3 Insurance Stocks Worth Dipping In During Tough Economic Times

There were 5,929 insurance companies in the US in 2020, according to the National Association of Insurance Commissioners, including 2,476 property casualty companies, 843 life / annuities companies, 995 health companies, 81 fraternal insurance companies, 62 title insurance companies, 245 risk retention groups. and 1,227 others.



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Total property casualty cash and invested assets were $ 2 trillion in 2020, according to S&P Global Market Intelligence. Life / annuity cash and invested assets totaled $ 4.7 trillion in 2020 and separate account assets and other investments totaled $ 3 trillion. Cash and invested assets for both sectors was $ 9.7 trillion.

Sounds like an industry worth pursuing during these tough times, right? Let’s dig into why you might want to buy insurance stocks.

Why Buy Insurance Stocks?

During inflationary times, insurance companies can be good investments because insurance stocks can increase 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 works in strong economies, during recessions and always has the potential to increase returns over the long run. In addition, insurance companies can generate cash at a low capital cost to turn into other ways to produce revenue.

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 well-being company that offers medical and supplemental benefit plans. The company:

  • Contracts with the Centers for Medicare and Medicaid Services to administer the Limited Income Newly Eligible Transition prescription drug plan program.
  • Contracts with various states to provide Medicaid, dual eligible and long-term support services benefits.
  • Offers commercial fully insured medical and specialty health insurance benefits comprising dental, vision and other supplemental health benefits
  • Offers administrative services-only products to individuals and employer groups.
  • Offers military services, such as TRICARE T2017 East Region contract.

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

Humana’s results in Q4 2021 and full year 2021 continued to be influenced by the ongoing effects of the COVID-19 pandemic. The company reported Q4 2021 loss per common share of $ 0.11 on a GAAP basis and an adjusted EPS of $ 1.24. Full-year EPS was $ 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 at $ 17.37 billion, a $ 1.75 billion decrease from $ 19.12 billion as of September 2021. The company paid cash dividends to its stockholders of $ 91 million in Q4 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, provides the following:

  • Personal auto insurance
  • Commercial auto insurance
  • Personal residential and commercial property
  • General liability
  • Other specialty property-casualty insurance products and related services

The company is divided into three segments, which includes writing insurance for personal autos and recreational vehicles (RV), personal auto insurance and special lines products, including insurance for motorcycles, ATVs, RVs, watercrafts, snowmobiles and related products.

The company also offers auto-related primary liability and physical damage insurance and business-related general liability and property insurance for autos, vans, pick-up trucks, dump trucks, tractors, trailers and more. The company also covers tow trucks and wreckers used in towing services and gas / service station businesses as well as non-fleet and airport taxis and black-car services.

The company also writes residential property insurance for homeowners, other property owners and renters, as well as offers personal umbrella insurance and primary and excess flood insurance. The company also offers policy issuance and claims adjusting services and acts as an agent to homeowner general liability, workers’ compensation insurance and other products.

Q4 2021 earnings at Progressive Corp. fell 43% despite an increase of 13% in net premiums in the last quarter of 2021. Net income for the full year achieved $ 3.35 billion, a 41% drop from about $ 5.7 billion in 2020 and net premiums increased 14%. Net income was down 44% to $ 393.3 million in December alone.

However, Progressive has consistently tried cross-selling auto policies and Progressive Home Advantage, contributing to its unbelievable 3,260% return since 2000. It also reports monthly earnings, one of the few companies to do so. For example, Progressive reported being 83% down year over year in February 2022 due to higher expenses and net realized loss on securities, offering a transparent consistency you won’t find anywhere else.

Allstate Corporation (NYSE: ALL)

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

  • Private passenger auto and homeowners insurance
  • Specialty auto products
  • Other personal lines products
  • Manufactured home and standalone scheduled personal property
  • Commercial lines products

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

The company also provides life, accident, critical illness, short-term disability and other health insurance products 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 shareholders’ equity was 16.9% in 2021, reflecting increased net investment income from strong performance-based results. Net investment income of $ 3.3 billion in 2021 exceeded prior year by $ 1.7 billion due to exceptional performance-based results.

In Q4, Allstate saw $ 13 billion in total revenues, a 18.7% increase compared to the prior year quarter. Net income applicable to common shareholders grew $ 790 million in Q4 of 2021, which decreased $ 1.8 billion compared to the prior year quarter.

Adjusted net income was $ 796 million, or $ 2.75 per diluted share, but below the $ 1.6 billion generated in the prior year quarter. 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 downed economic cycles. Therefore, it is worth your while to take a look at several insurance behemoths. However, do your research and make sure these companies will mesh well with your larger portfolio.

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