Two Insurance Stocks On My Radar

carinsuranceFrom a consumer standpoint I might not really appreciateย insurance companies. After all, it seems like the money I spend on my premiums just goes into a black hole, never to be seen from again. I rarely initiate claims, and would prefer to keep it that way, as that means some kind of tragedy has likely befallen me.

However, from the perspective of an investor I quite like insurance companies. They basically collect premiums up front and get to invest that capital in the interim until you make a claim against your policy. It’s a low-cost source of capital, called theย float, and these companiesย gets to keep any gains (and losses, for that matter) they reap on other people’s money. So prudent underwriting allows an insurance company to a earn profit on the premiums they charge, while prudent management of the investment portfolio also allows profit there as well.

It’s obviously a fantastic and easily understood business model, which is probably why Warren Buffett is such a fan of insurance companies. His investigation into GEICO led to him penning an article way back in 1951, at age 21, titled “The Security I Like Best” as can be seen in its reproduced form in Berkshire Hathaway Inc.’s (BRK.B) 2005 annual report on page 24.

I currently am invested in just one insurance company – Aflac Incorporated (AFL). Aflac is a supplemental health and life insurance company, and it’s been a tremendous holding for me so far. 31 consecutive years of dividend raises, with another raise due up in a month. I was fortunateย enough to load up on Aflac back in 2011 when it was a lot cheaper due to fears over its investment portfolio being too heavily allocated to sovereign debt in risky countries and of course the Fukushima disaster. There are still fears over its exposure to the Japanese bond market and its heavy reliance on the Yen. I’m not concerned.

However, I am content with my 100 shares. Furthermore, I’d like to diversify my insurance holdings with anย insurer that offersย property and casualty products and services. This would allow me additional financial exposure from a different angle. As such, I’m currently investigating two insurers for a possible addition to the Freedom Fund. Both of the below companies saw record performances in 2013, andย bothย may very well see lower earnings over the next couple fiscal years. But they alsoย appear fairly appealing at today’s prices, considering their long-term growth potential, conservative underwriting, and international exposure.

Travelers Companies Inc. (TRV)ย 

Travelers Companies Inc. is a holding company. Through its subsidiaries it provides commercial and personal property and casualty insurance products and services to individuals, businesses, government units, and associations. They operate primarily in the US, but also have operations in Canada, Ireland, and the UK.

I actually just took a good look at Travelers for Daily Trade Alert and concluded that the stock is undervalued, possibly vastly so. I love the growth rate of the company; earnings per shareย grew at a compound annual rate of 22.83% over the last decade, which is obviously impressive. The company routinely buys back significant portions of its stock, and since 2006 has cut its share count in more than half. That explains at least partly why there is such a difference between top line and bottom line growth, as revenue has grown at a slower compound annual rate of just 1.49% over this same time frame.

TRV appears to take pride in itsย conservative underwriting, which doesn’t sacrifice quality for growth. And they carry that same conservative attitude over to their $73 billion investment portfolio, as it’s mostly invested in US government, municipal, corporate, and US agency mortgage-backed bonds. Rising rates could help TRV’s profitability here, along with other insurance companies, including the one below.

The company sportsย 10 consecutive years of dividend growth, raising the dividend annually since their merger with The St. Paul Companies Inc in 2004. They’ve increased the dividend by a compound annual rate of 9.5% over the last decade. Meanwhile, the stock’s entry yield stands at 2.35%. And the payout ratio remains really low, at just 22.2%, so there’s plenty of room for future dividend raises going forward.

The balance sheet is solid, and so is profitability. Operating margin has averaged 11.34% over the last five years. Return on equity has averaged 11.22% over the same time period.ย The yield leaves a bit to be desired, but I really like the way this company is run. Shares appear cheap here, with a price-to-earnings ratio of just 9.45. This remains an interesting opportunity, in my view, to pick up a $31+ billion insurer at what appears to be a pretty attractive valuation. I’m currently strongly considering initiating a position in this company right now.

The Chubb Corporation (CB)

The Chubb Corporation is a holding company that provides, through its subsidiaries, property and casualty insurance to a variety of clients throughout the US and internationally.

Chubb is probably a bit unloved, but it’s long been a fantastic company. Looking through their financial metrics, one can see that they are obviously quite conservative in their operations. Fiscal year 2013 was just a blockbuster year for the company in terms of earnings per share and percentage of premium dollars spent on claims and expenses.

Earnings per share grew at a CAGR of 9.45% from fiscal years 2004-2013, which spans the last decade. Meanwhile, revenue compounded at a 0.40% over this same time frame. You see the lack of top line growth, but net income has grown fairly substantially due in large part to rather aggressive share repurchasing by the company. The great thing with their share repurchases is that, like Travelers, they were consistently buying back shares through the recession, which supercharged the buyback program’s ability to return value to shareholders.

The company has an impressive record of dividend growth, which might be surprising to any who do not follow this company. The insurer has grown its dividend for the last 32 consecutive years, which is really solid, especially considering the inherent risk in insurance. This speaks further to their prudence and conservative nature. The yieldย on shares right now, also like Travelers, leaves a bit to be desired, as this stock offers a yield of just 2.18%. However, we have another low payout ratio, at 24.5%. So one would naturally assume dividend growth will continue far into the future. Chubb boasts a 10-year dividend growth rate of 9.2%, and I see no reason this kind of rate won’t continue looking forward.

Like Travelers, the balance sheet leverage is quite low, but operating margin and return on equity bests TRV. Operating margin has averaged 14.73% over the past five years. Return on equity meanwhile has averaged 12.36% during the same time frame. However, shares appear quite a bit pricier here, with a P/E ratio of 11.21. A lot to like, but I’d like it a lot more if it were a bit cheaper. However,ย CB remains high on my watch list.

Full Disclosure: Long AFL.

What do you think? Interested in either insurer right now? Why or why not?ย 

Thanks for reading.

Photo Credit: suphakit73/FreeDigitalPhotos.net

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108 Comments

  1. First commenter. Score. I have never seen either one of these companies. I thought for sure you would be bringing up Allstate and progressive .

  2. DM,

    You can’t go wrong with either. Obviously Chubb is a dividend aristocrat, so that has that factor going for them. However, Traveler’s EPS growth and dividend growth rate are very strong. I actually purchased this stock for my friend when he was starting his portfolio and it’s been one of his best performing stocks. Also, better current P/E ratio with an initial higher (slightly) yield, similar payout ratios etc. Not a bad idea to reduce exposure with Aflac, as they are positioned strong, I believe, in Japan and TRV or CB can offer/reduce/spread exposure. All three, when discussion, have similar payouts, P/Es, dividend yields and growth. It’s quite interesting, however, you can invest into a different insurance company for insurance… haha, I just had to. Keep us posted DM, talk soon.

    -Lanny

  3. Jason – Both are great alternatives to AFL. Of the two mentioned, I like TRV. Even though they have a shorter dividend growth history, it appears to be a better value. The P/E is lower, it has a lower payout ratio, a slighter better growth rate, and a slightly better yield. These numbers seem to convey that TRV is the better play. ๐Ÿ™‚

    Thanks for sharing…Cheers! AFFJ

  4. Hey Jason, TRV is the more aggressive play, has higher risk higher reward. CB is battle tested with its dividend aristocrat title. My personal play if I have $1,500 to invest, $1,000 on CB and $500 on travelers, I wouldn’t mind the extra $7 commission fee to pay my broker buying high quality company, they are relatively cheap right now and averaging down won’t be a problem. Just my two cent. ๐Ÿ™‚

  5. Mike,

    Progressive has a really odd dividend payout policy over there with the every-other-year special dividend. And the regular dividend is kind of all over teh place. My car insurance is with Progressive, and I love to invest in the companies that I personally buy from. And they’ve got a great brand built up. But it just isn’t there for me. Maybe 2016 when that special dividend rolls around again. ๐Ÿ™‚

    Allstate kind of earns a black mark in my book for cutting the dividend there back in the crisis when there were many other peers able to weather the storm just fine. Plus, their valuation appears high here along with a low yield.

    Cheers!

  6. Lanny,

    “Itโ€™s quite interesting, however, you can invest into a different insurance company for insurance”

    Haha. Nice! And you can ensure future dividend growth with a high-quality insurer. ๐Ÿ™‚

    I just wanted to clear up that I don’t actually plan to reduce exposure to Aflac by selling, but rather just by not buying anymore. That’ll naturally reduce its weighting over time. I love Aflac, and I think it’s cheap right now. But I have enough for my portfolio.

    It’s a pretty close race, but I think, for me, TRV appears to be the better stock, and quite possibly better company. The valuation is lower, yield is higher, growth has been stronger, and I think they’d have a lengthy dividend growth record if it wasn’t for them being spun off from Citigroup back in ’02. So they’re kind of at a disadvantage there as far as dividend growth streaks. But they’ve got a lot of mojo going on. ๐Ÿ™‚

    Thanks for stopping by!

    Best regards.

  7. AFFJ,

    I’m with you. I prefer TRV of the two. I think it’s far more undervalued and has exhibited the ability to grow faster. And they have just recently expanded into Canada which might bode well for them.

    Appreciate the support. ๐Ÿ™‚

    Take care.

  8. ogie dg,

    Why do you think TRV has higher inherent risk? Is there something you see in their underwriting or investment management that makes you feel that way?

    I personally think CB is actually a higher risk play, and not from an underwriting or management aspect. Rather, the stock is just valued far higher and earnings are expected to drop quite substantially over the next year or two. So that puts the forward P/E at a rather high number compared to TRV. It’s like a 20% or so spread.

    But I think CB is a great company. It and TRV are the only other major insurers (besides AFL) that I currently track. I also look at HCC from time to time, but their business model appears to be a bit more complicated, from what I’ve seen.

    I’m still keeping an open mind, but TRV seems to be a rather prudent purchase right now. I was actually ready to pull the trigger the other day, but then OHI took a tumble. So I started to re-investigate my thesis on OHI. Love the yield, but they have a rather significant reliance on Medicare. So I’m going back and forth. The joys of being an investor, right? ๐Ÿ™‚

    Best regards!

  9. I just bought Norwegian Gjensidige Forsikring. Great insurance company also.

    Have you considered European alternatives?

  10. Hmm, I just realized that AFL is the only insurance company in my portfolio. TRV and CB both look interesting, although I’ve never heard of either before.

    Also, I like the photos you pick to go with your posts. So fitting!

  11. Great topic! I just added significantly to my AFL position today and added to BRK.B early last month. They’re 2 of my favorite companies due to their fantastic underwriting profits. I’ll have to look into TRV. I’m curious… have you ever considered investing in BRK? Sure, their dividend’s crap but at 0% payout there’s lots of room for increases! Not much worse than Visa! And would you really rather reallocate your taxable dividend income than have Warren do it for you (and tax-sheltered)?

  12. AFL and CB have both been with me since 2007 and I plan to keep them for decades longer if possible. Currently, AFL seems to be the best value of the bunch. I have been looking to add more CB though prices seem a tad high currently. It’s funny how you started this post talking about insurance premiums seemingly going into a black hole. I think everyone has that same feeling. It’s nice to be on both sides of the insurance game though; collecting dividends while paying premiums. Takes a little of the sting off of those monthly dues. Thanks for sharing your considerations.

  13. DM,

    Both stocks are on my watchlist as well. Travelers is even part of the DJIA index.

    What do you think about HCC Insurance holdings?

    FRD

  14. There is certainly money to be made in insurance, Jason. Travelers is good and I may initiate a position, but I am looking to pick up a couple hundred shares of Aflac…..as it’s share price continues lower. My next buy will be around $55. In the same vein, I’m looking add build a position in Mattel in the coming weeks. Have a great day

    -Bryan

  15. DM,

    I like TRV and AFL. I almost initiated a position in TRV at the beginning of the year when it was in the low 80s. I opted for TGT at the time and am pleased with the results. Opportunity costs always surround us. Anyway, the yield looks good and TRV had a solid dividend hike this year so I still like it at these levels.

  16. Hi Jason,

    What do you think of Assurant (AIZ) at its current price? I thought it was right up there in value with AFL and TRV when I was looking at stock purchases in July. The yield is a bit low, but so is the payout and debt to equity.

  17. Looks like we know what your next purchase will be! I have actually been a shareholder of Chubb since 2008 or 2009 in my investment club. It has been a tremendous holding for us over that time period, with some serious pent up capital gains on top of the rising stream of dividends. I agree with you that Travelers is the better option of the two right now, and will certainly be adding them to my watchlist.

    Keep up the good work Jason!

  18. Both look like great options. I didn’t have any exposure in the insurance sector and just initiated position in AFL and looking to build it over a period of time. These two stocks definitely look attractive and a great option to diversify in the insurance sector.
    Will keep a lookout on what you decide.

  19. You should be looking at combined ratios. Where does the income of the companies come from? Is it mainly underwriting profit (skilled insurer) or is it mainly investment income (skilled asset manager). Are they even making underwriting losses? (paying the customers in order to get money from them to manage) A market downturn (upturn) would impact different insurance companies in quite different ways …

  20. If you like TRV and CB you might also research Prudential (PRU). PRU is currently undervalued with a PE 9.4 and a growth rate of 11% for the past 15 years and predicted to grow 5% to 11% annually for the next 5 years. The dividend yield is 2.3% with a current payout ratio of only 18%. Earnings have been a little lumpy in the past and they did cut their dividend in 2008.

    AFL is on my “buy” list when I have available capital. I just added CB to my watch list thanks to you, Jason.

  21. I agree with your analysis, and of your two choices, I’d go with TRV too. A quick look at Fast Graphs shows that AFL is seriously undervalued, TRV is at the high end of undervalued, and CB is closest to fair value. I personally won’t be loading up on insurers any time soon, since I think there will still be value in the sector for a few months, and there are other values I like more and that I see disappearing faster (MCD, AOS, and BBL). Just my opinion though; I don’t think you will go wrong with either of your choices at the end of the day.

  22. How about an insurer with a higher dividend like MCY. I would be interested to know your thoughts about this stock and whether you would consider it a much riskier investment compared to CB and TRV (especially at current valuations). I just purchased some of this stock so I guess I’m long MCY!

  23. DM,

    Although BRK does not pay a dividend it is my biggest holding. The nice float is a big reason for that.

    You might want to take a look at Munich Re and Allianz. I have both of them. on my wach list since they appear cheap. The business model is complex and hard to understand, though.

    If you like to I’ll let you know once I have done the analysis.

    Greetings

  24. I’ve been invested in AFL since the low $30’s days, needless to say I’ve been a very happy shareholder. CB is another solid company, but I never had the chance to commit to it. I was too busy investing in CINF when it was yielding 6%.

    TRV is another great dividend idea. TRV seems to be increasingly prolific. My condo used to be insured by them, as a matter of fact.

  25. Hi there!
    Have you considered European insurance companies? it just looks like you could get a better deal beyond the bond.
    There is some good companies there such as Allianz SE, Munich RE, Hannover RE, Gjensidige Forsikring ASA, Topdanmark, Sampo Group and so on. Even the strong dollar is in your favor.

    Oh btw did some review on a Munich RE recently and one of the biggest shareholder there is our favorite Mr Warren Buffet, so could be some value there.

    But i like Aflac on a long term just waiting for a sweat deal. Answering to your question: I’m not interested either one of those two (TRV or CB). Cos i think i can get a better deal closer to home ๐Ÿ™‚

    cheers
    Anha

  26. Samuel,

    I haven’t actually run into any European insurance companies that really fit all of my criteria, including increasing dividends. But if you have any suggestions I would love to hear them.

    Never heard of the company you invested in, but I hope it’s a fantastic business. ๐Ÿ™‚

    Cheers.

  27. Great idea to move into incos. As you say, owning an inco is much better than bein an inco client.

    What makes MunichRe interesting from a dividend perspective is that they ave never cut a dividend since 1969. Current yield is just below 5%. Management is honest and rational, but reinsurance market not very easy at the moment.
    If you prefer Sterling to Euro,you may want to look into Admiral’s Group(good starting point is this article: http://valueandopportunity.com/2014/06/18/admiral-plc-isin-gb00b02j6398-short-candidate-or-outsider-company-with-a-moat/ ):
    UK Car insurer with an interestig business model, yielding close to 8% these days.

    Good Investments!
    lat

  28. Seraph,

    Thanks! Sometimes I spend more time looking for just the right picture than actually writing the article. ๐Ÿ™‚

    Travelers and Chubb are both solid insurers. I’m surprised you haven’t heard of Travelers, though. It’s a pretty big company and a member of the Dow Jones. Both have solid metrics, but I personally like TRV more right now.

    Thanks for stopping by!

    Best regards.

  29. Jonathan,

    Not a bad move at all there with AFL. I think it’s still a great long-term value because of its Japanese exposure.

    I haven’t considered investing in BRK. The lack of dividend automatically precludes it for me. And while I love the idea of Buffett working for me, I also don’t know how much longer he’s going to be around, unfortunately. Maybe if BRK starts paying a dividend (after Buffett is gone) I’ll think about it, but then a lot of the allure will be missing. All in all, it’ll probably be a great long-term investment for those buying today (like it has in the past), but it just doesn’t fit my strategy.

    Best wishes!

  30. DivHut,

    Great to have a long-term shareholder like yourself on board in AFL!

    It’s definitely nice to be on both sides of the premium game: paying them and collecting a dividend from others paying them. ๐Ÿ™‚

    And I agree with you. CB has been a fantastic insurance holding, but it does seem just a bit high right now, especially compared to TRV.

    Thanks for dropping in!

    Take care.

  31. FRD,

    I mentioned HCC in an above comment. It’s the only other insurance company (besides AFL, TRV, and CB) that I watch regularly. It’s a bit more complex due to its offerings beyond just P&C, and also a lot smaller. I think when we’re talking about risks of catastrophes, I’d prefer an insurer that’s a bit bigger. But HCC has a great history behind it. I believe its dividend growth rate is higher than the other two, but I’d still be just a tad concerned over its overall size.

    Best regards.

  32. Bryan,

    I hope AFL drops down to that $55 level for you. That would be a great price to pick up a good chunk of the company, in my view. The last time I bought AFL I believe it was just over $50. It it gets all the way down to that price I might have to pick up more myself, even though AFL is already a large enough position for me.

    Let’s see what we get. ๐Ÿ™‚

    Cheers.

  33. MDP,

    The low $80s would be a lot better. ๐Ÿ™‚

    The issue I have with TRV’s stock is that it’s at an all-time high because its EPS is also at an all-time high. They had a monster 2013, and the next couple of years look a bit more tame. But I think they have a great long-term story here.

    And you’re right about opportunity costs. Every stock opportunity competes with every other available opportunity. So many stocks, so little capital!

    Thanks for stopping by.

    Best wishes.

  34. Kipp,

    Just took a quick look at AIZ. Never looked before. It seems like a very solid play. It’s a specialty insurer, so it’s not necessarily a good comparison between CB and/or TRV. But it’s been very profitable and obviously does well in its niches. The yield is a bit low for my tastes, but the dividend is growing a bit faster than either CB or TRV, from what I can see. The valuation is roughly in line with TRV, which means that there could be substantial undervaluation here. It really all depends on where some of these insurers go from here. The last couple of years have been fantastic for a number of these companies, specifically 2013. So I’m a bit worried that we might be catching them at the top. Hard to say. AIZ’s EPS is expected to grow at a compound annual rate of 5% over the next three years, according to S&P Capital IQ, so a slowing is predicted.

    But it does look like a solid long-term play. Some of their insurance lines are pretty specialized, so that can be both a good and bad thing.

    Best wishes.

  35. I don’t plan to own any US insurance companies as we already own 2 Canadian insurance companies in our portfolio. It’s a good idea to diversify your portfolio for sure. ๐Ÿ™‚

  36. W2R,

    Thanks for dropping by!

    I’m sure you’re quite happy with CB. It has been run quite well through the years. I’d definitely have no issues at all if I were a shareholder.

    I’ve been going back and forth on buying TRV right now. I think the value is there, but the valuation is based on all-time high earnings after a blockbuster year. Although, their earnings aren’t predicted to drop a lot, and rising rates could provide a nice tailwind. We’ll see.

    Appreciate you stopping by!

    Cheers.

  37. DGJ,

    I agree. I think they’re both solid options in the P&C space, but TRV appears to be the better value by a pretty wide margin.

    Great job there with AFL. I’ve got a position in the company that’s about as big as I’d like it to be, but there is definitely some solid value in that name right now. I hope it stays cheap for you so you can continue adding to it. ๐Ÿ™‚

    Best regards!

  38. Christoph,

    Both companies have conservative underwriting and routinely make a solid profit from their underwriting operations. I mentioned that CB had a blockbuster year in regards to that. 86.1% of underwriting dollars were spent back on claims and expenses.

    Travelers saw $1.277 billion in underwriting gains and $2.186 billion in investment profits. They haven’t experienced an underwriting loss at least going back to 2007.

    Cheers!

  39. luckydog17,

    I haven’t specifically looked at Prudential. Is there a reason they had to cut their dividend back in 2008? I’m guessing it was related to their financial operations? If so, do you know if they’ve rectified that for future concerns?

    I think AFL is definitely a solid buy right now. Vastly undervalued compared to its historical norm, and the yield is quite high in that regard as well. Plus, the dividend should be raised here pretty shortly, increasing that yield even further.

    Glad you found some value in the article and added CB to your watch list as well. It’s a very solid insurer all the way around. I don’t think TRV gets a lot of respect, especially being a DOW component. And that might be because of its short dividend growth history. But they were spun off from C back in 2002, so they haven’t really had a chance to build one up like CB and AFL. I think they will over time, however.

    Cheers!

  40. DD,

    That’s an interesting look through the lens of FAST Graphs. I would generally agree that AFL is probably the best value of them all, though with additional risk via their Japanese exposure.

    For reference, S&P Capital IQ has fair value on TRV at $134.10. Morningstar has it at $93.00.

    S&P Capital IQ has fair value on CB at $97.00. Morningstar has it at $96.00.

    Averaging those out you’d see a better value on TRV, but there’s also a pretty big spread between S&P Capital IQ and M* on TRV’s valuation.

    Best wishes!

  41. Dana,

    MCY has a high yield, but the dividend growth is anemic. And it looks like that anemic growth is a function of the underlying profitability growth of the company, which is apparently also lacking.

    The stock also appears to have a relatively high valuation compared to a lot of peers. The forward P/E ratio, for instance, is 19.1 vs. 10 for TRV. So it would appear there earnings are expected to drop quite significantly, which might drag the share price down if the P/E ratio compresses.

    I haven’t looked at the company in-depth, so I can’t say if it’s a riskier business than TRV or CB. Underwriting and investment management prudence is extremely important in insurance. But it looks like a riskier stock to me.

    I hope that helps!

    Cheers.

  42. I believe that indeed TRV might be a great pick right now, Jason. Iโ€™ll have to look at it a little deeper.
    Insurance companies can indeed be a great investment on condition that management is capable. Mid 2015 interest rates are bound to rise which is not going to harm either ๐Ÿ˜‰
    During summer I took positions in both Aegon and PartnerRe for the same reasons. And both are trading below book ๐Ÿ˜‰
    Thanks for pointing me towards TRV.

  43. Dave,

    That’s an interesting pick there. Some of the metrics look pretty solid. It’s not a P&C insurer like I was specifically looking at, although that’s not necessarily a bad thing. However, I wonder if companies like PFG aren’t more sensitive to the broader stock market. You have to wonder if people start pulling assets out when the market tanks if they won’t be affected like they were the last time around? I’ve never taken a look at the firm, so I wouldn’t know that for sure. But just something that’s kind of in the back of my mind.

    Thanks for the suggestion!

    Cheers.

  44. Spoonman,

    I’m right there with you on AFL. Most of my stake was bought around that same price. I increased it around $50, though. Overall, very pleased. ๐Ÿ™‚

    TRV is growing, and it’s currently branching outside of the US. Both it and CB have excellent operational histories. I don’t think one would be displeased with either company over the next 10 or 20 years, as far as I can tell.

    Thanks for stopping by!

    Best regards.

  45. Stef,

    Buffett is infamous for using that float to his advantage. He understood the value of it way back in the 50s. Very, very smart. ๐Ÿ™‚

    I donโ€™t have easy access to Munich Re because it doesnโ€™t trade on one of our exchanges. Allianz has ADR shares, but I honestly haven’t looked at it before. It looks like they pay an annual dividend and it isn’t growing? Or is it just not growing based on the USD? Would be interested in your analysis once it’s complete. ๐Ÿ™‚

    Cheers!

  46. Anha,

    I don’t believe I can buy Munich RE over here on one of our exchanges. And I’d prefer to not own stock on a foreign exchange if I can’t access ADR shares.

    Stef was also mentioning Allianz SE. I may have to take a look at that one. It looks like the dividend isn’t growing, however. And I’d prefer to avoid the annual dividend if I could. Not that it’s a bad thing, but I just prefer a monthly, quarterly, or even semi-annual dividend if I can get it. But I’d be willing to forgo that if the company is great.

    I would definitely avoid TRV and/or CB if you have better options at home there. No sense in investing abroad if you’ve got the best stuff already right in front of you. ๐Ÿ™‚

    Take care.

  47. Tawcan,

    Thanks for dropping in.

    I agree. Diversification can be pretty intricate, and even one insurance company can be very different from another, depending on what lines they offer, etc.

    Glad those two companies you’ve got are working for you. I probably wouldn’t diversify past two insurance companies. I think two that offer very different products and lines would be enough for me, personally.

    Best regards!

  48. scott,

    ERIE is interesting. The yield is pretty solid, but the payout ratio is extremely high, especially for an insurer. And the valuation is very high. It looks like the dividend has been growing substantially faster than earnings. Iโ€™d like to see that valuation cut in half, either through a stock price depreciation or earnings spike, before investing there.

    Thanks for the suggestion!

    Take care.

  49. Jos,

    Oh, nice. Trading below book is very nice. It looks like TRV is trading at about 1.2 times book and CB about 1.3 times book. But below book would be even better. Solid! ๐Ÿ™‚

    No problem on TRV. They have done very well over the last 10 years, and over the last 5 as well. Let me know if you like what you see!

    Best regards.

  50. Hey DM,

    As someone who regularly fights against insurance companies, I would certainly give the nod to CB as opposed to TRV. Chubb has fantastic adjusters and their service (even to opposing attorneys) is usually second to none. CB is regularly considered one of the best insurance companies in Ohio for its policyholders and shareholders. TRV doesn’t have the same reputation although it does appear to be a better value right now.

    I’m intrigued that not a single person has mentioned ORI. I know they took a hit after the 2008 crisis due to its mortgage insurance program, but they weathered the storm. I know they are not straight P&C (i.e., title insurance) and are smaller, but they are dividend aristocrat with a nice yield. What are your thoughts on ORI?

    I hope you pick CB as your next position, mostly because I really appreciate it’s business model. Nothing against TRV, I’m just smitten with CB. Maybe I should purchase my personal P&C insurance through them!!

    Good luck with your decision. I look forward to your choice.

    Andy

  51. Not sure why they cut the dividend back in 2008. I seem to remember reading Prudential was buying back their stock in 2007-2008 right before the crash when the stock was at an all time high. PRU earnings are roughly 50% Retirement Planning (annuities) and 50% life insurance products.

    You may also want to research MetLife (MET). Similar story as PRU, but no dividend cut.

  52. lathinker: I don’t wanna trade UK stocks that are listed on the UK exchange, broker that i use does not offer that exchange, I can call them and buy but that costs way too much around 40โ‚ฌ and there are other fees that UK exchange takes, so not good for a small investments.

    Mantra: Yeah It is traded in Xetra (Germany exchange) Both Allianz and Hannover can be traded at OTC.
    I agree with you, don’t like the one annual dividend only policy, everyone just should pay quarterly, more owner friendly. But that one pig pile makes me happy every year and European companies usually pay little bit better, because of that once a year thingy.

    Every year Between Jan to May its just a big buying frenzy around here, everyone buying to get that dividend and after its over everything cool’s down, and rest of the year is just waiting for that next years boom.

    cheers

  53. DM,

    While the Irons hot KMI looks like a steal @ this price? What’s your thoughts? Also BP finally some nice value in this market!!!!!!

    Best of luck

  54. I like insurance stocks – when a weather related incident occurs that raises claims, they simply raise rates the following year. It’s hardly an option to get insurance so its recession proof and (in my opinion) people will need more and more insurance as they acquire more items

  55. Im with you with having to have health/dental insurance etc. I dont like to have it but its very reassuring to know that it is there. Personally I use the dental aspect of it and get more back from just that than I pay into it. Helps that its through my work as well so they pay part of it to. Also as you saw on my last watchlist I was looking into buying some of Manulife Financial which is a large insurer as well ๐Ÿ™‚
    Best of researching!

  56. I’ve owned TRV for a while now. Having worked in the insurance industry for many years, I can say they are well respected in the industry, and have some great underwriters. I think they are also undervalued now as well. Adding here would be a good buy in my opinion. I think most people forget they are in the Dow, but they are a really quality P&C insurer. Chubb is quality too, but they insure many high value items homes etc, and have less commercial lines exposure than TRV. I believe they have kept their combined ratio under 100 for like the last 10 years- that is impressive. Overall, I would start a position in TRV over CB right now due to the slightly higher yield, and better valuation.

  57. DM,

    haha, great points. From the “Fundamental” view point, which we shouldn’t make things complicated – TRV is the better investment. (1) Higher Yield (2) Lower P/E (3) Stronger Growth. New company to your listing. I think you may have your decision made, but until we see that post haha. It’s funny – I have a nice piece of mail from them that they’ll give me a $20 gas card if I see about receiving a quote, I’m taking up on that offer tomorrow on my day off. Good luck with your next investment move DM! Can’t go wrong here. Also – looks like they would classify as your lower yield, higher/larger div growth group.

    -Lanny

  58. Not sure about insurance right now. Big fan of BRK but reading the last few years management discussion, margins in insurance are shrinking and risk in the market is being mispriced. Buffett has actually dialed down a good deal of business because the risk/reward no longer warranted writing it, especially re-insurance. Of course a lot will depend on whether we have large claim events – hurricanes, tsunamis and the like. I’ve cut my own insurance expenses as of late due to better competition.

  59. Andy,

    That’s good stuff there about CB. When I was doing research on the company I discovered that their service reputation precedes them. It seems that, from what I understand, they charge higher premiums than some of their competition, but maintain an excellent reputation for taking care of their clients. And companies that routinely do right by their customers usually do well over the long haul.

    I looked at ORI a while ago – probably more than a year ago. I was concerned about its ongoing lack of substantial dividend growth. I understand the yield is pretty high, but I’d still like to see dividend growth in the 4-5% range, as your yield and dividend growth rate is a general proxy for total returns, assuming a static price.

    Thanks for your personal thoughts there. I’ve never been a customer of either CB or TRV, but both seem to have pretty solid reputations. CB in particular has a great reputation for service. It’s a tough call. TRV has the better valuation, in my view. But they’re both high-quality insurers from everything I can see.

    Best regards!

  60. luckydog17,

    MetLife is interesting. I was wondering why I hadn’t run across that one yet, but it looks like they just started increasing their dividend very recently after keeping it static for a number of years. I’ll have to take a good look at it. ๐Ÿ™‚

    Cheers.

  61. blahblah903,

    I like UPS quite a bit. I’ve added it to my watch list (which is getting increasingly unruly :)). I don’t think it’s a real steal here right now, but I think you could do a lot worse than buy a world-class logistics company that is surely going to see increasing business with the continued rise in e-commerce. Not really much to dislike there with UPS. I hope to add it to the portfolio at some point here.

    Cheers!

  62. j-harr,

    KMI looks great. I don’t know how you could not like a 4.5% yield and 10% projected dividend growth for at least the next five years. Of course, there are risks there with the debt load, and there’s some execution risk once everything is all under one roof. But I’m comfortable here with my position.

    Take care!

  63. For what it is worth, here is a the list of the 10 worst insurance companies according to the American Association for Justice and CB and TRV didn’t make the list:

    These ten companies were named the worst insurers in America for denying claims, raising premiums, refusing insurance to those who need it most, and many other reasons:

    Allstate
    Unum
    AIG
    State Farm
    Conseco
    WellPoint
    Farmers
    United Health
    Torchmark
    Liberty Mutual

    Read more: http://law.freeadvice.com/insurance_law/insurers_bad_faith/ten-worst-insurance-companies.htm#ixzz3Dd8Tcx5o

  64. Dan,

    You’re right about your thoughts there. It doesn’t get much more recession-proof than insurance. If anything, you need insurance more in a recession. The last thing you’d want is a catastrophic emergency just when you have the least amount of income/cash.

    Insurance isn’t going anywhere. That’s why I like it. It’s predictable. The odds of insurance working a lot like it does today 10 or 20 years from now are pretty high. ๐Ÿ™‚

    Cheers!

  65. DW,

    Paying insurance premiums definitely sucks. Until you all of the sudden you have a medical emergency or car accident. Then it’s probably nice to have.

    Thanks for dropping by!

    Best wishes.

  66. presone,

    That’s great information there from someone in the industry. Really appreciate your perspective.

    I agree that it’s weird a lot of people kind of forget about Travelers since they’re part of the DJIA. But they’ve had a great 10-year run.

    It looks like they had a solid combined ratio for 2013, at 89.8%. But it appears they eclipsed 100% back in 2011. Their ratios aren’t quite as solid as CB’s over the last few years, but they’re not really out of line either.

    But I’m with you. TRV has the edge in valuation and yield. Both are solid companies, but TRV might have the edge for me right now.

    Thanks again for stopping by!

    Cheers.

  67. envisionhappy,

    Great point of view. Thanks for sharing. ๐Ÿ™‚

    Insurance is certainly competitive, but I don’t necessarily have any indication it’s any more so than in the past.

    But I agree with you that a lot depends on major catastrophes. That is always a major lingering concern when talking about P&C. Smaller regional players might allow you to “pick and choose” your catastrophe risk, but these bigger P&C plays don’t really allow you to do that since they’re all over. Although, I like that because it spreads the risk out a bit. But catastrophic risk is always there in the background for sure.

    Best regards!

  68. Andy,

    Awesome information there. Thanks for sharing.

    I had State Farm years ago. My parents kind of passed it down to me, because they had it for many years. I just took the coverage and price at fair value for a while until I started shopping around. I quickly realized I was spending a lot more money than I should have been. Haven’t used them since.

    Cheers!

  69. Good picks here. I’d love to add an insurance component to my portfolio (once it’s off the ground!). I really don’t think you can go wrong with either too. Insurance is a money making business, love it or hate it. Sure there is risk with major losses on some disaster or something , but these companies are well versed in dealing with those things over the long term.

  70. Hi Jason,

    One example would be the German company Munich Re. They have never cut their dividend since 1969, have a current dividend yield of 4.73% and an average dividend growth of about 19% per year in the past 10 years. It’s not an aristocrat in the strictest sense as they have not raised their dividend on several occasions, but did not cut it either. Good enough for me and it seems good enough for Mr. Buffett, too ๐Ÿ˜‰

    Cheers,
    Christian

  71. I’m long AFL. just at a quick glance, I pulled up Valueline Reports on CB and TRV going back to the mid-90s, and their earnings are very lumpy from one year to the next. I don’t mind one or two years of decreasing earnings, esp around 2007-2008, but I tend to stay away from companies with overly cyclical earnings that are up and down from one year to the next.

  72. Hi Jason,

    Sorry to go off-ticker, but how are you felling about your Orchids Paper (TIS) investment? I researched and invested shortly after you did and it’s my worst performing stock at a loss of -13% right now. I’m considering selling at -15% as this is in my emergency fund or “play money” portfolio separate from my retirement account and I’m not in for the very long term with this. They got slammed after their last earnings and haven’t recovered yet.

    Thanks!

    JD

  73. SAD,

    Insurance companies are generally quite good at making money over the long haul. And that’s because with prudent underwriting you basically have a very low-cost source of capital from which you can make additional profits. It’s a great business model. And people generally have to have insurance. Very tough for people to self-insure their home or other assets, and some insurance is against the law to avoid (liability on your auto, etc, health insurance after ACA).

    Gotta pay into it, may as well profit from it. ๐Ÿ™‚

    Cheers!

  74. Christian,

    I really wish Munich Re was available on one of our exchanges over here. Unfortunately, it isn’t. But, from what I understand, it’s a great company. Maybe at some point it will trade as an ADR at some point over here. When/if that happens, I’ll definitely take a look!

    Thanks for the suggestion. ๐Ÿ™‚

    Best wishes.

  75. CB has passed the true test of time. Great pick. And I will pick some up. Thanks for your research!!! Dan

  76. kolpin,

    Hmm, I didn’t look back that far. Although, Travelers as it stands today is a very different company than the one that existed back in the mid 90s. It went through some mergers back then before a big acquisition by Citicorp, which later became Citigroup. Travelers was then spun off and merged with St. Paul to become what it is today.

    I can’t say for sure on Chubb. I haven’t investigated it to the same depth as Travelers, but I don’t think they’ve had nearly the same amount of corporate activity.

    I generally find 10 years to be roughly enough data and information to tell me what I’m getting into. Going back further than that really starts to cloud the picture from what the company looks like now. For instance, looking at Altria 20 years ago would show you a totally different company. And we can’t invest in what a company was 20 years ago, but what it will be tomorrow.

    Best wishes!

  77. JD,

    No problems. And that’s a good question.

    I’m actually thinking of buying more, not selling. Their last quarter was a miss not because of poor business operations, but rather because of investment in the business. They’re scaling up, and they entered into what could be a pretty lucrative agreement to expand westward. I mentioned in my original analysis on the company that almost all (or perhaps all) of their sales occur within 500 miles of their headquarters. And this sales area is the least populated area of the country. Expanding westward is a huge opportunity for them.

    There was also some executive compensation in there that I’ve discussed before, but if the majority of this compensation is realized we’ll all be doing very well because the stock will be more than double where it’s at right now.

    So it’s really a question as to whether you know what you own and whether or not you believe these recent moves will help or hurt the company over the long term. I think these moves are strategically wonderful, but you may completely disagree.

    I’m hesitant to buy more only because it’s a very small company. And I ask myself if I’d rather have more invested in, say, Procter & Gamble or this tiny paper products company. And the answer, for me, is the former. So I’m holding here, but happily so.

    Best wishes!

  78. Dan,

    I agree. CB has done very well over a very long time. You don’t produce results like that if you’re eye isn’t on the ball all the time.

    I may join you as a shareholder at some point. We’ll see! ๐Ÿ™‚

    Cheers.

  79. Hi Jason,

    greetings from Germany!

    Couple of days ago i read first time your blog and was inspired to build a portfolio to earn financial freedom!

    Only disadvantage is, i have only 20-22 years to go to build up this portfolio – iยดm 43 now and for retirement i want to be able to save my monthly rent for my condo – start will be next week! Iยดm excited to start this experiment.

    Days ago i mentioned that it would be build up with etfs and maybe some corps – so here is the starting seven for the journey:

    – iShares International Preferred Stock ETF Trailing Yield 5,49%
    – iShs Mortgage Real Est.Cap.ETF Registered Shares Trailing Yield 13,14%
    – iShares Morningstar Multi-Asset Income ETF Trailing Yield 5,61%
    – iShares STOXX Global Select Dividend 100 UCITS ETF Trailing Yield 3,58%
    – iShares Asia Pacific Dividend UCITS ETF Trailing Yield 4,87%
    – British Petrol Trailing Yield appr. 5,5%
    – Deutsche Post Trailing Yield app. 4,10%

    Regards

    Alexander

  80. Hi Dm,

    Well run insurance companies are good investments over the long run. I do own several insurance stocks. I work on a claimsdepartment from a big insurance broker so I have a good view of how the combined ratio for my region will evolve.

    My insurance companies are: AGS( they still have some legal problems which means they are really cheap), MUV2, ALV and then I do own 2 stocks from holdings that do own insurance companies: ACKB and BRK-B. So lots of insurance companies in my portfolio.

    An important thing when you look at insurance companies: A lower revenue isn’t always bad, if you see a lower revenue and a lower combined ratio then the year before it means they removed the bad risks. Which means more profits for the shareholders.

    Cheers,
    G

  81. Alexander,

    Thanks for stopping by! Glad you found the blog recently. I hope you stay in touch and continue to find inspiration here.

    You’re starting a little later than I did, but you’re still in an excellent position to generate great wealth for yourself over time. The key is that you took action now. Starting is the hardest thing to do. Once you get a little momentum behind you, it gets a lot easier. ๐Ÿ™‚

    Sounds like you’ve got a great strategy there. The only thing I would caution is to make sure you have a good idea of what you own with some of those funds, especially the ones with a really high yield. I’d personally feel uneasy not really having a pretty good idea of how a fund can yield over 13% in a sustainable manner.

    Best of luck!!

    Cheers.

  82. Geblin,

    Another “inside” perspective. I appreciate it. ๐Ÿ™‚

    And I agree with you on your last point. For instance, one bad year can be relatively good for future earnings because some major catastrophes only happen once in many years or even once in a generation. So working those catastrophes through the system provides better odds for less likely similar catastrophes in the future. Hurricane Katrina back in 2005, an unspeakable tragedy for many, is such an example.

    Best wishes!

  83. I know you were looking for P&C mostly, but I would also suggest looking at some Reinsurance companies for even more diversification. I own ZURVY, RE, and ACE, and have been pleased with all. ZURVY is my high yield/low growth holding with variable yearly payouts, RE and ACE are lower yield, higher growth. I have been happy with all three. If I did it again, I would probably have bought more ACE in hindsight for the growth, but tough to know the future when you are making a purchase:) I will look at adding some AFL if it keeps dropping for more insurance type diversification with supplemental/life. Insurance companies can be great cash cows, and like you and others mentioned above, getting different types in your portfolio can diversify the income sources.

  84. Hi DM… Here’s an example. My grandmother bought Safeco Insurance Co. in the 1950’s for a total investment of $5000.00. During the last decade before the stock was sold, the family was getting $9720.00 in yearly dividends; almost double the entire investment annually. The family sold it in the 1990’s for almost a million dollars. FYI… insurance stocks are really good in the long run. Dan

  85. Daniel,

    Reinsurance actually isn’t a bad idea. I’d prefer to buy into a US-based reinsurance company, however. I do track one reinsurance firm – RGA. I like the metrics, but the yield is a tad low for me right now.

    And I agree with you on insurance being cash cows. They’re great businesses, which is probably why Buffett made an insurance company the foundation of his financial empire. ๐Ÿ™‚

    I do hope to eventually diversify beyond AFL. Perhaps adding another diversified insurer and maybe one pure reinsurer might be a good way to go. We shall see!

    Best regards.

  86. Dan,

    That’s great stuff right there. That’s a dividend investor’s dream!! ๐Ÿ™‚

    I agree that insurance stocks can be great over the long haul. I’d very much like to increase my exposure here. AFL is a pretty big position for me, but I’d like another insurer or two to round it out here. We’ll see what I have room for. So many stocks, so little capital.

    Thanks for sharing. Your grandmother made a great, great decision.

    Best wishes!

  87. I’m gonna admit, I’ve never heard of it either.

    I’ve traditionally stayed away from insurance companies based on a “What do they own?” basis (meaning, I can point to a shipping company and say they own the ships, or a consumer goods company and actually see the products in stores, or even a bank and say they have all those branches to sell and deposits being made daily as actual hard assets that they own) as they do not really own any physical assets. I tend to like companies with hard, physical assets of some sort, rather than on-paper assets (which is why I won’t touch big brokerage firms or companies that deal mainly with exotic mortgage-backed-debt-security-package-options-whatevers). But I’m starting to change my mind on them. It’s a service that people need, and the amount of money that goes out in claims should be dwarfed by the amount of money that comes in in premiums. And unlike mortgage consolidated debt obligation bonds or whatever it was that sank the economy in 2008, if an insurance company finds itself in hot water, it has the actual insurance policies as an asset that can be sold. Assets with an actual inherent value. I always tried to think in terms of what assets the company can sell if it found itself in THAT bad of a situation.

    Sorry, sort of went into financial free-writing mode there.

  88. I’m actually thinking of putting money into their B shares, only because I see it as a hedge against my competence in stock picking. I figure Warren Buffett will pick up the slack for whatever mistakes I make over the long term. It’s money that’s sitting in some other investment that’s not doing anything for me anyway, so I’m not losing anything.

    Plus if you think about it, Berkshire Hathaway is the ultimate mutual fund, and with no fee! By owning it, you’ll be a part owner of Geico (since we are talking about insurance companies here), Benjamin Moore, Dairy Queen, Heinz, and a bunch of other great companies you can’t otherwise invest in. That’s how I found out that he owns Benjamin Moore; I wanted to invest only to find that you can’t.

    I wouldn’t put that much in, mainly because it doesn’t pay a dividend. I, like everyone else here, am looking for great dividend stocks. Like I said, I only see BRK-B as a hedge in case either we are all wrong about dividend investing or I turn out to be significantly less competent than I thought.

  89. Well, itยดs the nature of the mortage Reit business -spending 85-90% of free cash to shareholders – if i remember correctly in your portfolio you got Realty Income Corp. also – with the ishares basket i got 36 of them at all – itยดs a starter position and iยดm lowering my risk in buying a basket of mReits – so if the yield is not sustainable and comes down to 8% – well iยดm a lucky dividend investor also ๐Ÿ˜‰

  90. Joey Batz,

    Yeah, I don’t need a company to own a big load of physical assets. I mean some of my investments do, like O with commercial property, NSC with railroads and locomotives, and MCD with the physical stores. But some companies with huge amounts of physical assets make poor investments because it can be capital-intensive to build and maintain some massive asset base. So that’s something I keep in mind. Some of the companies that are a bit light on physical assets, like insurance companies and credit card processing companies, can be pretty outstanding investments over the long haul.

    Cheers!

  91. Joey Batz,

    ” I figure Warren Buffett will pick up the slack for whatever mistakes I make over the long term.”

    I’d be careful with that line of thinking if that’s actually the reason you’re going after Berkshire. If that’s the reason, I’d recommend just buying an S&P 500 index fund. Warren Buffett is unlikely to be alive over the long term, so his age is a pretty large negating factor. I know he ran an actuary table on himself at one time, and I think he figured he might make it to 90. That gives him a few more years, which definitely isn’t a long-term timeline.

    Not that Berkshire might not continue to do really well over the long haul. They’ve got a decentralized management set up, and a collection of wonderful private businesses. Plus, they have a solid portfolio of equity in public companies.

    But I think the allure of having Buffett picking up one’s slack was more relevant 20 years ago. And I’m as big a fan of Buffett as anyone else. But I think it might be more wise to maybe start looking at Todd Combs and Ted Weschler at this point.

    Best regards!

  92. Hi Jason,

    The best of both is TRV in my humble opinion. Fair value based on actual cash flow data is 229 / this acc to Istockresearch.com

  93. Alexander Oest,

    “so if the yield is not sustainable and comes down to 8% โ€“ well iยดm a lucky dividend investor also”

    I’d be careful with that line of thinking. When the dividends are cut on many of these mREITs the stock price also depreciates. So you’re left with a similar yield as you had before, just a cheaper stock. At least, that’s how it is in America. Many of these types of stocks have been poor investments over the last five years, at a time when the US stock market has basically doubled. So be careful there. ๐Ÿ™‚

    Cheers.

  94. Aspenhawk,

    Thanks for stopping by!

    That’s a pretty high fair value for the stock. Much higher than what I came up with. That would mean TRV is an absolute steal right now. Looks like I might have to come up with some capital, huh? ๐Ÿ™‚

    Hope all is well over there!

    Best wishes.

  95. Dividend Mantra,

    Been following you for about a year now and have to say thank you for sharing your knowledge and insight. The transparency in your posts are definitely an inspiration, especially in a world surrounded by people who have been sucked into consumerism and pessimism when it comes to their own saving / investing capabilities.I’m sure I’m the umpteenth person to extend this praise your way. The same goes for the other folks who comment on here that are choosing to take similar paths.

    Now, related to this post. I was hoping to see both AFL and TRV in your post, because they are both companies I have taken positions in over the last 6 months or so. You seem to know what you’re doing so seeing picks I’ve made definitely gives me some positive reinforcement and boosted confidence in owning small parts of each. When it comes to TRV and Chubb, I am a firm believer in TRV so I figured I’d put my 2 cents in. They (TRV) appear to be the ‘boring’ company that Buffett types look for that just keep chugging along year in and out. They’re up 12% from when I bought in and I would have no hesitation buying more shares if I had the capital freed up to do so right now.

    Keep doing what you’re doing, your blog and others’ help keep me sane and help me tune out all the ‘noise’ when it comes to the market. When family and friends look at me funny for not having cable, wifi, expensive dinners and a flashy car I go read your blogs and you all keep us fellow believers grounded.

    Thank you for that, and best of luck.

  96. Travis,

    Thanks so much for the kind words. I very much appreciate it. I’m truly doing my best to inspire and motivate others to pursue a life of independence and freedom. Not everyone wants this freedom, but I’d say that most people do. They may think they can’t achieve it on a modest salary, but I’m here to prove all of that wrong. Consistent hard work, saving, and investing goes a long, long way. ๐Ÿ™‚

    Glad to hear you’re a fellow shareholder in AFL. That’s one of my core positions, and I’m a very happy part-owner of that insurer. TRV is one of my favorite insurers that I haven’t yet invested in. HCC is another solid pick in this space, though it’s a bit smaller and not a pure play on P&C (for better or worse). And RGA is reinsurance company I follow. I hope to join you as a shareholder in TRV at some point here.

    Thanks a lot for stopping by. I hope you continue to drop by and share your thoughts!

    Best wishes.

  97. I’m partial to AFL and CB and have been adding to those positions for several months now. Never considered TRV. I realize AFL has some currency issues especially since the yen has been weakening in recent weeks but as a long term investor I’m overly concerned with this. Thanks to both of you for bringing TRV to my attention too. Looks like an interesting pick that offers a decent value at current prices.

  98. I don’t have any insurance stocks right now, but am finding compelling reasons here as to why you can’t really go wrong with them. As a user of insurance when we had a flooded basement due to a freak downpour in 2009, I can attest to the point about raising their rates!!

  99. Debs,

    A well-run insurance company is pretty much a lock as a great investment over the long haul. Tough to lose money there.

    As a consumer, however…

    Thanks for stopping by!

    Best wishes.

  100. DM,
    BAX looks like a great entry point under $72. Also looking to add to ARCP, way too cheap in my opinion. I think i’ll be looking back in 6-12 mos saying I’m glad I bought @ those levels!!!!! What’s your thoughts, their both on my radar.

    Best of luck,

  101. j-harr,

    I like both here. Not sure if I’m ready to add to either, as they’re both positioned pretty well for me right now. ARCP is already a fairly large portion of my annual dividend income as it stands, and BAX is also a good sized investment. But I do like both. If I had enough room for either/both I would be adding, and still might anyway. ๐Ÿ™‚

    Cheers!

  102. DM, love ur website, and much luck to your financial independence.

    I’m a novice investor with limited funds but wanted to test the waters by purchasing a few AFLAC shares for my two small children. To avoid paying commission fees through brokerage firms, what would you suggest? Thanks in advance!!

  103. formy2kids,

    Thanks for the support and readership. Much appreciated! ๐Ÿ™‚

    The most well-known ways to go about buying shares for no fees would be Loyal3 and Computershare. But it doesn’t look like either one offers Aflac, unfortunately. You could look into the cheaper discount brokerages, but I don’t see how buying shares for free is possible for this specific stock. You can look into contacting Aflac’s investor relations department. In addition, Robinhood is a brand new platform for mobile devices, though it’s largely untested and I have no experience with it.

    Hope that helps!

    Cheers.

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