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Tickers in this Article: UVE, SAFT, MCY
Perhaps one positive outcome of the financial meltdown of 2008 is the clear line that's been drawn between companies that have real financial strength and those that are lightweights. In a number of market sectors and subsectors the wheat has been separated from the chaff, and investors are discovering just who's tough enough to weather a crisis. Let's look at a few high-yielding insurance companies that have shown their resilience and offer good fundamentals.

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Acquiring New Businesses
Two recent news items about Universal Insurance Holdings (NYSE:UVE) gave investors confidence the company's shares would continue to rise. The first is UVE's acquisition of ICAT Specialty Insurance Company, a supplier of disaster insurance to hurricane-prone regions, and secondly, UVE had a year-over-year increase of 2.7% in total direct premiums earned.

If that's not sufficient reason to buy the stock, a dividend yield of about 10% and a trailing P/E ratio of only five certainly sweetens the deal. Ratings agency A.M. Best gives a financial strength rating of "A" (excellent) to Universal Insurance. The company will very shortly be added to the Russell 3000 stock index.

Explosive Earnings Growth
Safety Insurance Group, Inc. (NASDAQ:SAFT) is primarily a provider of automobile insurance in Massachusetts. SAFT's stock yields 5.3% and trades with a trailing P/E ratio of about 7.7. This week, A.M. Best affirmed Safety Insurance's financial strength rating at A.

Safety Insurance also boasts annual average earnings growth of 35.4% over the past five years and is 77% institutionally held.

Healthy Yield and Valuation
Mercury General Corporation's
(NYSE:MCY) stock is up about 40% since March and still yields a healthy 7.4% annually. Key valuation ratios are also strong. Price to book is a solid 1.10 and price to sales a mere 0.68. The company recently instituted a number of cost-cutting measures, including a salary freeze and layoffs, that investors appear to have applauded.

Insiders, too, seem excited about the company's prospects, having purchased over half a million dollars of Mercury shares in just March of this year. The company operates in California and is also primarily a writer of auto insurance policies. (Find out why the trading activity of owners and executives can be a valuable trade-confirmation tool in our article Can Insiders Help You Make Better Trades?)

The Wrap
Far from being a complete washout, the financial sector offers investors strong opportunities for profit. And within the auto and property/casualty sector, certain issues are definitely worth considering. Those listed above offer the benefit of reliable, above-average dividend payouts.

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