Best Insurance Stocks to Invest in 2024

Natural disasters, and an increasing number of severe storms and floods that can be linked to climate change have dragged down insurance company stocks in the past year. This may present investors with an opportunity to pick up these shares at attractive valuations. 

Investing in insurance companies can reduce volatility in the performance of a stock portfolio. Insurance companies are known for the resilience of their business models in all sorts of economic conditions. The following guide features the 10 best insurance stocks to consider for long-term returns. They cover a broad range of sub-sectors from health and auto to pet insurance to help balance your risks. 

Best Insurance Stocks to Buy in 2024

  1. UnitedHealthGroup: The largest insurance company in the world continues to grow, led by higher demand from an aging population for health insurance and healthcare services.
  2. AIA Group Limited: This Hong-Kong-based large-cap is the No.1 publicly traded pan-Asian life insurance group. AIA’s finances are improving as mainland China rebounds from its COVID-19 restrictions.
  3. Berkshire Hathaway: People may know that the company is run by investment guru Warren Buffett, but not everyone knows that it has substantial insurance interests with a decent track record of returns. 
  4. Brown & Brown: The large-cap insurance broker connects customers with insurance companies, with its revenue coming mainly from commissions from those referrals. It has been aggressive in acquisitions. 
  5. Progressive Insurance: It’s the second-largest auto insurer in the U.S., and it also issues homeowners and recreational vehicles insurance. It uses technology for risk assessment. 
  6. Chubb Limited: This Switzerland-based large-cap owns the world’s largest property and casualty insurer. It focuses on quality underwriting. Shares of Chubb are trading at less than 14 times earnings. 
  7. Zoetis: The world’s largest manufacturer of animal drugs and vaccines also offers pet insurance through its subsidiary, Pumpkin. 
  8. Markel Group: The specialty insurer focuses on complicated, or unusual risks that require special knowledge. It’s seen as a mini-Berkshire Hathaway because of its many non-insurance acquisitions. 
  9. Arch Capital Group: The large-cap company, based in Bermuda, focuses on specialty insurance, reinsurance and mortgage insurance. 
  10. Arthur J. Gallagher & Co.: The world’s fourth-largest insurance broker specializes in risk management products for other insurers, such as Health Maintenance Organizations. It’s also active in acquisitions.

A Closer Look at the Top Insurance Stocks to Buy

Let’s take a look at the best insurance stocks to invest in this year:

1. UnitedHealthGroup: Best Health Insurance Stock

The company has two distinct units, UnitedHealthcare, the largest health insurer in the U.S. and Optum, a health services and healthcare technology business. Both units had double-digit revenue growth in 2023.

For 2023, the company reported an increase in medical loss ratio to 85%, meaning the amount of premiums that were paid to cover medical expenses climbed. That concerned investors and temporarily weighed on the share price. However, the group’s overall financials were strong. It reported full-year revenue of $371.6 billion, up 14.6%, led by a 24% revenue growth by Optum. The group’s net income from operations rose 13.8% to $32.4 billion.

UnitedHealthGroup appeals to dividend investors because it raised its quarterly dividend by 14% last year to $1.88, the 14th consecutive year it did so. Over the past decade, the company raised its dividend by 571% and yet, the payout ratio is only around 30%, which leaves room for more increases.  

UNH price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
NYSE: UNH 21.15 1.49%

2. AIA: Best Insurance Stock to Watch for Asian Demand Growth

AIA operates in 18 markets in the Asia Pacific region including Mainland China, Hong Kong and New Zealand, and it also has a venture in India with a 49% stake. Mainland China, which has a rising middle class and boasts the world’s largest insurance market by premiums, offers immense growth potential for AIA.

Population growth, rising disposable incomes and an aging population are expected to help drive the insurance market in Asia over the next decade and AIA’s strong brand puts it in a good position to capture additional business there.

For the first half of 2023, AIA reported $4.53 billion in revenue, up 18.08%, year over year, and net income of $1.3 billion, up 45.82%. It also reported a value of new business (VONB) growth of 35% to $994 million, led by new business in Mainland China, Hong Kong, India, and the Association of Southeast Asian Nations (ASEAN) that includes Singapore, Thailand and the Philippines.

AIA price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
OTC: AAGIY N/A 2.2%

3. Berkshire Hathaway: Benefiting From Insurance Interests

Warren Buffet is certainly a fan of insurance holdings. His Berkshire Hathaway is a huge holding company that owns 66 companies and 260 subsidiaries, including GEICO and GUARD Insurance, and has the largest share of medical liability insurance in the U.S. Insurance remains the company’s main source of capital.

Overall, Berkshire reported third-quarter revenue of $93.21 billion, up 21.2%, year over year. Its insurance underwriting business is really just a small part of Berkshire’s business. In the third quarter underwriting insurance brought in net income of $2.42 billion, up from a loss of $1.07 billion in the same period last year. Insurance investment income rose 75.4%, year over year to $2.47 billion. The company posted operating earnings of $10.76 billion, an increase of 40.6%, year over year.

GEICO, whom some consider to be Buffett’s favorite investment, reported net income of $2.3 billion, compared to a loss of $1.4 billion in the same period last year.

Berkshire Hathaway price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
NYSE: BRK.B 0.073 N/A

4. Brown & Brown: Stable Growth, Consistent Dividend Increases

Brown & Brown has grown annual revenue by 16% or more the past three years, including an increase of 17.8% in 2023 to $4.26 billion. The company has also bought more than 600 insurance agencies that are contributing to its revenue growth.

It has more than 15,000 employees across 495 locations, though mostly in the U.S. who own roughly 20% of Brown & Brown’s stock, which is a vote of confidence. 

In the fourth quarter, revenue rose 13.8%, year over year, to $1.03 billion. Net income was $268.6 million, up 85% compared with the same quarter a year earlier. EPS was $0.94, up 84.3%, year over year.

Brown & Brown is a Dividend Aristocrat that has increased its dividend for 30 consecutive years, including an increase of 13% in 2023 to $0.13. The yield is around 0.7%.

Brown & Brown price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
NYSE: BRO 29.36 0.68%

5. Progressive Insurance: Early AI Adopter, Using Technology to Manage Risk 

The company is an early adopter of AI, using chatbots as far back as 2017. It also has been focusing on telematics, the use of technology to send, receive, and store data from devices, such as using a car’s onboard computer, to improve its underwriting by better recognizing risks. 

Over the past few years, Progressive has consistently outperformed the S&P 500 in total return.

In the third quarter, Progressive increased its revenue by 20% to $14.9 billion and its net income rose 804% from the same period last year to $1.12 billion. The company said that it grew net premiums written by 20% for the year-to-date and in the quarter and policies in force were up 10% in the quarter.

Progressive offers a quarterly dividend of $0.10 per share, but this year, it also doled out an annual dividend of $0.75. So, combining the two, the company returned $1.15 in dividends per share last year.

Progressive price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
NYSE: PGR 27.02 0.42%

6. Chubb Limited: Bouncing Back From a Down Cycle

A higher-than-usual level of natural disasters in the U.S. and Europe had slowed the company’s growth last year, but it seems to be gathering pace again as its investment income rebounds.

In the third quarter, Chubb net income increased a staggering 158% to $2.04 billion.  Return on equity (ROE) improved from 6.4% in the third quarter a year ago, to 15.5%, showing it has become a more efficient and profitable company, making it a more attractive investment and possibly pointing toward more growth.

The company reported $56.3 billion in gross premiums written (GWP), up 36.7%, year over year as it saw significant growth in Asia. 

Chubb has increased its quarterly dividend for 30 consecutive years, including a 3.6% increase in 2023 to $0.86 and a yield of around 1.5%. With a payout ratio of 19.55%, the company has plenty of room for continued dividend increases. 

Chubb price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
NYSE: CB 14.21 1.42%

7. Zoetis: Large Player in the Growing Industry of Pet Insurance

Zoetis is a leading animal health company and it benefits from both the increased need for livestock care to help supply protein to a growing population, but also to the increased willingness of consumers to spend money on their pets’ care, including insuring them.

In the third quarter, revenue rose 7% year over year to $2.2 billion. Net income climbed 13% to $596 million, or $1.29 per share. In its guidance, Zoetis is expecting full-year revenue of between $8.475 billion to $8.55 billion and a net income range of between $2.380 billion to $2.415 billion, representing an eighth consecutive year of growth for both metrics. 

It also just raised its quarterly dividend by 15% to $0.432 per share, the seventh consecutive year of boosting the payouts. The yield on the dividend is 0.90%. 

Zoetis price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
NYSE: ZTS 39.18 0.90%

8. Markel Group: Diversified Investments, Specialty Insurance Drive Stock Price 

Markel specializes in niche insurance that requires special expertise, insuring everything from horses and vintage cars to cyber liability and workers compensation claims. Markel has been steadily growing new business while retaining old business and it has expanded its product offerings. It also owns 19 non-insurance companies that sell everything from baked goods to luxury handbags.

The company’s shares are attractively priced at under 11 times earnings. In the third quarter, revenue increased 10% from the same quarter a year earlier to $3.8 billion. EPS grew to $3.14 compared to $3.06 in the same period last year. The EPS  was dragged down by a net loss of $46.2 million in underwriting due to the wildfires in Hawaii and claims regarding Hurricane Idalia.

Markel also improved net investment income by 70.6% over the same period last year to $192.2 million, thanks to higher interest income on short-term investments. The key for Markel is it branches beyond the usual insurance investment fare of higher-paying bonds, adding stocks and buying up businesses. According to the most recent figures, it had investments in 133 companies.

Markel price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
NYSE: MKL 10.68 N/A

9. Arch Capital Group: Strong Investments Deliver Above-Average Returns

Arch Capital has shown excellent growth in recent years, both in revenue and in premiums written. The company has also posted above-average returns on its investments, nearly tripling net investment income over the past year.

It operates in four segments: insurance, reinsurance (which takes a share of other insurers’ risks for a premium), mortgage and corporate, which includes the company’s investment arm.

Arch reported $4.5 billion in gross premiums written in the third quarter, up 17.2%, year over year. EPS jumped 725% from the same period a year ago to $2.31. Revenue was up 39.5% at $3.33 billion,

Two segments, insurance and reinsurance, did particularly well in increasing net premiums, thanks to a combination of hard market rates (when companies in general tighten their underwriting and raise rates) and rising inflation that led clients to the company’s property and casualty products. 

Arch Capital price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
NASDAQ: ACGL 10.28 N/A

10. Arthur J. Gallagher: Finding Growth Through Acquisitions

Gallagher’s market cap totals almost $50 billion, it has 49,000 employees and operates in 130 countries. Despite its size and due to the nature of its business of providing risk management services, the company doesn’t deal directly with consumers, so it’s not as well-known as some of the other companies on this list, even though it is nearly a century old. 

Most recently, it has been focusing on taking over rivals as a way of expanding its business. Gallagher acquired companies through 12 mergers in 2023 and has already bought three other insurance companies in January 2024. Over the past five years, it has acquired 183 companies, most of which fall under its brokerage segment. 

In the third quarter, the company posted revenue of $2.49 billion, up 21.9%, year over year and net income of $280.7 million, up 9.7%. It also raised its quarterly dividend by 7.8% last year to $0.55 per share, giving a yield of around 0.93%. It has increased its dividend for 13 consecutive years. Gallagher’s dividend payout ratio is around 40%, so it has scope for further increases. 

Gallagher price chart

Ticker  Price-to-Earnings Ratio Dividend Yield
NYSE: AJG 51.76 1.05%

Why Is It Worth Buying Insurance Stocks Now?

Insurance companies make money primarily by investing the premiums they collect from policyholders. They are known for their consistent dividends and relatively stable revenue that isn’t overly affected by economic downturns. As long as investment returns are good and the number of claims paid don’t exceed the premiums insurance companies collect, then business is good.

However, earthquakes, storms and other natural catastrophes led to $95 billion in insured losses last year, according to Munich Re, the world’s largest reinsurer. While that was down from the previous year, it was higher than the average of $90 billion in the past 10 years and the 30-year average of $57 billion. With 2023 confirmed as the hottest year on record, climate change is definitely a factor in the increase in these adverse events and this has given investors a pause to reflect.

Losses From Natural Disasters
Source: Munich Re via Reuters

Despite this phenomenon, many insurance companies continue to thrive, because they have been able to raise the premiums in line with the increased risk. Others are simply staying out of markets that have seen rising claims, such as Florida and California. It’s also worth noting that if the stock market goes up overall as it is the expectation now with interest rate cuts on the horizon, insurance companies will benefit due to increased income from their significant investments. 

How to Pick the Best Insurance Stocks to Invest in

Look for Insurers With Strong Growth Potential

The best insurance stocks are growing their market share through adding policies, new products and often, by buying up other companies. Their profitability also depends on their ability to invest the “float,” which is the money they hold onto after collecting premiums and before paying out money on claims. 

Find Companies With a Strong Underwriting Track Record

The top insurance stocks manage their risk by doing their due diligence in writing policies that rein in risk, or at least price it in, with higher premiums.

Insurance Stocks Don’t Have to Be Stodgy

Insurance companies are notoriously conservative and have been slow to adopt new technology. That leaves plenty of territory for those companies using AI or other new technologies to gain a competitive edge in their underwriting.

Where to Get Insurance Stock Tips and Insights

For further information regarding insurance stock picks, we recommend checking out AltIndex, a subscription service that uses artificial intelligence (AI) and alternative data

AltIndex Insurance Photo

This means that it analyzes social media and other websites, app downloads, customer satisfaction ratings, and other data regarding a company.

The data AltIndex gathers over time is then compared to other companies while using machine learning to come up with investment insights. Stocks are given a score from of 1 to 100, simplifying the analytical process for investors.

With more than 10k members, AltIndex is a widely used and trusted service. It provides over 100,000 unique daily stock insights and alerts, and has a very impressive win rate of 75% from its AI stock picks.

You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well many other useful features.

Conclusion

Insurance stocks can add stability and diversity to an investor’s portfolio. Most insurance stocks fall into the value stock category and provide a relatively safe investment because of their conservative management. Many insurance stocks also deliver dividends, which over the long-term can bring investors above-average total returns.

It’s important to note that there are all different types of insurance companies, but one thing they generally have in common is their strong balance sheets. Often, they are required by law to hold considerable reserves to cover claims. Their focus on prudent risk management carries into their own investments, making them good long-term stocks to buy.

References

https://www.unitedhealthgroup.com/investors/stock.html

https://www.businessinsurance.com/article/20240101/NEWS06/912361820/Largest-medical-professional-liability-insurers

https://coverager.com/geico-ends-q3-with-1-billion-profit/

https://investor.bbinsurance.com/news-releases/news-release-details/brown-brown-inc-announces-13-increase-quarterly-cash-dividend

https://investor.bbinsurance.com/news-releases/news-release-details/brown-brown-inc-announces-fourth-quarter-2023-results-including

https://investor.zoetis.com/stock-information/dividend-history/default.aspx

https://www.mklgroup.com/what-we-do/markel-ventures

https://www.reinsurancene.ws/gallagher-re-acquires-toronto-based-mgb-re-to-grow-medical-reinsurance-business/

https://mergr.com/arthur-j.-gallagher-acquisitions

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Jim Halley

I am an experienced journalist who has also worked as an editor and writer at the Savannah Morning News, Salt Lake Tribune, USA Today, Stars and Stripes, and The Motley Fool. I spent the first half of my career in sports journalism, but in recent years have switched to writing about my other passion, stocks, particularly healthcare, real estate and consumer staples stocks. I've won numerous journalism awards from the Associated Press and state press associations and have been a judge for the Georgia Sportswriters Association. I've written one non-fiction book, Just One More Time, about Georgia Southern football, and…