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Can Beazley PLC Oust Aviva plc, Prudential plc And RSA Insurance Group plc From Your Portfolio?

FTSE100It’s been a rather disappointing year for investors in Beazley (LSE: BEZ) with shares in the insurer falling by 3% year-to-date. That doesn’t compare favourably to the FTSE 100’s performance, with the wider index up just under 1% over the same time period. However, as this week’s update from Beazley showed, the company is making encouraging progress, with premium growth and international growth both being significantly stronger than expected. Together, they enabled the company to beat expectations for the first half of the year, with management expecting the second half to be a similar story.

So, with a potential tailwind, is Beazley a better buy for your portfolio than Aviva (LSE: AV) (NYSE: AV.US), Prudential (LSE: PRU) and RSA (LSE: RSA)?

Attractive Valuations

Trading on a price to earnings (P/E) ratio of just 11.1, Beazley offers great value for money at current levels. Indeed, it compares favourably to its larger sector peers on this front, with only Aviva trading on a lower P/E of 10.6. Prudential and RSA, meanwhile, have P/Es of 14.3 and 11.8 respectively which, although higher than their two sector peers, are still attractive when compared to the FTSE 100’s P/E of 13.9.

Top Yields

As ever, insurers provide income-seeking investors with sound prospects. On this front, Beazley outperforms its rivals, since it offers a yield of 4%, while Aviva, Prudential and RSA are slightly behind on 3.4%, 2.6% and 2.5% respectively. However, where Beazley disappoints is with regard to next year’s dividend forecasts, with the company set to see dividends per share fall by 6.7% next year, as the company’s bottom-line is also set to tumble by 23%.

This is disappointing and shows that, while Beazley’s current yield is higher than that of its peers, their dividend per share growth over the next couple of years will narrow the gap and, in Aviva’s case, overtake Beazley’s yield.

Looking Ahead

As mentioned, Beazley’s update for the first half of the year was ahead of market expectations. However, the company is still forecast to report a decline in earnings over the next two years. Unlike Beazley, Aviva, Prudential and RSA are all in the midst of bottom-line growth periods and, as a result, their share prices could be more buoyant going forward.

That’s not to say that Beazley doesn’t have potential. It offers investors good value, a strong yield and longer term growth prospects. For now, though, it is still outmatched by its three larger rivals.

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Peter Stephens owns shares in Aviva and RSA. The Motley Fool has no position in any of the shares mentioned.