With property-casualty companies increasing their book value per share, the outlook for property-casualty insurance stocks is now viewed as “compelling” as opposed to “attractive,” according to a Bank of America analysis.
The analysis said that many p-c stocks are trading at or below book value. “We firmly believe that valuation is the most important criteria when investing in insurance, even though we realize that valuation has not mattered lately, as the stocks continue to fall.”
According to the bank, valuation will eventually matter again. “When the stock market is essentially giving buyers the opportunity to receive $1 for every 80 cents invested, based on our estimates, at some point attractive valuation will be its own catalyst, which is why we are even more positive on the sector than at the beginning of the year.”
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