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Both the property and casualty [P&C] insurers and the reinsurers are getting cheap. 

I ran a screen of 26 P&C insurers and reinsurers.  These are the price to book and price to tangible book values of the companies.

Insurers 08 07 10

The average price to book of the group is 0.87, 5% above the average multi-decade low.  The median price to book is 0.84, 9% above the average multi-decade low. Sixteen of the companies are trading below tangible book value.

However, at least two companies skew the averages.  Both AIG (NYSE:AIG) and XL Capital (NYSE:XL) are insurers of bonds and structured products, and the market is expecting both to take significant write-downs on their capital.  However, if you exclude those two, the average price to book is 0.89 and the average price to tangible book value is 0.92, still very inexpensive.

The stocks are cheap for a reason, of course.  Insurers carry large fixed income investment portfolios, and the market is expecting at least some losses on the assets.  In addition, the pricing cycle is deteriorating, which is not good for the stocks.

However, value is being created in the group.  The stocks will likely be significantly higher three years from now.

Disclosure: None

Source: Property and Casual Insurers, and Reinsurers Are Getting Cheap