Stocks & Investing
Stocks and InvestingStocks and Investing 
Tue, August 30, 2011
NATL, TRV, GLRE, WRB, NAVG, BWINB, Insurance - Property Casualty Stocks Overvalued
August 30, 2011/ M2 PRESSWIRE / BUYINS.NET / http://www.squeezetrigger.com is monitoring the Insurance - Property Casualty sector and these stocks are the most undervalued as of today. NATIONAL INTERSTATE CORP (NASDAQ:NATL), TRAVELERS COS INC/THE (NYSE:TRV), GREENLIGHT CAPITAL RE LTD-A (NASDAQ:GLRE), WR BERKLEY CORP (NYSE:WRB), NAVIGATORS GROUP INC (NASDAQ:NAVG), BALDWIN & LYONS INC -CL B (NASDAQ:BWINB) are all expected to go Down as they are Overvalued according to industry standard valuation metrics. The valuation model employs a three-factor approach to stock valuation using fundamental variables--the company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's forecasted 12-month EPS, and the 30-year Treasury yield--to create a highly accurate reflection of a company's fair value.
The chart below displays the projected Fair Value and Valuation discount/premium of the most undervalued stocks in the highlighted industry group:
Symbol Company Name Last Close Fair Value Valuation Industry
NATL NATIONAL INTERSTATE CORP 23.57 21.38 10.20% Overvalued Insurance - Property Casualty
TRV TRAVELERS COS INC/THE 50.75 47.51 6.80% Overvalued Insurance - Property Casualty
GLRE GREENLIGHT CAPITAL RE LTD-A 22.5 21.39 5.20% Overvalued Insurance - Property Casualty
WRB WR BERKLEY CORP 30.72 27.38 12.20% Overvalued Insurance - Property Casualty
NAVG NAVIGATORS GROUP INC 44.16 44.12 0.10% Overvalued Insurance - Property Casualty
BWINB BALDWIN & LYONS INC -CL B 23.66 21.47 10.20% Overvalued Insurance - Property Casualty
Here are some of the variables that are utilized when calculating the Fair Market Valuation of a stock: Long-run EPS growth rate, Duration of Business-growth-cycle, Volatility of EPS growth rate, Systematic or beta risk of the firm, Correlation between the firm's EPS and the interest rate environment, EPS growth volatility, Dividend payout ratio, Buffer earnings, Interest rate related criteria: Interest rate (30 year yield) long-run level, Duration of interest rate cycle, Interest rate volatility. The Fair Market Valuation uses 12-month historic and forecasted EPS values and the current 30-year treasury yield as primary determinants. When calculating risk/return values such as the Sharpe ratio, the historic periods used are five years.
Some expected results of the Valuation Model are: the valuation of a stock increases in a declining interest rate environment. Increasing current and/or projected EPS will produce a higher Valuation. While long-term EPS growth would produce a corresponding long-term Valuation increase, concomitant long-term interest rate increases would offset EPS growth and depress the Valuation. The shorter a company's own business cycle, the higher its stock Valuation will be.
NATIONAL INTERSTATE CORP (NASDAQ:NATL) - National Interstate Corporation, through its subsidiaries, operates as a specialty property and casualty insurance company in the United States, the District of Columbia, and the Cayman Islands. It underwrites and sells traditional and alternative property and casualty insurance products primarily to the passenger transportation industry and the trucking industry; general commercial insurance to small businesses in Hawaii and Alaska; and personal insurance to owners of recreational vehicles and commercial vehicles in the United States. The company provides truck and passenger transportation alternative risk insurance products; workers compensation coverage; and commercial auto liability, general liability, physical damage, and motor truck cargo coverage for truck and passenger operators, as well as offers coverage for campsite liability, vehicle replacement coverage, and coverage for trailers, golf carts, and campsite storage facilities. National Interstate Corporation also provides companion personal auto coverage to recreational vehicle policyholders. It offers its products through various distribution channels, including independent agents and brokers, program administrators, affiliated agencies, and agent internet initiatives. The company was founded in 1989 and is headquartered in Richfield, Ohio. National Interstate Corporation is a subsidiary of Great American Insurance Company.
TRAVELERS COS INC/THE (NYSE:TRV) - The Travelers Companies, Inc., through its subsidiaries, provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals primarily in the United States. The company operates in three segments: Business Insurance; Financial, Professional, and International Insurance; and Personal Insurance. The Business Insurance segment offers property and casualty products and services, such as commercial multi-peril, property, general liability, commercial auto, and workers compensation insurance. It operates in six groups: Select Accounts, which serves small businesses; Commercial Accounts that serves mid-sized businesses; National Accounts, which serves large companies; Industry-Focused Underwriting that serves targeted industries; Target Risk Underwriting, which serves commercial businesses requiring specialized product underwriting, claims handling, and risk management services; and Specialized Distribution that offers products to customers through licensed wholesale, general, and program agents. The Financial, Professional, and International Insurance segment provides surety and financial liability coverage, which requires a credit-based underwriting process, and property and casualty products primarily in the U.S., the United Kingdom, Ireland, and Canada. The Personal Insurance segment offers property and casualty insurance covering personal risks, primarily automobile and homeowners insurance to individuals. It distributes its products through independent agents, sponsoring organizations, joint marketing arrangements with other insurers, and direct marketing. The company was founded in 1853 and is based in New York, New York. The Travelers Companies, Inc. operates independently of Citigroup, Inc. as of August 20, 2002.
GREENLIGHT CAPITAL RE LTD-A (NASDAQ:GLRE) - Greenlight Capital Re, Ltd., through its subsidiary, Greenlight Reinsurance, Ltd., operates as a specialty property and casualty reinsurer. The companys frequency business consists of smaller losses emanating from multiple events and helps the clients to increase their own underwriting capacity. Its severity business includes contracts with the potential for significant losses emanating from one event or multiple events. Greenlight Capitals products include personal and commercial property, motor liability, workers compensation, health, medical malpractice, general liability, and professional liability lines that cover risks on worldwide basis. The company offers its products through reinsurance brokers. Greenlight Capital Re, Ltd. was founded in 2004 and is based in Grand Cayman, the Cayman Islands.
WR BERKLEY CORP (NYSE:WRB) - W.R. Berkley Corporation, through its subsidiaries, operates in the property casualty insurance business in the United States and internationally. The company operates in five segments: Specialty, Regional, Alternative Markets, Reinsurance, and International. The Specialty segment underwrites third-party liability risks, primarily excess and surplus lines, including premises operations, professional liability, commercial automobile, products liability, and property lines. The Regional segment provides commercial insurance products to small-to-mid-sized businesses, and state and local governmental entities in the United States. It sells its products through a network of non-exclusive independent agents. The Alternative Markets segment engages in developing, insuring, reinsuring, and administering self-insurance programs and other alternative risk transfer mechanisms to employers, employer groups, insurers, and other groups or entities seeking alternative ways to manage their exposure to risks. This segment also provides administrative and consulting services. The Reinsurance segment underwrites property casualty reinsurance on a treaty and facultative basis. It underwrites specialty lines of business, including professional liability, umbrella, workers compensation, commercial automobile, and trucking. The International segment offers personal and commercial property casualty insurance in South America; commercial insurance in the United Kingdom, Continental Europe, and Canada; and reinsurance in Australia and the Southeast Asia. The company was founded in 1967 and is based in Greenwich, Connecticut.
NAVIGATORS GROUP INC (NASDAQ:NAVG) - The Navigators Group, Inc., an international insurance holding company, engages in the underwriting and management of property and casualty insurance in the United States, the United Kingdom, Belgium, and Sweden. It focuses on underwriting ocean marine insurance, as well as professional liability insurance and specialty liability insurance consisting of contractors' liability, and primary and excess liability coverages. The companys product line in marine business includes cargo and marine liability, as well as other product lines, which include marine liability, offshore energy, specie, bluewater hull, and assumed reinsurance of other marine insurers. It also underwrites insurance for harbor craft and other small craft, such as fishing vessels, providing physical damage and third party liability coverages; cargo insurance, which provides coverage for physical damage to goods in the course of transit; and protection and indemnity business. In addition, The Navigators Group underwrites engineering and construction business, which comprises coverage for construction projects, including damage to machinery and equipment, and loss of use due to delays; and onshore energy insurance, primarily property damage and business interruption coverages for the oil and gas, chemical, and petrochemical industries. Further, it underwrites traditional inland marine insurance products, including builders risk, contractors tools and equipment, fine arts, computer equipment, and motor truck cargo. The company was founded in 1981 and is based in New York, New York.
BALDWIN & LYONS INC -CL B (NASDAQ:BWINB) - Baldwin & Lyons, Inc., through its subsidiaries, engages in marketing and underwriting property and casualty insurance products primarily in the United States and Canada. The company provides various fleet transportation insurance products for the motor carrier industry. Its product lines include casualty insurance, such as motor vehicle liability, physical damage, and other liability insurance; workers' compensation insurance; and fidelity and surety bonds. The company also provides specialized accident (medical and indemnity) insurance products for independent contractors; and offers inland marine products primarily consisting of cargo insurance. In addition, Baldwin & Lyons, Inc. offers various additional services, primarily for its insureds, which include risk surveys and analyses, government compliance assistance, and loss control and cost studies, as well as research, development, and consultation in connection with new insurance programs, such as development of computerized systems to assist customers in monitoring their accident data. Further, it provides claims handling services primarily to clients with self-insurance programs. The companys reinsurance business accepts cessions and retrocessions from selected insurance and reinsurance companies, principally reinsuring against catastrophes. Additionally, it markets private passenger automobile liability and physical damage coverage products to individuals through a network of independent agents; and commercial property and business owners liability coverage products. The company was founded in 1930 and is based in Indianapolis, Indiana.
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