Analyzing Hannover Ruck (OTCMKTS:HVRRY) and Mercury General (NYSE:MCY)

Hannover Ruck (OTCMKTS:HVRRY) and Mercury General (NYSE:MCY) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Earnings & Valuation

This table compares Hannover Ruck and Mercury General”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hannover Ruck	$30.30 billion	1.22	$2.99 billion	$4.04	12.61
Mercury General	$5.99 billion	0.97	$541.09 million	$16.92	6.20

Hannover Ruck has higher revenue and earnings than Mercury General. Mercury General is trading at a lower price-to-earnings ratio than Hannover Ruck, indicating that it is currently the more affordable of the two stocks.

Dividends

Hannover Ruck pays an annual dividend of $1.76 per share and has a dividend yield of 3.5%. Mercury General pays an annual dividend of $1.27 per share and has a dividend yield of 1.2%. Hannover Ruck pays out 43.6% of its earnings in the form of a dividend. Mercury General pays out 7.5% 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.

Institutional & Insider Ownership

0.0% of Hannover Ruck shares are held by institutional investors. Comparatively, 42.4% of Mercury General shares are held by institutional investors. 35.5% of Mercury General shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Hannover Ruck and Mercury General, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hannover Ruck	1	1	0	2	2.75
Mercury General	0	0	1	2	3.67

Mercury General has a consensus target price of $100.00, suggesting a potential downside of 4.64%. Given Mercury General’s stronger consensus rating and higher possible upside, analysts clearly believe Mercury General is more favorable than Hannover Ruck.

Volatility & Risk

Hannover Ruck has a beta of 0.19, meaning that its share price is 81% less volatile than the S&P 500. Comparatively, Mercury General has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Profitability

This table compares Hannover Ruck and Mercury General’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hannover Ruck	9.33%	18.15%	3.52%
Mercury General	14.77%	31.98%	8.19%

Summary

Mercury General beats Hannover Ruck on 11 of the 16 factors compared between the two stocks.

About Hannover Ruck

Hannover Rück SE, together with its subsidiaries, provides reinsurance products and services in Germany, the United Kingdom, France, Europe, the United States, Asia, Australia, Africa, and internationally. It operates through Property & Casualty Reinsurance; and Life & Health Reinsurance segments. The company provides property and casualty reinsurance solutions for agricultural, livestock, and bloodstock; aviation and space; catastrophe XL; credit, surety, and political risks; facultative; and marine and offshore energy businesses, as well as insurance-linked securities and structured reinsurance. It offers risk solutions in the areas of critical illness, disability, health, longevity, long term care, and mortality. In addition, the company offers group life, retirement, lifestyle, credit life, and Takaful reinsurance products. Further, the company provides various financial solutions, including new-business financing; monetization of embedded value; reserve and solvency relief; and reinsurance and solvency II businesses. The company was formerly known as Hannover Rückversicherung AG and changed its name to Hannover Rück SE in March 2013. Hannover Rück SE was founded in 1966 and is based in Hanover, Germany. Hannover Rück SE operates as a subsidiary of Talanx AG.

About Mercury General

Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, and other coverages. The company sells its policies through a network of independent agents, insurance agencies, as well as directly through internet sales portals in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.