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Recently Doug Kass disclosed that he is finding good value in the insurance sector and highlighted four stocks that he is very bullish on. One, Metlife (MET), I profiled yesterday. Here are his other three selections analyzed.

Hartford Financial Services (HIG) - The Hartford Financial Services Group, Inc., through its subsidiaries, provides insurance and financial services in the United States and internationally. The companyÂ’'s Property and Casualty Commercial segment provides workersÂ’ compensation, property, automobile, marine, livestock, liability, and umbrella coverages, as well as customized insurance products and risk management services, including professional liability, fidelity, surety, specialty casualty coverages, and third-party administrator services.
Valuation and Prospects – Hartford goes for under 7 times this year’s estimated EPS and around 6.5 times 2012’s consensus. HIG has absolutely hammered earnings estimates the last three quarters. The stock now is in the bottom quarter of its five-year valuation range based on P/B, P/E and P/CF. It yields 1.6% after doubling its dividend payment recently. It still pays out less than 20% of its pre-crisis dividend payout. S&P predicts average annual earnings growth of 17% over the next three years. HIG currently sells for $26.37. S&P has a price target of $34 on Hartford and FBR Capital just raised its price target to $35.
Lincoln National Corporation (LNC) - Lincoln National Corporation, through its subsidiaries, engages in multiple insurance and retirement businesses in the United States. It sells a range of wealth protection, accumulation, and retirement income products and solutions. These products include fixed and indexed annuities, variable annuities, universal life insurance (UL), variable universal life insurance (VUL), linked-benefit UL, term life insurance, mutual funds, and group life insurance. The company also provides employer-sponsored fixed and variable annuities, and mutual fund-based programs; single and survivorship versions of UL and VUL, including corporate-owned UL and VUL, and bank-owned UL and VUL products to small and mid-sized banks and large-sized corporations; and group non-medical insurance products, principally term life, disability and dental.
Valuation and Prospects – Lincoln National sells for just over 7 times this year’s projected earnings and just 6.75 times 2012’s consensus earnings. LNC at these levels is selling in the lower third of its five-year valuation range based on P/S, P/CF and P/B. S&P projects Lincoln National will grow earnings an average of 15% over the next three years, it has a A- rated balance sheet and its earnings estimates have increased for 2011 and 2012 over the last ninety days. LNC at $28.50 is significantly under analysts’ price targets of $37 at S&P and FBR Capital at $36.
Prudential Financial (PRU) - Prudential Financial, Inc., through its subsidiaries, offers various financial products and services in the United States, Asia, Europe and Latin America. The company operates through three divisions: The U.S. Retirement Solutions and Investment Management, The U.S. Individual Life and Group Insurance, and The International Insurance and Investments.
Valuation and Prospects – Prudential sells for 9.5 times this year’s expected earnings and just over 8 times 2012’s consensus EPS. PRU has crushed earnings estimates each of the last three quarters. Consensus earnings estimates have significantly been raised for 2011 and 2012 over the last ninety days. Despite this, PRU is down 6% since mid February along with most of the financial sector. Prudential has an A rated balance and yields 1.9. PRU’s large excess capital position and strong cash flow could allow it to increase its dividend and/or increase its stock buyback program. It is also undervalued at $63.59. S&P has a price target of $75 as does Credit Suisse. Morgan Stanley is at $71.
Source: 3 Recent Doug Kass Insurance Industry Picks