Meadowbrook Insurance Group (NYSE: MIG) and Allied World Assurance (OTCMKTS:AWHHF) are both financials companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, analyst recommendations, earnings, valuation, dividends and institutional ownership.

Dividends

Allied World Assurance pays an annual dividend of $0.52 per share and has a dividend yield of 1.0%. Meadowbrook Insurance Group does not pay a dividend. Allied World Assurance pays out 17.5% of its earnings in the form of a dividend.

Insider and Institutional Ownership

86.5% of Allied World Assurance shares are held by institutional investors. 3.2% of Allied World Assurance shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Meadowbrook Insurance Group and Allied World Assurance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Meadowbrook Insurance Group 4.54% 7.19% 1.16%
Allied World Assurance 12.56% 8.96% 2.42%

Analyst Recommendations

This is a summary of current ratings and target prices for Meadowbrook Insurance Group and Allied World Assurance, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meadowbrook Insurance Group 0 0 0 0 N/A
Allied World Assurance 0 1 0 0 2.00

Allied World Assurance has a consensus target price of $24.50, suggesting a potential downside of 52.47%. Given Allied World Assurance’s higher possible upside, analysts plainly believe Allied World Assurance is more favorable than Meadowbrook Insurance Group.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Meadowbrook Insurance Group N/A N/A N/A $0.53 16.30
Allied World Assurance N/A N/A N/A $2.97 17.36

Meadowbrook Insurance Group 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.

Summary

Allied World Assurance beats Meadowbrook Insurance Group on 9 of the 10 factors compared between the two stocks.

Meadowbrook Insurance Group Company Profile

Meadowbrook Insurance Group, Inc. (Meadowbrook) is a holding company. The Company is a commercial insurance underwriter and insurance administration services company. The Company markets and underwrites specialty property and casualty insurance programs and products through a network of independent retail agents, wholesalers, program administrators and general agents. The Company’s products include Admitted Programs and Standard Market Products, Main Street Excess and Surplus Lines, Non-Admitted Programs, and Specialty Market Products. The Company is also involved in a range of activities, including program and product design, underwriting risk selection and policy issuance, claims administration and handling, loss prevention and control and reinsurance. The Company also provides the following services to its fee-for-service and agency clients: administration of risk-bearing entities and agency services.

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.

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