As we move closer to wrapping up 2025, we are all hoping for a prosperous 2026, which, in turn, will be reflected in our investment portfolio. Despite an active catastrophe environment and three rate cuts, the insurance industry has gained 7.9% this year to date, thanks to better pricing, exposure growth and accelerated digitalization.
Driven by their strength, insurers like Travelers Companies TRV, Axis Capital Holdings AXS, Jackson Financial JXN, Lincoln National LNC and Globe Life GL 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.
Strong underwriting, reinsurance strategies and favorable reserve development enabled non-life insurers to deliver solid results despite an above-average hurricane season.
Globally, commercial insurance pricing has softened, reflecting heightened competition. Even amid softer pricing, industry profitability has improved. With no major loss events recorded so far in the fourth quarter, underwriting performance should improve.
Macroeconomic conditions remain favorable. The Federal Reserve projects 1.7% growth in 2025, with unemployment averaging 4.5%. As inflation trends closer to the Fed’s 2% target, interest rates were cut three times during the year. While lower rates may moderate investment income—particularly for long-duration liabilities—diversified portfolios should help cushion the impact.
In life insurance, growing consumer awareness continues to support demand. LIMRA expects the momentum to persist, driven by strong sales of accumulation products, broader adoption of simplified offerings and a healthy final-expense market.
At the same time, accelerated digital transformation is improving efficiency, lowering costs and enhancing customer engagement. Insurers’ operational expertise and strong balance sheets continue to support stable shareholder returns through consistent dividend growth and occasional special payouts.
According to the Federal Reserve’s December Economic Projections, GDP growth in 2026 is expected to reach 2.3%, while the unemployment rate is forecast to improve to 4.4%. This continued economic expansion positions the insurance industry favorably for growth. At the December FOMC meeting, Fed officials also indicated one rate in 2026.
While rate cuts can be a modest headwind for insurers, investment income is expected to remain resilient, supported by diversified portfolios, increasing allocations to private market investments, and portfolios weighted toward fixed-income securities with staggered maturities.
Industry growth prospects remain constructive. A ReporterLinker report estimates global life insurance gross written premiums to reach $2.5 trillion by 2026. Deloitte notes growth in advanced markets is expected to stay muted, while emerging markets are likely to expand at a faster pace, benefiting from low insurance penetration and a growing middle-class population.
Despite ongoing pricing softness, the Swiss Re Institute expects global insurance premiums to rise 3% in 2026.
Insurers are actively streamlining operations, pursuing diversification and investing in technology to enhance resilience.
With the help of the Zacks Stock Screener, we have selected five insurance stocks that have rallied this year and are poised to retain the momentum next year. These stocks have outpaced the industry.
The Travelers Companies, one of the leading writers of auto and homeowners’ insurance plus commercial U.S. property-casualty insurance, is poised to grow on strong renewal rate change, retention and increased new businesses, supported by a compelling portfolio and a solid capital position.
Travelers has a strong balance sheet with ample liquidity and a decent debt-to-total capital ratio. This Zacks Rank #1 (Strong Buy) insurer has raised dividends for 21 consecutive years with a compound annual growth rate of 8% over that period. Its current dividend yield of 1.7% is better than the industry average of 0.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TRV’s 2026 earnings per share is pegged at $26.40 on $50.5 billion revenues. Shares have gained 18.8% year to date.
AXIS Capital Holdings is a global specialty underwriter. The insurer targets higher-margin, less commoditized segments of the insurance market. This focus allows the company to leverage underwriting expertise, maintain pricing discipline and build strong client relationships in niche areas with lower competitive intensity. As a result, Axis enhances its profitability and resilience across market cycles.
Its balance sheet shows a strong financial foundation. It exited the third quarter with cash and cash equivalents of $825.9 million and debt was $1.3 billion at quarter-end. Its debt-to-equity ratio sits at 0.3%.
The company approved 18 consecutive dividend raises and boasts one of the highest dividend yields among its peers. The consensus estimate for AXS’ 2026 earnings per share is pegged at $12.66 on $6.8 billion in revenues. Shares of this Zacks Rank #2 (Buy) insurer have gained 15.8% year to date.
Jackson Financial provides a suite of annuities to retail investors in the United States. Retail Annuity sales are poised to grow on diversified product sales and growing distribution. This Zacks Rank #1 insurer is poised to grow on the success of RILA, coupled with growth in fixed annuities and institutional sales. It also boasts a high-quality, diversified investment portfolio.
JXN targets an 11%-27% increase in capital return to shareholders in 2025. It intends to deploy $700-$800 million through share buybacks and dividend increases. Its dividend yield is 3%.
Its balance sheet strength is underscored by a cash and invested balance of $72.3 billion against a long-term debt of $2 billion. Its debt to equity sits good at 0.5%.
The consensus estimate for JXN’s 2026 earnings per share is pegged at $23.85 on $7.8 billion in revenues. Shares have gained 18% year to date.
Lincoln National is a diversified life insurance and investment management company. A fast-recovering Group Protection business, a strong fixed annuity business and positive flows in the Retirement Plan Services, coupled with pricing discipline and product introductions, should favor this Zacks Rank #2 insurer.
Its quarterly dividend of 45 cents per share, resulting in a dividend yield of 4%, comfortably surpassed the industry average of 3%.
The balance sheet also shows strength. It exited the third quarter with cash and invested cash of $10.7 billion while long-term debt amounted to $5.8 billion. Its debt-to-equity ratio stands at a good 0.6.
The consensus estimate for LNC’s 2026 earnings per share is pegged at $8.03 on $19.5 billion in revenues. Shares have rallied 39.5% year to date.
Globe Life’s niche market focus, expansion initiatives to capture heavily populated and less penetrated areas, solid distribution channels and operating fundamentals should drive long-term growth. Growth in average invested assets should drive investment income of this provider of individual life and supplemental health.
Backed by a sustained operational performance, Globe Life has maintained a strong liquidity position with sufficient cash generation capabilities. Its debt-to-equity ratio stands at a good 0.4.
Strong capital and liquidity position enable Globe Life to make dividend payouts. Shares of this Zacks Rank #3 (Hold) insurer have rallied 33% year to date. The consensus estimate for GL’s 2026 earnings per share is pegged at $15.04 on $6.3 billion in revenues.
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Lincoln National Corporation (LNC) : Free Stock Analysis Report
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Globe Life Inc. (GL) : Free Stock Analysis Report
Jackson Financial Inc. (JXN) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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