Insurance stocks are stocks of the insurance companies that deal in life insurance, property or casualty insurance, accident and health insurance, surety and title insurance, and insurance brokers. Insurance stocks have experienced a sudden rally and outperformed the benchmarks in recent times due to booming business and rising demand.
Insurance stocks are a must in the investment portfolio due to stability and high returns. With the growth in the sales of retail insurance products, insurers have been able to increase their margins and become more profitable. This has further led to the uptick in insurance stocks and returns from them.
Factors to Consider Before Investing in Insurance Stocks
Investors must consider the fundamental strengths of business before investing in insurance stocks. The fundamental analysis must include industry-specific parameters, including new business premiums and annualized premium equivalent, in addition to the standard factors like returns, P/E ratios, valuation, and dividend yield.
Additionally, investors must also take an in-depth look at the types of insurance offered, portfolio and book value consisting of capital held for future claims, underwriting diversification, and combined ratios. These sector-specific features give a clearer picture of the future performance of insurance stocks.
Investors must also note that insurance stocks are one of the few stocks where past performance helps in predicting future performance. Therefore, technical analysis can also yield competent results while investing in insurance stocks.
Which Insurance Stocks Should I Buy?
A wide range of insurance stocks trades on the US stock exchanges. They belong to companies dealing with different segments of the insurance sector. We have shortlisted the best insurance stocks for investors to choose from.
Insurance stocks are on a sustained growth path due to solid distribution franchise, growth in the overall business, and due to the shift towards high-margin segments. During the times when the financial sector is highly volatile and risky, insurance stocks are suitable investments for stable returns and long-term growth.