for me to advocate further without seeing the coverage and many others. However in spite of everything do not be worried about the solvency of the coverage carrier.

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