Allied World Assurance Company Holdings (NYSE: AWH) and Selective Insurance Group (NASDAQ:SIGI) are both financials companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Allied World Assurance Company Holdings and Selective Insurance Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allied World Assurance Company Holdings 0 6 0 0 2.00
Selective Insurance Group 0 4 0 0 2.00

Allied World Assurance Company Holdings presently has a consensus price target of $39.25, indicating a potential downside of 20.29%. Selective Insurance Group has a consensus price target of $46.91, indicating a potential downside of 14.63%. Given Selective Insurance Group’s higher possible upside, analysts plainly believe Selective Insurance Group is more favorable than Allied World Assurance Company Holdings.

Risk & Volatility

Allied World Assurance Company Holdings has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, Selective Insurance Group has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500.

Institutional & Insider Ownership

86.5% of Allied World Assurance Company Holdings shares are held by institutional investors. Comparatively, 77.7% of Selective Insurance Group shares are held by institutional investors. 3.2% of Allied World Assurance Company Holdings shares are held by company insiders. Comparatively, 3.0% of Selective Insurance Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Allied World Assurance Company Holdings and Selective Insurance Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Allied World Assurance Company Holdings N/A N/A N/A $2.90 16.98
Selective Insurance Group $2.38 billion 1.35 $313.01 million $2.88 19.08

Selective Insurance Group has higher revenue and earnings than Allied World Assurance Company Holdings. Allied World Assurance Company Holdings is trading at a lower price-to-earnings ratio than Selective Insurance Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Allied World Assurance Company Holdings and Selective Insurance Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allied World Assurance Company Holdings 12.56% 8.96% 2.42%
Selective Insurance Group 7.13% 10.82% 2.32%

Dividends

Allied World Assurance Company Holdings pays an annual dividend of $0.52 per share and has a dividend yield of 1.1%. Selective Insurance Group pays an annual dividend of $0.64 per share and has a dividend yield of 1.2%. Allied World Assurance Company Holdings pays out 17.9% of its earnings in the form of a dividend. Selective Insurance Group pays out 22.2% 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. Selective Insurance Group has increased its dividend for 3 consecutive years. Selective Insurance Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

About Allied World Assurance Company Holdings

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.

About Selective Insurance Group

Selective Insurance Group, Inc. is a holding company. As of December 31, 2016, the Company had 10 insurance subsidiaries, nine of which were licensed by various state departments of insurance to write specific lines of property and casualty insurance business. The remaining subsidiary is authorized by various state insurance departments to write property and casualty insurance in the excess and surplus lines (E&S) market. Its segments include Standard Commercial Lines, which consists of insurance products and services provided in the standard marketplace; Standard Personal Lines, which consists of insurance products and services, including flood insurance coverage that it writes through the National Flood Insurance Program (NFIP); E&S Lines, which consists of insurance products and services provided to customers not obtaining coverage in the standard marketplace, and investment segment invests insurance premiums, as well as amounts generated through its capital management strategies.

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