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3 Unlikely Stocks that Have Defied a Falling Stock Market

You may not have noticed, but over the past three years, Singapore’s stock market, as represented by the Straits Times Index  (SGX: ^STI), has declined by 17%.

Here’s another thing you may not have noticed. There was one little industry that managed to swim strongly against the bearish tide of the stock market: Insurance.

A recent report from bourse operator Singapore Exchange Limited (SGX: S68) had shed some light on the tiny group of just three companies in the market that are considered as insurers (all data as of 29 February 2016 unless otherwise stated):

  1. The trio are Great Eastern Holding Limited (SGX: G07)United Overseas Insurance Limited (SGX: U13) and Singapore Reinsurance Corporation Ltd (SGX: S49). The average gain for the three stocks over the past three years was nearly 32%.
  2. While the trio are in the same sector, there are some differences. Great Eastern deals mainly in life assurance and general insurance products. Meanwhile, UOI engages in general insurance and reinsurance. Finally, Singapore Reinsurance, as its name would suggest, operates as a general reinsurer.
  3. The three insurance outfits differ greatly in size too. Great Eastern has a market capitalization of over $9.9 billion. UOI and Singapore Reinsurance, on the other hand, weigh in with market caps of only $249 million and $185 million, respectively.
  4. Income investors may want to look at the insurance industry for possible ideas too. Singapore Reinsurance has a nice dividend yield of 4.9%.  For context, the SPDR STI ETF (SGX: ES3), an exchange traded fund that mimics the fundamentals of the Straits Times Index, offers a 3.7% trailing yield.
  5. The average valuation for the insurance firms do not look unreasonable at 1.1 times book value. Great Eastern tips the scales at a price-to-book (PB) ratio of 1.5 while Singapore Reinsurance Corporation is at the other end with a PB ratio of 0.8. UOI is also priced below its book value with a PB ratio of 0.9. Meanwhile, the SDPR STI ETF is valued at 1.05 times its book value. When it comes to financial institutions such as an insurer, the book value can be a good proxy for the real economic worth of the company.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.