White Mountains Insurance Group (NYSE:WTM) vs. Brown & Brown (NYSE:BRO) Critical Analysis

Brown & Brown (NYSE:BRO) and White Mountains Insurance Group (NYSE:WTM) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings for Brown & Brown and White Mountains Insurance Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brown & Brown	1	14	5	0	2.20
White Mountains Insurance Group	0	1	1	0	2.50

Brown & Brown presently has a consensus price target of $75.62, indicating a potential upside of 18.83%. Given Brown & Brown’s higher probable upside, equities research analysts plainly believe Brown & Brown is more favorable than White Mountains Insurance Group.

Risk & Volatility

Brown & Brown has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500. Comparatively, White Mountains Insurance Group has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500.

Institutional and Insider Ownership

71.0% of Brown & Brown shares are held by institutional investors. Comparatively, 88.7% of White Mountains Insurance Group shares are held by institutional investors. 13.1% of Brown & Brown shares are held by company insiders. Comparatively, 3.0% of White Mountains Insurance Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Brown & Brown pays an annual dividend of $0.66 per share and has a dividend yield of 1.0%. White Mountains Insurance Group pays an annual dividend of $1.00 per share and has a dividend yield of 0.0%. Brown & Brown pays out 20.8% of its earnings in the form of a dividend. White Mountains Insurance Group pays out 0.2% 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.

Earnings & Valuation

This table compares Brown & Brown and White Mountains Insurance Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brown & Brown	$5.90 billion	3.61	$1.05 billion	$3.17	20.08
White Mountains Insurance Group	$2.98 billion	1.65	$1.11 billion	$439.40	4.67

White Mountains Insurance Group has lower revenue, but higher earnings than Brown & Brown. White Mountains Insurance Group is trading at a lower price-to-earnings ratio than Brown & Brown, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Brown & Brown and White Mountains Insurance Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brown & Brown	17.75%	13.17%	5.56%
White Mountains Insurance Group	29.29%	5.11%	2.37%

Summary

Brown & Brown beats White Mountains Insurance Group on 10 of the 16 factors compared between the two stocks.

About Brown & Brown

Brown & Brown, Inc. is an insurance agency, wholesale brokerage, insurance program and service organization. It engages in the provision of insurance brokerage services and casualty insurance underwriting services. It operates through the following segments: Retail, National Programs, Wholesale Brokerage, and Services. The Retail Segment receives fees in lieu of commissions. The National Programs segment acts as a managing general agent and provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches. The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as the company’s retail agents. The Services segment provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, social security disability and Medicare benefits advocacy services and claims adjusting services. The company was founded by J. Adrian Brown and Charles Covington Owen in 1939 and is headquartered in Daytona Beach, FL.

About White Mountains Insurance Group

White Mountains Insurance Group, Ltd., through its subsidiaries, provides insurance and other financial services in the United States. The company operates through HG Global/BAM, Ark/WM Outrigger, Kudu, and Other Operations segments. The HG Global/BAM segment provides insurance on municipal bonds issued to finance public purposes, such as schools, utilities, and transportation facilities, as well as reinsurance protection services. The Ark/WM Outrigger segment offers reinsurance and insurance, including property, marine and energy, accident and health, casualty, and specialty products. The Kudu segment provides capital solutions to boutique asset and wealth managers for generational ownership transfers, management buyouts, acquisitions and growth finances, and legacy partner liquidity, as well as strategic assistance to investees. The Other Operations segment offers insurance solutions to travel industry through broker channel and on a direct-to-consumer basis; and manages separate accounts and pooled investment vehicles for insurance-linked securities sectors, including catastrophe bonds, collateralized reinsurance investments, and industry loss warranties of third-party clients. White Mountains Insurance Group, Ltd. was incorporated in 1980 and is headquartered in Hamilton, Bermuda.