Hartford Financial Services Group Inc (HIG): Is This a Good Time to Buy This Financial Stock?

Page 1 of 2

Hartford Financial Services Group Inc (NYSE:HIG) is a leading insurance and financial services company. It operates in four major segments – consumer markets, commercial markets, wealth management, and runoff operations. Hartford Financial Services Group Inc (NYSE:HIG) is a provider of investment products and life, property, and casualty (P&C) business to both individuals and businesses in the U.S.

It is the eleventh largest P&C insurer in the U.S. with a market share of 2%. Recently, it concluded the divestiture of its life insurance and retirement solutions business, so that it can focus more on the P&C business. Hartford Financial Services Group Inc (NYSE:HIG) has some key strengths, but is this a good time to buy the stock? Let’s discuss.

Hartford logoStock performance up 33% year-on-year

Hartford has performed exceptionally well over the past one year. The shares are up more than 33%, in spite of the company incurring significant losses due to Hurricane Sandy. Last week itself, the shares hit a new high of $26.72. Currently, it is trading at around $27.

The price to equity (P/E) ratio of Hartford is 39, above the S&P 500 P/E of 18. The stock is trading at half of its book value, which is in stark contrast to the insurance companies before the financial crisis, when they were trading at 4 to 5 times their book value. 2012 earnings of the company stood at $1.4 billion.

Some concerns for Hartford

One major worry for Hartford Financial Services Group Inc (NYSE:HIG) is that it has been losing market share in its automobile and homeowners’ line of insurance, which declined from 1.57% in 2011 to 1.40% in 2012. Total policies have also fallen from 2.23 million in 2010 to 2.01 million in 2012. However, the company has devised a solution to fight this problem by expanding its portfolio.

This has been achieved through an affinity agreement with the American Association of Retired Persons (AARP), whose aim is to market homeowners and automobile insurance directly to 37 million members enrolled in AARP through January 1, 2020. Another concern is that Hartford has a high beta of 2.08, which means that it is quite sensitive to the market index.

Competitors

American International Group Inc (NYSE:AIG) has a market cap of $58 billion compared to Hartford’s $12 billion. It has a ROE of 6% and a 10-year growth rate of 10%, which is comparable to Hartford. If we recall the financial crisis of 2008, AIG took a staggering $182 billion from the Fed as a bailout package while Hartford took just $3 billion. Hartford Financial Services Group Inc (NYSE:HIG) also was able to repay the bailout faster than AIG, which shows that it has been always in good shape than other insurance and financial services companies.

Berkshire Hathaway Inc. (NYSE:BRK.A) is an American multinational conglomerate holding company owned and operated by Warren Buffett. The stock has been steadily climbing since last year. The insurance premiums earned during 2012 had increased 9% from 2011. Unlike AIG, it has a diverse portfolio consisting of life insurance, P&C, and mutual funds. The company enjoys high growth in all its business and its P/E ratio of 17 validates the same.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!