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STFC, AHL, MRH, Y, DGICA, ASI, Insurance - Property Casualty Stocks Overvalued

^{Published on 2011-08-30 06:41:37 - WOPRAI}
 

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. STATE AUTO FINANCIAL CORP (NASDAQ:STFC), ASPEN INSURANCE HOLDINGS LTD (NYSE:AHL), MONTPELIER RE HOLDINGS LTD (NYSE:MRH), ALLEGHANY CORP (NYSE:Y), DONEGAL GROUP INC-CL A (NASDAQ:DGICA), AMERICAN SAFETY INS HOLDINGS (NYSE:ASI) 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               
     STFC       STATE AUTO FINANCIAL CORP           14.35          12.33          16.40% Overvalued           Insurance - Property Casualty
     AHL        ASPEN INSURANCE HOLDINGS LTD        24.38          23.41          4.10% Overvalued            Insurance - Property Casualty
     MRH        MONTPELIER RE HOLDINGS LTD          17.18          15.36          11.80% Overvalued           Insurance - Property Casualty
     Y          ALLEGHANY CORP                      299.15         281.49         6.30% Overvalued            Insurance - Property Casualty
     DGICA      DONEGAL GROUP INC-CL A              12.58          10.4           21.00% Overvalued           Insurance - Property Casualty
     ASI        AMERICAN SAFETY INS HOLDINGS        18.84          15.63          20.50% 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.

STATE AUTO FINANCIAL CORP (NASDAQ:STFC) - State Auto Financial Corporation, through its subsidiaries, writes personal and business lines of insurance in the United States. It markets a line of property and casualty insurance products, such as standard personal and commercial automobile, nonstandard personal automobile, homeowners and farmowners, commercial multi-peril, workers compensation, commercial general liability, fire and allied lines, and property insurance. State Auto Financial Corporation offers its products and services through independent insurance agencies in 34 states and the District of Columbia. The company was founded in 1950 and is headquartered in Columbus, Ohio. State Auto Financial Corporation is a subsidiary of State Automobile Mutual Insurance Company.

ASPEN INSURANCE HOLDINGS LTD (NYSE:AHL) - Aspen Insurance Holdings Limited, through its subsidiaries, provides insurance and reinsurance products and services worldwide. The companys Property Reinsurance segment offers treaty catastrophe, which includes protection against losses from earthquakes and hurricanes, as well as other natural and man-made catastrophes, such as floods, tornadoes, fires, and storms; treaty risk excess; treaty pro rata; property facultative; credit and surety reinsurance; and structured reinsurance. Aspens Casualty Reinsurance segment provides U.S. treaty reinsurance that comprises workers compensation, medical malpractice, general liability, and professional liability; international treaty that consists of automobile liability, employers liability, public and product liability, fidelity business, professional indemnity, and other coverages; and casualty facultative reinsurance, that includes umbrella and automobile liability. The companys International Insurance segment offers marine, hull, energy, and construction liability; energy property; specie; aviation; global excess casualty; professional liability; U.K. commercial property; U.K. commercial liability; financial and political risk; financial institutions; management and technology liability; and specialty reinsurance. Aspens U.S. Insurance segment provides U.S. property and casualty insurance. The company distributes its products through brokers and reinsurance intermediaries. Aspen was founded in 2002 and is based in Hamilton, Bermuda.

MONTPELIER RE HOLDINGS LTD (NYSE:MRH) - Montpelier Re Holdings Ltd., through its subsidiaries, provides insurance and reinsurance solutions. The company underwrites various insurance and reinsurance products, including property catastrophe reinsurance, which provides coverage for losses from earthquakes, hurricanes, floods, tornados, fires, and storms; and property specialty reinsurance products comprising risk excess-of-loss reinsurance products with property or engineering risk coverages. It also underwrites other specialty reinsurance products, such as aviation liability, aviation war, space, marine, personal accident, workers compensation, political violence, casualty, and crop, as well as hospital treaty reinsurance, auto liability coverage, and professional liability reinsurance products. In addition, the company underwrites direct insurance and facultative reinsurance coverage on industrial, commercial, and residential property; liability; marine; and space risks, as well as stand-alone political violence, pandemic and event contingency, and excess and surplus lines products. Montpelier Re Holdings Ltd. has operations in Bermuda, the United States, the United Kingdom, and Switzerland. The company was founded in 2001 and is headquartered in Pembroke, Bermuda.

ALLEGHANY CORP (NYSE:Y) - Alleghany Corporation, through its subsidiaries, engages in the property and casualty, and surety insurance business. It underwrites specialty insurance coverages in the property, umbrella/excess, general liability, directors and officers liability, professional liability lines of business, and homeowners insurance. The company also writes surety products, such as commercial surety bonds and contract surety bonds. In addition, Alleghany owns and manages improved and unimproved commercial land, and residential lots in the Sacramento, California. As of December 31, 2009, it owned approximately 320 acres of property in various land use categories. Further, the company engages in the oil and gas exploration and production business. Alleghany Corporation was founded in 1929 and is based in New York, New York.

DONEGAL GROUP INC-CL A (NASDAQ:DGICA) - Donegal Group Inc., through its subsidiaries, provides personal and commercial lines of property and casualty insurance products to businesses and individuals in the United States. Its personal lines of insurance products include private passenger automobile insurance, which provides protection against liability for bodily injury and property damage arising from automobile accidents, and protection against loss from damage to automobiles owned by the insured; and homeowners insurance that offers coverage for damage to residences and their contents from a range of perils, including fire, lightning, windstorm, and theft, as well as covers liability of the insured arising from injury to other persons or their property. The companys commercial lines of insurance products comprise commercial automobile policies that provide protection against liability for bodily injury and property damage arising from automobile accidents, and protection against loss from damage to automobiles owned by the insured; commercial multi-peril policies, which offer protection to businesses against various perils, such as combining liability and physical damage coverages; and workers compensation policies that provide benefits to employees for injuries sustained during employment. Donegal Group markets its insurance products through approximately 2,000 independent insurance agencies in 18 Mid-Atlantic, midwestern, and southeastern states. The company was founded in 1986 and is headquartered in Marietta, Pennsylvania.

AMERICAN SAFETY INS HOLDINGS (NYSE:ASI) - American Safety Insurance Holdings, Ltd. provides specialty insurance and reinsurance solutions for small and medium sized businesses primarily in the United States and Bermuda. The companys Excess and Surplus Lines segment provides property and general liability coverage across specialty classes of businesses, including environmental business that provides general, professional, and pollution liability to contractors, consultants, and property owners; construction business, which offers commercial general liability insurance coverages for residential and commercial contractors; products liability business that offers general and product liability coverages for manufacturers and distributors, non-habitational real estate and real property owners, and landlord and tenant risks. This segment also provides liability coverage for surety business, which offers payment and performance bonds to the environmental remediation and construction industries; and healthcare business that provides customized liability insurance solutions for long-term care facilities. Its Alternative Risk Transfer segment provides specialty programs consisting of casualty insurance coverages for construction contractors, pest control operators, small auto dealers, real estate brokers, restaurant and tavern owners, and bail bondsmen; and fully funded general and professional liability policies for businesses operating in the healthcare and construction industries. The companys Assumed Reinsurance segment provides traditional specialty property and casualty reinsurance for unaffiliated specialty insurers and reinsurers with a focus on small specialty insurers, risk retention groups, and captives. In addition, the company also involves in other lines of businesses, such as workers compensation; and excess liability insurance for municipalities, real estate, and other ancillary product lines. American Safety Insurance Holdings, Ltd. was founded in 1986 and is based in Hamilton, Bermuda.

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