Head to Head Review: Allied World Assurance (AWHHF) & Employers (EIG)

Allied World Assurance (OTCMKTS: AWHHF) and Employers (NYSE:EIG) are both companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.

Valuation & Earnings

This table compares Allied World Assurance and Employers’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Allied World Assurance N/A N/A N/A $2.97 17.36
Employers $779.80 million 1.79 $106.70 million $3.19 13.48

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

Dividends

Allied World Assurance pays an annual dividend of $0.52 per share and has a dividend yield of 1.0%. Employers pays an annual dividend of $0.60 per share and has a dividend yield of 1.4%. Allied World Assurance pays out 17.5% of its earnings in the form of a dividend. Employers pays out 18.8% 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. Employers has raised its dividend for 2 consecutive years. Employers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Allied World Assurance and Employers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allied World Assurance 0 1 0 0 2.00
Employers 1 0 1 0 2.00

Allied World Assurance currently has a consensus target price of $24.50, indicating a potential downside of 52.47%. Employers has a consensus target price of $44.50, indicating a potential upside of 3.49%. Given Employers’ higher possible upside, analysts plainly believe Employers is more favorable than Allied World Assurance.

Profitability

This table compares Allied World Assurance and Employers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allied World Assurance 12.56% 8.96% 2.42%
Employers 13.32% 10.39% 2.40%

Insider & Institutional Ownership

86.5% of Allied World Assurance shares are owned by institutional investors. Comparatively, 77.4% of Employers shares are owned by institutional investors. 3.2% of Allied World Assurance shares are owned by insiders. Comparatively, 3.5% of Employers shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

Allied World Assurance has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500. Comparatively, Employers has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Summary

Employers beats Allied World Assurance on 10 of the 14 factors compared between the two stocks.

Allied World Assurance Company Profile

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.

Employers Company Profile

Employers Holdings, Inc. is a holding company. Through its insurance subsidiaries, the Company provides workers’ compensation insurance coverage to select, small businesses in low to medium hazard industries. It provides workers’ compensation insurance under a statutory system wherein employers are required to provide coverage for their employees’ medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses. As of December 31, 2016 the Company provided workers’ compensation insurance in 36 states and the District of Columbia, with a concentration in California. Its insurance subsidiaries include Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC) and Employers Assurance Company (EAC). The Company’s insurance products are jointly offered and marketed with and through its partners and alliances.

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