- By Sarah Foley
- Oct 05, 2022
No matter what the global economy is doing, insurance companies can be a strong investment.
However, it’s important to ensure that the insurance companies you’re investing in are financially sound.
Insurance is an essential industry. Even when consumers are struggling financially, they’re likely to still maintain insurance policies.
Insurance companies also maintain very stable finances to keep up with regulations.
Because of this, insurance stocks are a great long-term buy.
Most large insurers can withstand recessions and fluctuations in the stock market.
In this article, we’ll feature some of the best insurance stocks to invest in right now.
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Best Insurance Stocks To Buy
Chubb Ltd (NYSE: CB)
Chubb Ltd is an insurance company based out of Switzerland with a presence in some 54 different countries around the world.
Being so large, the insurance group covers accidents, casualties, health, life, property, and more.
Furthermore, the company is one of the largest property and casualty companies out there.
With so many areas of expertise, Chubb is able to weather any storms that affect the insurance sector.
Chubb took advantage of the pandemic season to work on process improvements that have propelled them into such a strong standing as 2021 rolled around.
Currently, Chubb’s stock price is up 35% from last year at this time and shows signs of continued growth moving into the third quarter of 2021.
If trends continue, Chubb will continue to be a solid investment for the foreseeable future.
Best Health Insurance Stocks
UnitedHealth Group Inc (NYSE: UNH)
UnitedHealth is the largest health insurance company in the United States.
They have a very strong business model, with the financial stability to handle a rapidly changing insurance industry.
One of the best things about investing in UnitedHealth is that they are committed to paying dividends and have increased their dividend yield every year for the last decade.
Their dividend is up to $1.45 per share as of summer 2021.
UnitedHealth continues to post strong earnings numbers through the second quarter of 2021.
While the coronavirus pandemic hurt many other health industry aspects, it strengthened United’s earning potential.
When people started losing their jobs at the beginning of the pandemic, many opted to purchase their own plans through government exchanges.
United Healthcare has plans available on these exchanges through government contracts.
As a result, United has been able to keep its medical costs lower this year and has taken the opportunity to get ahead financially.
United Healthcare stock isn’t a cheap buy, but they are an industry leader that has shown success time and again.
Cigna (NYSE: CI)
Cigna is a health insurance provider based in the state of Connecticut.
They offer private health insurance plans as well as Medicare and Medicaid plans.
Additionally, they have a global arm that offers group health benefits products in Europe and Asia.
After a solid first quarter, earnings are slightly down for Q2 of 2021.
Even though Cigna’s stock has fluctuated over the years, it has consistently been able to recover from challenges and provide strong returns.
They’ve managed to improve their debt in check and their profits have improved over time as well.
Signs show that Cigna will continue to follow its past trends, making it a good investment.
Now is the time to buy, while the stock is sitting a little lower than usual.
Anthem Inc (NYSE: ANTM)
Anthem Inc is a massive for-profit health insurance company based out of the state of Indiana.
Their plans cover a large range of businesses from small to large and even includes options for individual users.
They also have partnerships with both Medicare and Medicaid to serve an even larger number of people.
At the beginning of the third quarter 2021, Anthem’s stock price is up nearly 45% from last year’s standing.
This year marks the first time the company has been able to pay out a dividend above one dollar, and Q2 earnings reports confirm the same payout for September.
Anthem continues to trend upward and looks to be a good pick for a long-term insurance stock.
Best Car Insurance Stocks
Allstate Corp. (NYSE: ALL)
There’s a good chance you’ve heard of Allstate before – they’re one of the largest providers of personal insurance policies in the US.
Their products are widely available, which gives them a very competitive market share.
Allstate is known for their car insurance, but they also have products in the property and casualty sector.
This company is very innovative and has a focus on great customer service. They’ve used technology to make insurance more accessible to the average consumer.
They also offer enticing discount and loyalty programs.
After a difficult 2020 where fewer people were on the roads, Allstate has bounced back at the beginning of 2021 and their stock share has increased20% year to date.
One great reason to invest in Allstate is their dividend. Their current quarterly dividend is $0.81 per share.
A reliable dividend makes any insurance stock financially valuable, even if their returns don’t meet expectations.
A strong dividend and strong financial model makes this company a good buy.
Best Life Insurance Stocks
MetLife (NYSE: MET)
MetLife is the largest provider of life insurance products in the US but also provide annuities and other financial products designed to help people save for retirement.
MetLife works with companies around the world to provide employee benefits in addition to their consumer personal finance products.
The reason MetLife is such a good buy is its financial stability.
MetLife also has a very strong return on equity, and they pay a modest dividend of $0.48 per share each quarter.
After a low 2020 season, Metlife’s stock price has surpassed its 2019 average and even reached an all-time high in May.
Their strong business model set them up for this rebound and the company plans to use this momentum moving forward.
This means now may be the right time to open a position with this company.
Prudential Financial (NYSE: PRU)
Prudential is an established insurer that offers a wide variety of financial products.
They’re a global company that currently has operations in more than 40 countries, including the US.
Prudential works in a range of spaces, including not only insurance but also investment management.
They’ve seen impressive gains after the pitfalls of the pandemic and have seen a 53% growth in stock price from last year at this time.
In addition, they have a reliable quarterly dividend of $1.15 per share.
Prudential is also being proactive by restructuring its operations to prevent future losses, pandemic or otherwise.
Although Prudential has bounced back and then some, trends indicate the potential for more growth on the horizon.
Best Insurance Company Stocks To Buy
Progressive (NYSE: PGR)
Progressive is another one of the largest insurers in the US market.
They’re known for insuring cars, motorcycles, boats, and other vehicles, although they do have some types of property and casualty insurance products as well.
As a company, Progressive stands out from the rest of the market by offering competitive premiums and user-friendly products.
It’s easy for customers to get a quote online, and they also offer a user-friendly mobile app.
By focusing on modern technology, Progressive appeals to younger drivers that want a streamlined experience.
Progressive has also proven that they have a financially savvy business model.
They consistently draw in more money in revenue than they pay in claims, instead of focusing on their own investing.
While they do have some investments in play, they are only a small percentage of the company’s total profit.
This minimizes risk and has helped them do better this year than many of their competitors.
Progressive has a whopping 5.15 percent dividend yield. This makes it a great play for income investors.
Overall, this stock has seen a positive change this year, and it’s a stable choice for the long term.
American International Group Inc. (NYSE: AIG)
The American International Group, better known as AIG, is an insurance company that covers property and casualty on the global market.
The company made some mistakes early on which led to a government bailout, but these mistakes have made for a stronger business moving forward.
AIG has learned from their mistakes and has built a better company for it.
As with most insurance companies, AIG’s trip through 2020 was wrought with peril, but this further cemented a strong standing at the beginning of 2021.
The insurance company currently sits with a stock price 45% higher than last year at this time and a belief that their strong business model will continue to propel them forward.
AIG has a buy rating right now, making it another good pick to add to your list.
Are Insurance Stocks A Good Investment?
Insurance stocks can be an excellent investment – as long as you’re choosing ones with stable finances.
No matter the season of life, insurance is an essential tool in this day and age.
Families invest in health, life, and insurances to cover their property regularly.
In order to succeed financially, insurance companies cannot take on the same type of debt as companies in other industries.
Because of this, they’re able to keep clean balance sheets that can push their stock prices up.
When investing in insurance stocks, it’s important to understand how an insurance business model works.
Insurance companies make money in two ways. The first is by collecting money from the premiums they charge.
The other way insurance companies make money is by investing the income they get from their premiums.
When you invest in an insurance company, you’ll want to take a look at what type of investments they have and the risk involved.
You’ll also want to look at the insurance company’s combined ratio, which is the ratio of business expenses and losses to their overall income from premiums.
Ideally, insurers should have a combined ratio of under 100 percent. This indicates that the insurer is making a profit.
Insurance Stocks: Final Thoughts
Insurance stocks have always been a good choice for investors, even when the global economy was struggling last year.
Since insurers need to maintain a stable balance sheet, they’re less likely to see dramatic fluctuations in their overall performance.
They also tend to be good dividend stocks.
When selecting insurance stocks, you’ll want to ensure that you’re choosing established companies with a history of strong performance.
Data points like combined ratios and earnings per share numbers can help you determine the viability of each stock.
