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Tickers in this Article: NYSE:BRK-A, NYSE:BRK.B, TRV, ACE, ALL, PGR
Insurance stocks have been largely ignored by investors over the past several years. The property & casualty (P&C) space is no exception. A combination of a tough environment to price insurance properly and low bond yields have squeezed the two primary revenue generators for insurance companies. The credit crisis also hurt investment balance sheets, and though most have been repaired as financial markets have returned to normal, anything in the financial sector remains shunned by many investors. IN PICTURES: Top 6 Uses For Bonds

Below are five P&C insurers that are among the largest in the industry, and possess a number of characteristics that give them plenty of investment appeal.

True Blue Chip
The Travelers Companies (NYSE:TRV) is a bona fide Blue Chip insurance stock given its size and status as a member of the Dow Jones Industrial Average. It is one of the largest insurers in the U.S. and boasts a market capitalization of about $26 billion. During its most recent full year, return on equity was high at 14.4% and earnings are expected to exceed $6 per share for all of 2010. That puts the forward P/E at just over 9, and the stock currently trades slightly below book value. A 2.60% current dividend yield is also appealing.

Warren Buffett: A King Among Men
Despite its reputation as a conglomeration of dozens of separate businesses, Berkshire Hathaway (NYSE:BRK.B) is primarily an insurance company. It's hard to argue against investing alongside Warren Buffett, who is one of the best capital allocators out there and has grown Berkshire's book value at more than 20% per year since 1965. The stock currently trades at a 31% premium to reported book value, but the premium is arguably worth it, given the collection of world class insurance operations and other highly respected businesses.

Ace Limited: Growth Appeal
Ace Limited (NYSE:ACE) serves a corporate clientèle and has grown into one of the largest P&C insurers out there. It also has a global focus, which enhances its growth appeal over more purely domestic rivals. Its focus on larger and more unique insurance coverage hurt it during the financial crisis, and is likely a reason the stock trades at only about 93% of book value. The forward P/E is also low at just over 8, and the current dividend yield is 2.10%.

Allstate: Victim of the Credit Crisis
Allstate (NYSE:ALL) is one of the largest auto insurers in the U.S. Its balance sheet was hit significantly during the credit crisis, and business trends are currently flat, both of which have contributed to sending the forward P/E to below 10 and price to book at about 0.89. The current dividend yield of 2.5% is above most other industry rivals.

Fast Progression
Progressive (NYSE:PGR) competes with Allstate as one of the largest auto insurers in the U.S. Its management team is highly respected in the industry and returns on equity average impressive levels in the high teens. Given these high returns, the shares are not cheap on a price-to-book basis, trading at a multiple of nearly 2. The dividend yield is also stingy at 0.8%, but the company does grow faster than most of its rivals.

The Bottom Line
Insurance investment portfolio prospects are looking up, as bond yields and interest rates in general increase. This should continue for some time. A soft market for insurance premiums could continue, but the low price-to-book multiples more than offset these weak operating fundamentals. From an investment perspective, Travelers is a compelling opportunity given its size and low valuation. Allstate and Ace represent turnaround plays, while Berkshire and Progressive have the best organic growth prospects, though they are more richly valued. (For related reading, also take a look at Is Your Insurance Company Going Belly Up?.)

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