Best Insurance Stocks

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Contributor, Benzinga
April 16, 2024

Allstate (NYSE:ALL)

One of the most popular insurance firms for home and auto coverage, Allstate like many other insurers found themselves in a unique situation when the COVID-19 pandemic breached American shores. Suddenly, typically gridlocked routes encountered an eerie silence as millions of people sheltered in place. This led to insurers issuing policy premium refunds. However, with new coronavirus cases fading, it may be time to consider the rebound storyline for ALL stock.

$164.5529
-1.2071[-0.73%]
Last update: 11:15AM (Delayed 15-Minutes)
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Open166.410Close-
Vol / Avg.198.645K / 1.660MMkt Cap43.402B
Day Range164.430 - 166.72052 Wk Range100.573 - 174.575

Progressive (NYSE:PGR)

Arguably best known for its auto insurance policy, Progressive levers a critical advantage over many other insurance stocks: brand recognition. Even if the company name doesn’t quite ring a bell, you almost certainly heard of Flo, a fictional character whom actress and comedian Stephanie Courtney portrays. Though a fortuitous advertising icon, Flo nevertheless contributed to Progressive’s revenue tally of $42.6 billion in 2020, which was up over 9% from the prior year.

$206.79
0.20[0.10%]
Last update: 11:15AM (Delayed 15-Minutes)
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Open208.840Close-
Vol / Avg.937.634K / 2.670MMkt Cap121.115B
Day Range206.760 - 210.62052 Wk Range111.410 - 212.240

American Intl Gr (NYSE:AIG)

From one of America’s favorite characters to one of the nation’s previously most criticized companies, American International Group is now proof that through perseverance, an entity can turn its image around. As you know, AIG got itself embroiled in an accounting fraud scandal in 2005. A few years later, it suffered a liquidity crisis and required a government bailout. But from the ashes came a much more diligent and disciplined organization, one that offers a forward annualized yield of 2.46%.

$72.715
-0.335[-0.46%]
Last update: 11:15AM (Delayed 15-Minutes)
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Open73.500Close-
Vol / Avg.875.499K / 3.983MMkt Cap49.012B
Day Range72.700 - 73.72052 Wk Range48.950 - 78.950

Prudential Financial (NYSE:PRU)

Because of the uncertainties of the coronavirus, many people asked themselves about the financial security of their families in case the worst happened. Therefore, it’s likely that demand for life insurance coverage will increase following this once-in-a-century pandemic. Although revenue took a hit in 2020, down 12% year-over-year, investors should eyeball a potential comeback as the economy normalizes. Further, Prudential will pay for holding the risk, offering a forward yield of 4.38%.

$107.39
-0.97[-0.90%]
Last update: 11:15AM (Delayed 15-Minutes)
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Open108.230Close-
Vol / Avg.203.536K / 1.555MMkt Cap38.594B
Day Range107.300 - 108.50052 Wk Range77.220 - 118.690

MetLife (NYSE:MET)

One of the world’s largest providers of insurance programs, MetLife also offers annuities and employee benefit programs. The latter business segment is particularly intriguing as many corporate employees have considered operating as independent contractors during the COVID lockdowns. However, they may change their mind and stick to the employment route as they consider hefty insurance costs. Organically, this may benefit the bullish case for MET stock.

$68.82
-0.62[-0.89%]
Last update: 11:15AM (Delayed 15-Minutes)
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Open69.570Close-
Vol / Avg.554.108K / 3.556MMkt Cap49.758B
Day Range68.790 - 69.64052 Wk Range48.950 - 74.675

In one of his brilliant quips, comedian Chris Rock once lamented that the insurance industry was a code word for “in case stuff happens.” But if stuff doesn’t happen, shouldn’t you get your money back? While this garnered raucous applause from the audience, the case for the best insurance stocks isn’t quite that simple.

Mainly, it’s due to things happen all the time and usually when you least expect or want it. Therefore, the case for insurance stocks couldn’t be any clearer. Here’s how you can protect yourself and your portfolio.

Quick Look at the Best Insurance Stocks:

Overview

While modern insurance programs have increased in sophistication due to significant changes in society over the years, the historical roots of insurance stocks date back to the dawn of civilization. In ancient Babylon, merchants signed bottomry contracts, which were loans that covered sea shipments. If an incident resulted in lost cargo, merchants did not have to repay the loan. Further, the interest on this contract covered the insurance risk.

In early U.S. history, entrepreneurs established the first insurance company in South Carolina in 1732 to provide fire coverage. Moreover, in the 1750s, Benjamin Franklin established a company to raise funds to prevent catastrophic building fires. Later in the 1800s, insurance firms expanded their services to include life insurance among other critical needs. Eventually, the Great Depression sparked several government-backed insurance programs, including the Social Security Act.

Indeed, you can make the argument that one of the most trying chapters in American history catalyzed a renaissance in the insurance industry. During the Roaring Twenties, relatively few people gave a moment’s thought about the risk of economic capsizing. For example, while buy-now-pay-later apps seemingly represent a modern innovation, the concept of consumer credit first materialized in the 1920s. Thus, the subsequent shock of the Great Depression left a permanent mark on the American psyche.

This may be the central reason why the best insurance stocks likely have a perpetually bright future. Frankly, the idea of risk mitigation is built into the American DNA. In addition, what makes the U.S. distinct is that it attempts to introduce new legislation to shore up previously exposed weaknesses. By logical deduction, the industry will probably increase in scope and complexity, boding well for the best insurance stocks.

Best Online Brokers

If you’re looking for the most ironic market segment, you’d be hard-pressed to find anything more fitting than insurance stocks. Every day, insurance firms and their army of agents field cases from the entire spectrum of the human experience, ranging from the joys of a newborn child to the loss of a loved one. In between, they’re navigating the pitfalls of what could go wrong — and what did.

But while insurance companies manage the broad dynamism of society, their underlying equity units couldn’t be any more boring. Yet this pedestrian nature is what makes insurance stocks so compelling. No matter what happens, people want coverage.

Better yet, every reputable brokerage will allow you to trade these stocks. Below is a list of best brokers to consider.

Features to Look for

  1. Passive income: One of the lessons that you learn very quickly when you participate in the stock market is the risk-reward dynamic. In short, higher-risk stocks present a danger to your principal. At the same time, you’re receiving a greater reward potential. On the flip side, insurance stocks are boring. But as a reward for the lack of upside moves, insurance firms usually offer a dividend. This is a must-have if you’re considering wagering in this sector.
  2. Financial stability: With these stocks, you’re not necessarily looking for outright growth machines, although that would be a nice attribute to have in your back pocket. Rather, you’re looking for financial stability. For instance, the best insurance stocks will feature consistent earnings per share. Moreover, free cash flow is another metric to consider as it allows companies to pay dividends or explore opportunities to raise shareholder value.
  3. Diversification: Although the consensus regarding the economic recovery following the COVID-19 pandemic is positive, the harsh reality is that no one knows for certain what tomorrow may bring. Therefore, it’s best to think like an insurance agent when assessing insurance stocks. Instead of just accruing equity in narrowly focused companies, you should consider blue chips which feature a broad range of revenue channels.

An Old Dog That Keeps Learning New Tricks

Though modern insurance coverage programs feature incredible complexity, this sector’s heritage extends back to the earliest human civilizations. Even without the convoluted infrastructures of contemporary societies, the first entrepreneurs realized that global shipping routes did not offer guarantees of safe passage. Therefore, coverage plans became necessary to control for the unknown.

Today, the mechanism behind insurance stocks has changed but not the principle. Indeed, as societies ramp up their infrastructure and become intertwined in global commercial networks, variability has only increased. Certainly, the COVID-19 pandemic gave everyone a sharp reality check that anything can happen. Given this lesson, the bullish case for the insurance industry received a sentiment boost, albeit a surprising one.

Frequently Asked Questions

Q

What are insurance stocks?

A

Insurance stocks are shares of companies that are in the insurance industry.

Q

Are insurance stocks a good investment?

A

Insurance is a commodity and something most people use, and that makes it a good investment.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.