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Introduction:

The insurance industry is one that I am sure we have all encountered at one point or another. Probably most of us all view the insurance industry the same way; it is service that we don't necessarily need but can't afford to be without should we need to use it. For that reason we all buy insurance but most of us never get in return what we pay for the service. I believe that every income portfolio should seek to profit from the insurance industry in one way or another. For that reason I decided to highlight 8 insurance companies and compare them across a couple categories that income investors might find important.

Company Data

I would like to quickly highlight some financial data for each of these companies that I will use in our comparison section later. The data for each company below highlights the revenue, net income, and EPS for each company over the last 5 years. We will also look at the current P/E ratio, dividend yield, and dividend payout ratios as well. Each one of the below companies derive a significant portion of their income from insurance products.

AFLAC Inc. (NYSE:AFL)

  • Financial Data
  1. P/E Ratio: 9.06
  2. Dividend Yield: 2.43%
  3. Consecutive Years of Dividend Increases: 30
  4. Dividend Payout Ratio: 22%
2008 2009 2010 2011 2012
Revenue 17.31B 19.62B 21.19B 24.32B 26.34B
Net Income 1.25B 1.5B 2.34B 1.96B 2.87B
EPS 2.62 3.19 4.95 4.18 6.11

MetLife Inc. (NYSE:MET)

  • Financial Data
  1. P/E Ratio: 21.98
  2. Dividend Yield: 2.31%
  3. Consecutive Years of Dividend Increases: 0
  4. Dividend Payout Ratio: 51%
2008 2009 2010 2011 2012
Revenue 52.84B 42.66B 54.12B 70.66B 69.36B
Net Income 3.51B (2.29B) 2.78B 6.82B 1.28B
EPS 4.14 (2.89) 3.00 6.29 1.12

Allstate Corp. (NYSE:ALL)

  • Financial Data
  1. P/E Ratio: 10.73
  2. Dividend Yield: 2.00%
  3. Consecutive Years of Dividend Increases: 2
  4. Dividend Payout Ratio: 21%
2008 2009 2010 2011 2012
Revenue 31.32B 33.56B 32.26B 33.17B 33.2B
Net Income (1.68B) 854M 928M 788M 2.31B
EPS (3.07) 1.58 1.71 1.51 4.68

Prudential Financial Inc. (NYSE:PRU)

  • Financial Data
  1. P/E Ratio: 49.82
  2. Dividend Yield: 2.09%
  3. Consecutive Years of Dividend Increases:4
  4. Dividend Payout Ratio: 103%
2008 2009 2010 2011 2012
Revenue 33.3B 35.56B 39.14B 50.9B 88.08B
Net Income (1.1B) 3.04B 3.19B 3.63B 454M
EPS (2.42) 7.63 6.72 7.51 1.00

Progressive Corp. (NYSE:PGR)

  • Financial Data
  1. P/E Ratio: 16.55
  2. Dividend Yield: 1.09%
  3. Consecutive Years of Dividend Increases: 0
  4. Dividend Payout Ratio: 70%
2008 2009 2010 2011 2012
Revenue 14.69B 14.6B 14.96B 15.5B 17.07B
Net Income (70M) 1.06B 1.07B 1.02B 902.3M
EPS (0.10) 1.57 1.61 1.59 1.48

Travelers Companies Inc. (NYSE:TRV)

  • Financial Data
  1. P/E Ratio: 12.31
  2. Dividend Yield: 2.44%
  3. Consecutive Years of Dividend Increases: 7
  4. Dividend Payout Ratio: 30%
2008 2009 2010 2011 2012
Revenue 24.9B 24.94B 25.14B 25.47B 25.76B
Net Income 2.92B 3.6B 3.19B 1.42B 2.45B
EPS 4.82 6.33 6.62 3.36 6.30

Chubb Corp. (NYSE:CB)

  • Financial Data
  1. P/E Ratio: 13.65
  2. Dividend Yield: 2.03%
  3. Consecutive Years of Dividend Increases: 28
  4. Dividend Payout Ratio: 27%
2008 2009 2010 2011 2012
Revenue 13.58B 13.04B 13.25B 13.57B 13.6B
Net Income 1.8B 2.18B 2.17B 1.68B 1.55B
EPS 4.92 6.18 6.76 5.76 5.69

Hanover Insurance Group Inc. (NYSE:THG)

  • Financial Data
  1. P/E Ratio: 35.78
  2. Dividend Yield: 2.65%
  3. Consecutive Years of Dividend Increases: 7
  4. Dividend Payout Ratio: 95%
2008 2009 2010 2011 2012
Revenue 2.68B 2.88B 3.16B 3.94B 4.6B
Net Income 84.5M 187.8M 153.2M 31.9M 46.1M
EPS 0.40 3.63 3.30 0.72 1.00

Comparison Of Data:

I could make a compelling case for each of the stocks above as to why you should own them inside your income portfolio. In order to know which one represents the greatest value though a side by side comparison of all of these stocks is needed to justify value. For that reason I decided to compare these stocks across 5 different data elements. The data I compared consisted of the (P/E ratio), (dividend yield), (dividend payout ratio), (5 yr average revenue growth), and a custom statistic that I have used quite often for analysis (5 yr total EPS/current share price). The last statistic is one that I use to determine how much money a company has made for its investors over the last 5 years relative to its current share price. I ranked all the stocks based upon where they stood in each category on a scale from 1-8 8 being the best and 1 the worst for that category. The results of this analysis can be viewed in the graph below.


(Click to enlarge)

As you can see AFL has far distanced itself from the other insurance companies scoring in the top three of each data category. TRV is also a nice alternative to AFL but as you can see do not expect large revenue growth from this company. All data for the above table was based upon current data and share prices as of 1:30 EST 7/8/2013.

Summary:

All of the above mentioned stocks have the potential to be a good contributor to any income portfolio. I do feel however that based upon my analysis as demonstrated above that AFL offers the best potential for both current and future returns as well as income potential. Please reply in the comments section below and let me know what you think about these and any other insurance companies you may be invested in.

Source: Ranking And Comparing 8 Income Generating Insurance Companies