Buying Insurance Stocks On Near Term Weakness

Earlier this year I wrote a post titled, “Insuring Your Portfolio With Insurance Stocks,” as I discussed the relatively boring nature of the industry, specifically the property and casualty insurance space. I mentioned how this boring sector is tempered by its stability and predictability in terms of measured growth and it being a potential reliable source of growing dividends for decades on end. Why am I bringing this post up today? Well, it seems with all the hurricane activity we are witnessing in the Gulf of Mexico and Caribbean many stocks in the insurance space have been extra volatile falling quite dramatically in recent days. I just want to know if any of you are taking advantage of some much better buying opportunities in the space. With headlines like “Hurricane Irma already slams Cincinnati Financial,” “Deadly Irma Nears Florida As Insurers Face `Nightmare’ Scenario” and “Insurers brace for a 1-in-100 year storm as Irma bears down on Florida,” you know some high quality stocks will be dragged down in the near term.

Names like The Travelers Companies, Inc. (TRV) with a 2.40% yield, AXIS Capital Holdings Limited (AXSwith a 2.76% yield, The Progressive Corporation (PGR) with a 1.50% yield, Everest Re Group, Ltd. (RE) with a 2.25% yield, Cincinnati Financial Corporation (CINF) with a 2.64% yield and Old Republic International Corporation (ORI) with a large 4.00% yield have all dropped in recent weeks, though rebounding nicely on September 8th, as insurance claims are expected to climb into the billions as a result of Hurricane Harvey which rolled through last week and Irma which is expected to make landfall this weekend. Many of these insurance stocks are sporting attractive PEs and higher yields as a result of the sell off occurring in the sector.

What do you think about the P&C industry? Do you own any insurance stocks in your own portfolio? Have you noticed better buying opportunities in this space? Please let me know below.

Disclosure: Long NONE

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