11X Stock Market Accelerator Summit

Eric Fry reveals how an A.I.-based secret could make you up to 11 times RICHER on the same stocks you’re investing in now… without using options, leverage, or anything risky.

Wed, September 27 at 8:00PM ET

3 Best Insurance Stocks to Buy Today


Best insurance stocks to buy today - 3 Best Insurance Stocks to Buy Today

Source: Shutterstock

The pandemic has meant enormous health and economic costs for many countries. Especially with numerous health concerns and due to changing personal and professional lives, the insurance industry that has received greater focus. For instance, industry analysts have reported, “COVID-19 led to surge in online auto insurance quote requests.” Therefore today, we will introduce three of the best insurance stocks to buy today.

In the U.S., the “[v]alue of insurance premiums written” in 2019 stood at $1.32 trillion. A year ago, it was 1.22 trillion. Thus, it is a growth industry, employing millions of people and affecting almost every individual in the country.

According to the Insurance Information Institute, two segments make up the premiums:

  • Life/annuity insurers (premiums written account for 52%).
  • Property/casualty (P/C) insurers (premiums written account for 48%).

In addition to potential growth in the industry, market participants are typically drawn to stable dividends paid by insurance stocks. Insurers are part of the financial services sector. However, their operations are quite different than most financial companies, such as banks.

Insurers are liability-driven. In other words, they have a set of future liabilities that become due when insurance claims are made. Recent academic research on the industry highlights, “while pooling risks, insurers redistribute resources obtained through premiums to policyholders experiencing losses of income or wealth.”

As a result, insurance companies need to invest premiums collected well so that they can easily pay out claims as they become due. Most, therefore, have to invest in fixed-income securities, such as government bonds and AAA-rated corporate bonds. The duration and maturities of bonds in their portfolios are also affected by interest rates.

With that information, here are three of the best best insurance stocks to buy today:

  • Allstate (NYSE:ALL)
  • Anthem (NYSE:ANTM)
  • Prudential Financial (NYSE:PRU)

Best Insurance Stocks: Allstate (ALL)

Source: madamF / Shutterstock.com

Northbrook, Illinois-based Allstate offers a range of  auto, home, life and other insurance products. Its brands include Allstate, Esurance, Encompass, SquareTrade and Answer Financial.

In early November, Allstate released Q3 results. Revenue came at $11.5 billion, an increase of 3.9% year-over-year. Adjusted net income was $923 million, a decrease of 2.4%.  

CEO Tom Wilson said, Investment income was down slightly from the prior year quarter, and the total year-to-date portfolio return was 4.4%. The return on equity was 18.9% for the last 12 months. The circle of protection also expanded, with Allstate Protection Plans growing policies 40% since the prior year with adjusted net income increasing to $36 million for the quarter.”

ALL stock’s forward P/E and P/S ratios are 8.54 and 0.75, respectively. We like the shares at current levels and believe they could find a place in long-term portfolios.

Anthem (ANTM)

The Anthem logo on a sign outside of Anthem World Headquarters
Source: Jonathan Weiss / Shutterstock.com

Anthem is a leading health benefits company based in Indianapolis. It offers network-based managed care plans to large and small employers, individuals as well as Medicaid and Medicare markets and serves around 106 million people.

ON Oct. 28, Anthem released Q3 results. Revenue came at $31.16 billion, an increase of 16.8% YOY. Management credited premium revenue due to growth in Medicaid and Medicare. It operates in three main segments:

  • Commercial and specialty business (comprised of the local group, national accounts, individual and specialty businesses).
  • Government business (comprised of the Medicaid, Medicare, and federal health products and services businesses).
  • IngenioRx (pharmacy benefits business).

Diluted EPS came at 87 cents, including net negative adjustment items of $3.33 per share. This represented a 81% decrease compared to $4.55 in the same period of the previous year.

ANTH stock’s forward P/E and P/S ratios are 12.06 and 0.67, respectively. Long-term investors may consider buying the dips.

Prudential Financial (PRU)

Source: JHVEPhoto / Shutterstock.com

Newark, New Jersey-based Prudential Financial offers life insurance, annuities, retirement-related services, mutual funds and investment management.

In early November, the company announced Q3 metrics. Revenue was $15.4 billion, an increase of 2% YOY. Net income was $1.5 billion or $3.70 per share. A year ago, the metrics were net income of $1.4 billion or $3.44 per share.

CEO Charles Lowrey commented, We are ahead of pace with our cost savings program, already realizing $135 million of savings through the third quarter of 2020 versus our full-year goal of $140 million. As a result, we expect to generate an additional $250 million in efficiencies by the end of 2023, bringing our total expected cost savings to $750 million.”

PRU stock’s forward P/E and P/S ratios are 6.84 and 0.52, respectively. We believe the shares offer value for the long-run.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tezcan Gecgil Ph.D. has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination.

Article printed from InvestorPlace Media, https://investorplace.com/2020/12/3-best-insurance-stocks-to-buy-today/.

©2023 InvestorPlace Media, LLC