January 19, 2025

Analytical Business Tactics

Long Term Benefits of Investment

4 Insurance Stocks to Secure Your Investments in the New Year

4 Insurance Stocks to Secure Your Investments in the New Year

As we move closer to the New Year, we are all hoping for a prosperous 2025, which, in turn, will be reflected in our investment portfolio. The insurance industry has gained 29.6% year to date compared with the Finance sector’s increase of 21% and the Zacks S&P 500 composite’s rise of 28.3%. Despite an active catastrophe environment and rate cuts, the industry has outperformed, banking on better pricing, exposure growth and accelerated digitalization.

Driven by their strength, insurers like The Allstate Corporation ALL, Unum Group UNM, Kingstone Companies KINS and Kemper KMPR have not only crushed the market this year but are expected to retain the bull run next year too. Adding them to your portfolio will be a smart move to secure your investments and enjoy strong returns.

Zacks Investment Research
Zacks Investment Research


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Prudent pricing, reinsurance programs and favorable reserve development helped non-life insurers sail through this year despite an above-average hurricane season.

Per a report by Aon, there were at least 280 notable global natural disaster events in the period between the first quarter and the third quarter, resulting in economic losses of at least $258 billion and insurance losses of $102 billion. Given an active hurricane season, Swiss Re estimates insured losses from catastrophes to exceed $144 billion in 2024, while economic losses are projected to be about $320 billion, much higher than the 10-year average. Nonetheless, it believes insurers are poised to deliver profits driven by better underwriting as well as investment results.

Global commercial insurance prices declined for the first time in seven years in the third quarter of 2024, attributable to heightened competition among insurers in the global property market, per Marsh Global Insurance Market Index. 

Insurance Information Institute and Milliman estimate underwriting profitability to be under pressure, primarily due to soft performance in personal lines, which are expected to witness higher catastrophe losses. AM Best estimates cat loss to contribute 680 basis points to the expected combined ratio of 100.7 in 2024. Swiss Re estimates the combined ratio to improve from 2023 to 98.5% in 2024.

The economy has been growing slowly, as evident from the GDP, which increased at an annualized rate of 2.8% in the third quarter of 2024. Per the Fed’s December Economic Projections, GDP in 2024 is estimated to improve 2%, while the unemployment rate is expected to be 4.4%.

With the expectation that inflation will move toward the desired 2%, the Fed cut the interest rate by 50 basis points in September and again in November for the first time in four years.  All eyes are on the Fed now as it will likely cut interest rate again in its December meeting. Insurers are direct beneficiaries of a rising rate environment. They invest a portion of their premiums. Long-tail insurers tend to gain more from rising rates as they have more time to invest their premiums and earn a higher rate of return. With a lower rate of return, investment income will suffer. However, a broader invested base will limit the downside. 

Increased awareness continues to support the life insurance market. According to LIMRA’s Third Quarter U.S. Individual Life Insurance Sales Survey, total new annualized premium has jumped 2% to $11.6 billion year to date, while the number of policies sold has risen 1% year over year. LIMRA projects sales to be solid through the end of the year, likely marking the fourth consecutive year of record premium if the economy remains strong with inflation and unemployment stable.

A solid surplus level continues to aid insurers in pursuing strategic mergers and acquisitions to gain market share, expand in niche areas and diversify operations into new business lines and geography.

The industry is undergoing accelerated digitalization. Increased use of technology like blockchain, artificial intelligence, advanced analytics, telematics, cloud computing, robotic process automation, Chatbot and RoboAdvisory, and insurtech solutions continue to expedite business operations and save costs.

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