Aviva (LSE: AV), Prudential (LSE: PRU), Standard Life (LSE: SL) and Legal & General (LSE: LGEN) have been some of the market’s best performing stocks over the past five years.
For example, since the beginning of 2010 the FTSE 100 has risen 33.8%, but over the same period shares in Aviva and Standard Life have gained 51% and 108% respectively, Prudential’s have risen 183%, and Legal & General has put in the best performance, with its shares jumping a staggering 290% (all gains excluding dividends).Â
But while undeniably impressive, these gains have left the insurers looking expensive, and it could be time for investors to consider taking some money off the table.Â
Expensive picks
There is one main factor that suggests  now could be the time to sell Legal & General, Prudential, Standard Life and Aviva — valuation.
In particular, at present levels, the best performer of this group, Legal & General, is trading at a forward P/E of 15.6. This is 30% higher than the company’s peak valuation in 2007, just before the financial crisis set in. Similarly, Standard Life is currently trading at a forward P/E of 19.9, nearly 60% above the company’s 2007  peak valuation.
On the other hand, although Prudential’s valuation is high — the company trades at a forward P/E of 14.7 — the company’s earnings are expected to grow at a high double-digit rate every year for the next few years. In this case, Prudential looks to be attractively valued based on its forward growth rate.
Still, out of the whole group, only Aviva appears to be undervalued at present levels. Specifically, the company currently trades at a low forward P/E of 11.2 and the market is yet to factor in the synergies that will be achieved through Aviva’s merger with Friends Life Group.
Yield play
Whilst Aviva, Legal & General, Standard Life and Prudential all look expensive at present levels, they are attractive yield plays. You see, due to the nature of their business — long-term life insurance and asset management — these four companies have predictable and stable income streams, making them perfect dividend stocks.
And even after recent gains, these insurers still support attractive dividend yields. In particular, Legal & General and Standard Life offer yields of 4.1% and 4.2% respectively while Aviva and Prudential offer yields of 3.3% and 2.2% respectively, at present levels.
Foolish summaryÂ
So, if you’re will to pay a premium for a market-beating dividend yield, then Aviva, Legal & General, Standard Life and Prudential could deserve a position in your portfolio.Â
However, if you’re looking for undervalued income shares with the potential for capital growth, then it could be time to look elsewhere.