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The insurance industry has become quite adept at understanding risk and getting paid very to well to protect people from the ones that concern them. Investing in this business sector can have an added benefit for this reason. While there are plenty of companies to consider, let's take a look these five to help you build a healthier portfolio: ACE Ltd (ACE), American International Group Inc (AIG), The Travelers Companies Inc (TRV), Hartford Financial Services Group Inc (HIG) and WR Berkley Corporation (WRB).

ACE Ltd

Swiss-based ACE Ltd is obviously doing something very well, and investors would be wise to pay attention. Offering insurance and reinsurance worldwide for a variety of business and personal concerns, ACE is debt-free, it pays nice dividends and its stock price offers both growth and dividends. Trading around $73.50 per share, (with a 52-week range of $56.90 - $74.50, the stock has a one-year target estimate of $79. ACE also pays a nice dividend of $1.88, good for a yield of 2.5%).

While on pace for an 8.8% increase in share price, ACE's dividend helps to make this a very handsome stock to hold. This climb is supported by a 15.83 price to earnings ratio, and its price to book ratio of 1.02 suggests that the stick has reasonable value, supporting its current run that has pushed it more than 10% above its 200-day moving average. Investors should look to ACE Ltd as a very good stock to hold for both growth and dividend reasons.

American International Group Inc

For all the careful planning that the insurance sector performs, American International is caught in the wake of on-going European financial crisis. Expected to make big gains last year, the company saw its 52-week range surge to $19.18 - $42.69, and its share price tumble for most of that time. Currently trading at $27.50 per share, its one-year target estimate shows no change, and its price to earnings ratio of 6.18 does little to build any confidence. Adding to its woes for investors, AIG doesn't pay dividends.

Highly volatile (with a beta of 3.78), the company will have a struggle to regain its momentum. Year-to-year quarterly revenue was down 35%, and although its stock is undervalued (price to book ratio is 0.60), the strong run on Wall Street in 2012 has only recently been able to drag the share price above its 200-day moving average of $24 per share. With other solid options in this business sector, I believe that American International Group's current struggles should be enough to keep investors from taking any new positions at this time.

The Travelers Companies Inc

Focusing primarily on the United States market, The Travelers Companies offers personal property and casualty insurance to corporate, governmental and private individuals. After a strong 2010, the company struggled to keep up, posting a 31% earnings decline largely due to lower underwriting gains and net investment income that lagged behind the previous year. Earnings per share fell from $1.89 in 2010 to $1.48 last year.

Despite its travails last year, the news looks better for Travelers in 2012. Experiencing very little volatility (its beta is 0.76), the company's current share price of $60 is poised for a projected 5% climb, based on its one-year target of $63.50. This belief is supported by its price to earnings ratio of 17.8 and its low price to book ratio of 0.96. Add in the fact that the company pays a very nice $1.64 dividend for a 2.7% yield, and The Travelers Group offers another attractive mixed share option for investors, and I like it as an option going forward.

Hartford Financial Services Group Inc

Much like American Insurance Group, Hartford Financial Services Group is struggling. Coming off a terrible 2011 which saw the company post big losses in revenue (down 31.5%) and earnings (a 100% decline), the company is being pressured by investors to raise share prices. Many analysts believe this can be accomplished by splitting its life-insurance and property-casualty businesses.

Currently trading around $20 per share, the company's price has only recently reached its declining 200-day average, in spite of a price-to-book ratio that stands at a mere 0.41. Due to its reluctance to separate its core businesses, Hartford may have a tough time improving its return on equity, now standing at a paltry 4.4%. I would not recommend this stock to anyone until the company formulates a plan to jump start its lagging share price.

WR Berkley Corporation

Although it saw mixed results in 2011, WR Berkley Corporation is looking ahead to a potentially strong 2012. Our final company to consider, it specializes in the property casualty insurance business, operating mostly in the United States. The company's stock is currently trading just over $36 per share as it attempts to move past the high of its 52-week range of $27.26 - $36.50. This rise is expected to occur, as evidenced by its one-year target estimate of $37.50. The company also pays an annual dividend of $0.32 for a yield of 0.9%.

With a reputation for being a well-managed company, WR Berkley has avoided major involvement in the catastrophic risk sector. The move seems to have helped reduce its volatility (its beta is a low 0.76) while making solid share price gains (a 23.66% increase in the past year). With an 11.3% rise in quarterly revenue and a reasonable price to book ratio of 1.28, WR Berkley continues to be a very good performer, and one that could be a great addition to almost anyone's portfolio.

Insuring Investment Health

Because of the risk and inherent volatility, many investors shy away from the insurance industry when looking for new investments. While I would recommend avoiding American International Group Inc and Hartford Financial Services Group Inc, the numbers stack up favorably for investors considering ACE Ltd, The Travelers Companies Inc and WR Berkley Corporation. These companies offer a better level of stability and dividends to make them very appealing.

Source: 3 Insurance Stocks To Buy, 2 To Avoid