In this article, we discuss the 5 undervalued insurance stocks to buy now. To read the detailed analysis of the insurance industry, go directly to the 10 Undervalued Insurance Stocks to Buy Now.
5. The Hartford Financial Services Group, Inc. (NYSE:HIG)
Number of Hedge Fund holders: 33
The Hartford Financial Services Group, Inc. (NYSE:HIG) is an American insurance and mutual funds firm headquartered in Connecticut. The company’s revenue sources include automobile insurance, property insurance, general liability insurance, workers’ compensation, mutual funds, and ETFs. At the time of market close on December 12, The Hartford Financial Services Group, Inc. (NYSE:HIG) was trading at a PE ratio of 10.32.
On October 27, The Hartford Financial Services Group, Inc. (NYSE:HIG) announced a 10% raise to its quarterly dividend. The new dividend of $0.425 is payable by January 4 to the shareholders of record on December 1. As of December 13, the company has a dividend yield of 2.26%.
Among the 920 hedge funds in the Insider Monkey database, 33 hedge funds held a position in The Hartford Financial Services Group, Inc. (NYSE:HIG) in Q3. Diamond Hill Capital retained its position as the most prominent shareholder with over 3.4766 million shares, valued at $215.34 million.
Here is what ClearBridge Investments had to say about The Hartford Financial Services Group, Inc. in its Q3 2021 investor letter:
“Financials continued to gain from the economic recovery from COVID-19. Insurance companies, such as Hartford Financial Services Group, benefited from rate increases and margin improvements during the quarter, as well as historically high retention and premium growth driving an improvement in ROE.”
4. Aflac Incorporated (NYSE:AFL)
Number of Hedge Fund holders: 34
Aflac Incorporated (NYSE:AFL) is the largest provider of supplemental insurance in the US. It is headquartered in Georgia. The company works in Japan and the United States. Despite opening near its 52-week high at a stock price of $71.88 on December 13, the company still seems undervalued and is trading at a PE ratio of 9.02.
On November 18, Piper Sandler analyst John Barnidge maintained an Overweight rating on Aflac Incorporated (NYSE:AFL)’s shares and raised the price target to $80 from $73. The analyst told investors that the company “strikes us as the natural evolution in the capital optimization that has been occurring at the company for much of the last half-decade.”
Aflac Incorporated (NYSE:AFL) has been raising its dividend for the past 39 years. In November, Aflac Incorporated (NYSE:AFL) raised its dividend by 5% to $0.42, payable by March 1, 2023, to the shareholders of record on February 15, 2023.
In addition, Aflac Incorporated (NYSE:AFL) had previously authorized share repurchases of 25.6 million shares of its common stock at the end of September. However, the company management authorized the repurchase of 100 million additional shares on November 8.
3. The Travelers Companies, Inc. (NYSE:TRV)
Number of Hedge Fund holders: 37
The Travelers Companies, Inc. (NYSE:TRV) is a New York-based insurance company and has operations in seven countries including the United States. As of December 13, the company is trading near its 52-week high of $191.16 at $187.05. However, the company stock still provides a good value with a PE ratio of 13.7 at the time of writing.
Our database reveals that in the third quarter, 37 hedge funds had a stake worth $508.67 million in The Travelers Companies, Inc. (NYSE:TRV). In the prior quarter, the total number of hedge funds holding positions in the company was 31, valued at $433.82 million. The most significant shareholder was First Eagle Investment Management with over 2.7 million of The Travelers Companies, Inc. (NYSE:TRV)’s shares, worth $420.037 million.
On November 1, MKM Partners analyst Harry Fong reiterated a Buy rating on The Travelers Companies, Inc. (NYSE:TRV) with a $220 price target, up from $185. The analyst noted that the company’s catastrophic losses of $512 million were just ahead of its estimates and also near what he expected without a significant event.
2. Lincoln National Corporation (NYSE:LNC)
Number of Hedge Fund holders: 39
Lincoln National Corporation (NYSE:LNC) is a holding company that operates asset management and insurance firms through its subsidiaries. At the time of market opening on December 13, the company was trading near its 52-week low of $30.80 at $33.49. The company took a battering this year due to disappointing results and now has a PE ratio of around 10x.
According to our database, hedge funds are optimistic about Lincoln National Corporation (NYSE:LNC) as 39 hedge funds held positions in the company in Q3, up from 34 in the previous quarter. Lyrical Asset Management owned over 3,556,967 of the company shares, valued at $156.186 million, making it the most prominent shareholder in Lincoln National Corporation (NYSE:LNC).
On November 16, Goldman Sachs analyst Alex Scott upgraded Lincoln National Corporation (NYSE:LNC) from Neutral to Buy and lowered the firm’s price target to $46 from $50. Scott believes that the company will be able to rebuild its capital base. Moreover, the company is expected to return to more solid cash flow levels by 2024.
Here is what Chartwell Investment Partners had to say about Lincoln National Corporation (NYSE:LNC) in its Q2 2022 investor letter:
“The three worst-performing stocks in the Dividend Equity accounts includes Lincoln National (NYSE:LNC, 1.9%), down 27.9%. Lincoln’s quarterly results were weak in both life insurance and annuity sales, but we remain positive on the stock given the company’s ongoing de-risking initiatives, leverage to higher rates, and discounted valuation.”
1. Cigna Corporation (NYSE:CI)
Number of Hedge Fund holders: 76
Cigna Corporation (NYSE:CI) is an American healthcare and insurance company. On November 23, Morgan Stanley analyst Erin Wright initiated the company’s coverage with an Overweight rating and a $347 price target. She believes that Cigna Corporation (NYSE:CI) presents “a unique investment opportunity.”
In the third quarter of 2022, Cigna Corporation (NYSE:CI) posted a non-GAAP EPS of $6.04, beating the estimates by 33 cents. The revenues were up 2.2% year-over-year to $45.28 billion and outperformed the forecasts by $570 million. Cigna Corporation (NYSE:CI) also updated its FY22 outlook with a revenue projection of at least $179 billion compared to the previous outlook of $178 billion. In addition, the company expects its net income to be at least $23.10 per share, up from $22.90.
Cigna Corporation (NYSE:CI) is one of the best undervalued dividend stocks as it is trading at a PE ratio of 14.73, which is slightly below the industry average. The company also has several growth catalysts waiting to pop, making the company an interesting prospect for long-term investors.
Cigna Corporation (NYSE:CI) is a dividend stock with a yield of 1.36% as of December 13. The company has a payout ratio of 18.07% and in the last 3 years, its dividend grew at a CAGR of 382%.
Aristotle Atlantic Partners, LLC made the following comment about Cigna Corporation (NYSE:CI) in its Q3 2022 investor letter:
“Cigna Corporation (NYSE:CI) outperformed the S&P 500 Index in the third quarter, as the company reported what we view as solid second quarter results driven by a better-than-expected medical loss ratio. The company continues to be aggressive with share repurchases and we believe the defensive nature of Cigna’s business continues to be attractive during the ongoing macroeconomic uncertainty.”
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