Hanover Insurance Group (NYSE: THG) and Allied World Assurance (OTCMKTS:AWHHF) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, dividends and analyst recommendations.
Institutional & Insider Ownership
83.9% of Hanover Insurance Group shares are held by institutional investors. Comparatively, 86.5% of Allied World Assurance shares are held by institutional investors. 1.1% of Hanover Insurance Group shares are held by company insiders. Comparatively, 3.2% of Allied World Assurance shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a breakdown of recent recommendations for Hanover Insurance Group and Allied World Assurance, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Hanover Insurance Group||0||1||0||0||2.00|
|Allied World Assurance||0||4||0||0||2.00|
Hanover Insurance Group currently has a consensus target price of $91.00, indicating a potential downside of 10.92%. Allied World Assurance has a consensus target price of $39.25, indicating a potential downside of 23.86%. Given Hanover Insurance Group’s higher probable upside, analysts plainly believe Hanover Insurance Group is more favorable than Allied World Assurance.
This table compares Hanover Insurance Group and Allied World Assurance’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Hanover Insurance Group||2.37%||3.35%||0.67%|
|Allied World Assurance||12.56%||8.96%||2.42%|
Valuation & Earnings
This table compares Hanover Insurance Group and Allied World Assurance’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hanover Insurance Group||$4.95 billion||0.88||$155.10 million||$2.82||36.22|
|Allied World Assurance||N/A||N/A||N/A||$2.97||17.36|
Hanover Insurance Group has higher revenue and earnings than Allied World Assurance. Allied World Assurance is trading at a lower price-to-earnings ratio than Hanover Insurance Group, indicating that it is currently the more affordable of the two stocks.
Hanover Insurance Group pays an annual dividend of $2.00 per share and has a dividend yield of 2.0%. Allied World Assurance pays an annual dividend of $0.52 per share and has a dividend yield of 1.0%. Hanover Insurance Group pays out 70.9% of its earnings in the form of a dividend. Allied World Assurance pays out 17.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Hanover Insurance Group has raised its dividend for 5 consecutive years. Hanover Insurance Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Hanover Insurance Group has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Allied World Assurance has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.
Allied World Assurance beats Hanover Insurance Group on 7 of the 12 factors compared between the two stocks.
Hanover Insurance Group Company Profile
The Hanover Insurance Group, Inc. is a holding company. The Company is engaged in providing property and casualty insurance products and services. The Company has four segments: Commercial Lines, Personal Lines, Chaucer and Other. It markets its domestic products and services through independent agents and brokers in the United States, and conducts business internationally through a subsidiary, Chaucer Holdings Limited, which operates through the Society and Corporation of Lloyd’s (Lloyd’s). Its Commercial Lines product suite provides agents and customers with products designed for small, middle and specialized markets. Its Personal Lines coverages include other personal lines, which consist of umbrella and fire, among others. The Chaucer segment consists of international business written through Lloyd’s, including marine and aviation, and property. The Other segment consists of Opus Investment Management, Inc. (Opus), which provides investment advisory services to affiliates.
Allied World Assurance Company Profile
Allied World Assurance Company Holdings Ltd is a Germany-based holding company. It provides property, casualty and specialty insurance and reinsurance solutions to clients around the world. The Company operates in three segments: North American Insurance, Global Markets Insurance and Reinsurance. The North American Insurance segment consists of the Company’s direct insurance operations in the United States, Bermuda and Canada. The Global Markets Insurance segment includes all of the Company’s direct insurance operations outside of North America. The Company’s reinsurance segment includes the reinsurance of property, general casualty, professional liability, specialty lines and property catastrophe coverage’s written by other reinsurance companies. The Company leases space in Australia, Bermuda, Canada, Hong Kong, Ireland, Labuan, Singapore, the United Kingdom and the United States for the operation of its North American Insurance, Global Markets Insurance and Reinsurance segments.
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