February 18, 2025

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3 Insurance Stocks Standing Strong Amid Recovery

3 Insurance Stocks Standing Strong Amid Recovery

The insurance sector is currently experiencing significant turbulence, with losses squeezing gains. The ongoing wildfires in Los Angeles have destroyed or damaged more than 17,000 structures, highlighting the sector’s massive work ahead in recovery efforts.

The financial toll is staggering. Estimates from catastrophe risk modelers place the average insured loss per structure at $1.9 million. CoreLogic predicts total insured losses in the $35-$45 billion band, while Moody’s RMS estimates range within $20-$30 billion, including losses tied to the California FAIR Plan.

Most insurance and utility companies with operations in California have seen share prices drop due to the fires. This financial burden will be distributed across insurers and their reinsurers, with most losses stemming from home insurance claims. Auto and commercial property insurance are expected to see smaller impacts in comparison. These substantial losses have even affected reinsurers. The share price drop has created an opening for investors looking to expand their footprint in the insurance space.

The Los Angeles wildfires are a tragedy for individuals and businesses alike, and rebuilding will undoubtedly come at a significant cost. However, historical trends indicate that insurance stocks often recover quickly. In fact, following the last four major U.S. natural disasters with losses exceeding $100 billion, insurance shares typically experienced notable gains in the months afterward.

The demand for various types of insurance products often surges after such events. Insurers typically respond by innovating and offering more efficient solutions to meet evolving customer requirements and stand by them in their time of need. History suggests that insurers can become a guiding force for recovery and rebuilding, which is important because, often, a rising tide will lift all boats in an industry.

As such, we have identified three Zacks Rank #2 (Buy) stocks with strong ties to Los Angeles and significant growth potential in the insurance sector: Arthur J. Gallagher & Co. AJG, Brown & Brown, Inc. BRO and Primerica, Inc. PRI. Their resilience, innovation and ability to contribute to the overall recovery efforts make them standout choices for investors looking to capitalize on the sector’s rebound.

These selections were made using the Zacks Stock Screener. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

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