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

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

Profitability

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

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

Volatility and Risk

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

Analyst Recommendations

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

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

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

Insider & Institutional Ownership

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

Dividends

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

Valuation & Earnings

This table compares Mercury General and Hannover Ruck”s gross revenue, earnings per share and valuation.

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

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.

Summary

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

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.

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.