Contrasting Alterra Capital (ALTE) and Allied World Assurance (AWHHF)

Alterra Capital (NASDAQ: ALTE) and Allied World Assurance (OTCMKTS:AWHHF) are both mid-cap property & casualty insurance – nec companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, dividends, risk, profitability and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Alterra Capital N/A N/A N/A
Allied World Assurance 12.56% 8.96% 2.42%

Earnings and Valuation

This table compares Alterra Capital and Allied World Assurance’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alterra Capital N/A N/A N/A $1.65 0.55
Allied World Assurance N/A N/A N/A $2.97 17.36

Alterra Capital 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%. Alterra Capital does not pay a dividend. Allied World Assurance pays out 17.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings for Alterra Capital and Allied World Assurance, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alterra Capital 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, indicating a potential downside of 52.47%. Given Allied World Assurance’s higher possible upside, analysts clearly believe Allied World Assurance is more favorable than Alterra Capital.

Insider & Institutional Ownership

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

Summary

Allied World Assurance beats Alterra Capital on 9 of the 10 factors compared between the two stocks.

About Alterra Capital

Alterra Capital Holdings Limited (Alterra) is engaged in providing diversified specialty insurance and reinsurance products to corporations, public entities and property and casualty insurers. In Bermuda, the Company conducts its insurance and reinsurance operations through Alterra Bermuda. In Europe, the Company conducts its non-Lloyd’s operations primarily from Dublin, Ireland through Alterra Europe. In the United States, the Company’s U.S. reinsurance operations are conducted through Alterra Re USA, a Connecticut-domiciled reinsurance company. The Company’s U.S. insurance operations are conducted through Alterra E&S. In Latin America, the Company provides reinsurance to clients through Alterra at Lloyd’s in Rio de Janeiro, Brazil, using Lloyd’s admitted status, through Alterra Europe. In June 2012, the Company formed New Point V Limited. On May 1, 2013, Alterra Capital was acquired by Markel Corporation.

About Allied World Assurance

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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