3 insurance stocks worth diving into during tough economic times

According to the National Association of Insurance Commissioners, there were 5,929 insurance companies in the US in 2020, including 2,476 non-life insurance companies, 843 life/annuity companies, 995 health insurers, 81 fraternal insurance companies, 62 property insurance companies, 245 risk retention groups and 1,227 others.

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According to S&P Global Market Intelligence, total cash and invested assets were $2 trillion in 2020. In 2020, life/annuity cash and assets under management totaled $4.7 trillion and assets in segregated accounts and other investments totaled $3 trillion. Cash and invested assets for both sectors were $9.7 trillion.

Sounds like an industry worth pursuing in these trying times, right? Let’s take a look at why you might want to buy insurance stocks.

Why buy insurance stocks?

In times of inflation, insurance companies can be good investments because insurance stocks can rise as interest rates rise. (The relationship between interest rates and insurance companies goes like this: The higher the rate, the greater the growth.)

The insurance industry always operates in strong economies, during recessions and always has the potential to increase returns in the long run. In addition, insurance companies can generate cash at a low cost of capital to generate income in other ways.

3 insurance stocks to buy

Let’s take a look at three insurance stocks to consider adding to your portfolio.

Humana Inc. (NYSE: HUM)

Humana Inc., headquartered in Louisville, Kentucky, is a health and wellness company that offers medical and supplemental benefit plans. Company:

Contracts with the Centers for Medicare and Medicaid Services to administer the Limited Income Newly Eligible Transition Prescription Drug Plan Program. Contracts with several states to provide Medicaid benefits, dual eligibility, and long-term support services. Provides commercial fully insured medical and specialty health insurance plans, consisting of dental, visual and other additional health benefits. Offers administrative services products only to individuals and employer groups. Provides military services, such as TRICARE T2017 East Region contract.

The company also provides pharmacy solutions, provider services and home solutions such as home health and other services to its health plan members and third parties.

Humana’s fourth quarter 2021 and full year 2021 results continued to be impacted by the ongoing effects of the COVID-19 pandemic. The company reported fourth quarter 2021 loss per common share of $0.11 on a GAAP basis and adjusted earnings per share of $1.24. Full year earnings per share were $22.67 on a GAAP basis and $20.64 on an adjusted basis, $23.08.

As of December 31, 2021, the company had cash, cash equivalents and investment securities worth $17.37 billion, down $1.75 billion from $19.12 billion as of September 2021. The company paid cash dividends to its shareholders of $91 million in the fourth quarter of 2021, versus $84 million compared to the last quarter.

The Progressive Corporation (NYSE: PGR)

The Progressive Corporation, headquartered in Mayfield, Ohio, is an insurance holding company, offers the following:

Personal auto insurance Commercial auto insurance Personal residential and commercial real estate General liability Other specialty property insurance products and related services

The company is divided into three segments, including personal auto and recreational vehicle (RV) liability insurance, personal auto insurance and specialty products, including insurance for motorcycles, ATVs, RVs, personal watercraft, snowmobiles and related products.

The company also offers auto-related primary liability and physical damage insurance and business general liability and property insurance for cars, vans, pickup trucks, dump trucks, tractors, trailers and more. The company also covers recovery vehicles and wreckers used in towage and service stations, as well as non-fleet and airport taxis and black-car services.

The company also writes home insurance for homeowners, other property owners and renters, as well as personal umbrella insurance and primary and excess flood insurance. The company also provides policy issuance and claims adjustment services, and acts as an agent for homeowners’ general liability, employee insurance, and other products.

Fourth quarter 2021 earnings at Progressive Corp. declined 43% despite a 13% increase in net premiums in the last quarter of 2021. Full-year net income was $3.35 billion, down 41% from approximately $5.7 billion in 2020 and net premiums rose 14%. Net income fell 44% to $393.3 million in December alone.

However, Progressive has consistently tried cross-selling auto policies and Progressive Home Advantage, which has contributed to its incredible 3,260% return since 2000. It also reports monthly earnings, one of the few companies to do so. For example, Progressive reported that it was down 83% year over year in February 2022 due to higher costs and net realized losses on securities, providing transparent consistency you won’t find anywhere else.

Allstate Corporation (NYSE: ALL)

The Allstate Corporation, based in Northbrook, Illinois, offers property, casualty and other insurance products in the United States and Canada. The company offers:

Insurance for private passenger cars and homeowners Special car products Other products for personal lines Manufactured home and self-contained planned personal properties Commercial line products

It also offers consumer product protection plans and related technical support for cell phones, consumer electronics, furniture and appliances, as well as financial and insurance products, roadside assistance, device and mobile data collection services, and more.

The company also offers life, casualty, critical illness, short-term disability and other health insurance through call centers, agencies, financial specialists, independent agents, brokers, wholesale partners through online and mobile applications.

For the full year 2021, the company’s adjusted net income return on equity was 16.9% in 2021, reflecting higher net investment income due to strong performance-based results. Net investment income of $3.3 billion in 2021 surpassed last year by $1.7 billion due to exceptional performance-based results.

In the fourth quarter, Allstate had total revenues of $13 billion, an increase of 18.7% from the prior year quarter. Net income applicable to common shareholders grew $790 million in the fourth quarter of 2021, down $1.8 billion from the prior year quarter.

Adjusted net income was $796 million, or $2.75 per diluted share, but lower than the $1.6 billion generated in the prior year. The loss was due to non-catastrophe losses, partially offset by higher earned premiums.

Get on board with insurance stocks

People still need insurance even during downturns in the economy. It is therefore worth taking a look at several insurance giants. However, do your research and make sure these companies are a good fit for your larger portfolio.


This post 3 insurance stocks worth diving into during tough economic times was original published at “https://www.entrepreneur.com/article/424022”

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