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5 Multiline Insurers to Watch Amid Rising Insurance Demand
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Product diversification helps Zacks Multiline Insurance industry players lower concentration risk, ensure uninterrupted revenue generation and improve retention ratio. Better pricing, prudent underwriting, increased exposure and faster economic recovery should benefit MetLife Inc. (MET - Free Report) , American International Group Inc. (AIG - Free Report) , Prudential Financial Inc. (PRU - Free Report) , The Hartford Financial Services Group (HIG - Free Report) and Old Republic International Corporation (ORI - Free Report) . Accelerated digitalization will help in the smooth functioning of the industry.
The solid capital level of the multiline insurers will fuel merger and acquisition (M&A) activities. An improving rate environment should drive investment income higher as insurers are beneficiaries of a better rate environment.
About the Industry
The Zacks Multiline Insurance industry comprises companies that provide single insurance coverage, bundling automobile, homeowner, long-term care, and life and health insurance to individuals and businesses. The insured pays a single premium and is covered for many things through a single contract. These companies cover commercial and personal properties, automobiles, marine, livestock, aviation, personal accident, life, including permanent and term insurance, supplemental accident and health insurance, workers’ compensation, annuity products, private mortgage insurance, et al. The players also provide risk management services. Since the companies offer single insurance coverage for multiple products, customer retention improves. The insured stands to benefit from lower premium payments compared to paying individual premiums for insuring varied products.
3 Trends Shaping the Future of the Multiline Insurance Industry
Diversified portfolio lowers concentration risk: Given the nature of the business, multiline insurers’ product and service portfolios are diversified. This lowers concentration risk. Increased awareness, driving higher demand for protection products, should benefit sales and premiums of life insurance operations. Continued improvement in pricing and an increase in exposure should support premium growth. Also, per Deloitte Insights, the transition to green energy and related insurance products, as well as exposure to intangible assets, offers growth opportunities. The increased adoption of artificial intelligence could increase potential cyber threats, thus fueling demand for cyber insurance. Per a report in Carrier Management, AM Best expects profitable commercial lines and improving personal lines in 2024.
Merger and acquisitions: Consolidation in the multi-line insurance industry is expected to continue as players look to diversify their operations into new business lines and geographies. Buying businesses along the same lines is driven by the players’ need to gain a fair market share and grow in their niche areas. Consolidations that slowed down earlier due to inflation are expected to be on the rise again in 2024. Insurance technology companies are expected to top the list per media reports. The industry is undergoing accelerated digitalization.
Increased adoption of technology: Digitalization has increased by leaps and bounds. The industry is witnessing greater use of technology like blockchain, AI, advanced analytics, telematics, cloud computing and robotic process automation to expedite business operations and save costs. Many life insurers have started selling policies online that appeal to the tech-savvy population. At the same time, the use of real-time data is making premium calculation easier and reducing risk. Insurers remain focused on ramping up data and analytics capabilities as well as realizing the benefit of the technological infrastructure per Deloitte Insights. Moreover, the adoption of technology has helped in seamless underwriting and claims processing. However, the adoption of technology comes with the risk of cyber threats.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging prospects in the near term. The Zacks Multiline Insurance industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #87, which places it in the top 35% of 249 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is the result of a positive earnings outlook for the constituent companies in aggregate. The rosy outlook reflects that the industry’s earnings estimates have been revised upward by analysts for the current year.
Before we present a few multiline insurance stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms Sector but Underperforms S&P 500
The Multiline Insurance industry has outperformed the sector over the past year but underperformed the Zacks S&P 500 composite over the same time frame. The stocks in this industry have collectively gained 5.3% in the past year compared with the Finance sector’s increase of 3.1% and the Zacks S&P 500 composite rise of 7% in the same time frame.
One-Year Price Performance
Current Valuation
On the basis of its trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 2.48X compared with the S&P 500’s 6.14X and the sector’s 3.06X.
Over the past five years, the industry has traded as high as 2.81X, as low as 0.69X and at the median of 1.51X.
Old Republic International: Based in Chicago, IL, Old Republic engages in the insurance underwriting and related services business, primarily in the United States and Canada. The company’s solid market presence, niche focus, low property catastrophe exposure in its General Insurance segment and strong capital position poise it well for growth. It has a Zacks Rank #2.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 3.8% and 4.4%, respectively. ORI delivered a four-quarter average earnings surprise of 6.61%.
Price and Consensus: ORI
American International Group: Headquartered in New York, AIG provides insurance products for commercial, institutional and individual customers in North America and internationally. Strategic business de-risking, acquisitions, cost-control efforts and accelerated capital deployment will drive this Zacks Rank #3 insurer’s growth.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 4.4% and 16%, respectively. The expected long-term earnings growth rate is pegged at 11.9%. The consensus estimate for 2024 and 2025 has moved 1 cent and 2 cents north, respectively, in the past 30 days. AIG delivered a four-quarter average earnings surprise of 9.18%.
Price and Consensus: AIG
MetLife: This New York-based insurance-based global financial services company provides protection and investment products to a range of individual and institutional customers. This Zacks Rank #3 insurer’s focus on businesses with growth potential and strategies to control costs and increase efficiency bodes well for growth.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 17.6% and 13.7%, respectively. Its expected long-term earnings growth rate is pegged at 13.9%. MET delivered a four-quarter average earnings surprise of 0.71%.
Price and Consensus: MET
Prudential Financial: Headquartered in Newark, NJ, Prudential is a financial services leader offering an array of financial products and services. It carries a Zacks Rank #3. Its solid asset-based businesses, improved margins in the Group Insurance business, solid international operations, a high-performing asset management business and deeper reach in the pension risk transfer market are catalysts for long-term growth. A vast distribution network, a compelling product portfolio and a superior brand image give it a competitive edge. PRU is on track to become a higher-growth, less market-sensitive business.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 15.4% and 8.3%, respectively. The expected long-term earnings growth rate is pegged at 10%. PRU delivered a four-quarter average earnings surprise of 0.23%.
Price and Consensus: PRU
The Hartford Financial Services Group: Headquartered in Hartford, CT, this Zacks Rank #3 insurer is one of the major multi-line insurance and investment companies in the country. It is poised to grow on improvement in the quality and size of mortgage insurance in force, a decline in claim payments, given the strong credit characteristics of the new loans insured, maintenance of capital in compliance with regulations and its solid capital position.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 11.9% and 14.3%, respectively. Its expected long-term earnings growth rate is pegged at 12.2%. HIG delivered a four-quarter average earnings surprise of 10.85%.
Price and Consensus: HIG
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5 Multiline Insurers to Watch Amid Rising Insurance Demand
Product diversification helps Zacks Multiline Insurance industry players lower concentration risk, ensure uninterrupted revenue generation and improve retention ratio. Better pricing, prudent underwriting, increased exposure and faster economic recovery should benefit MetLife Inc. (MET - Free Report) , American International Group Inc. (AIG - Free Report) , Prudential Financial Inc. (PRU - Free Report) , The Hartford Financial Services Group (HIG - Free Report) and Old Republic International Corporation (ORI - Free Report) . Accelerated digitalization will help in the smooth functioning of the industry.
The solid capital level of the multiline insurers will fuel merger and acquisition (M&A) activities. An improving rate environment should drive investment income higher as insurers are beneficiaries of a better rate environment.
About the Industry
The Zacks Multiline Insurance industry comprises companies that provide single insurance coverage, bundling automobile, homeowner, long-term care, and life and health insurance to individuals and businesses. The insured pays a single premium and is covered for many things through a single contract. These companies cover commercial and personal properties, automobiles, marine, livestock, aviation, personal accident, life, including permanent and term insurance, supplemental accident and health insurance, workers’ compensation, annuity products, private mortgage insurance, et al. The players also provide risk management services. Since the companies offer single insurance coverage for multiple products, customer retention improves. The insured stands to benefit from lower premium payments compared to paying individual premiums for insuring varied products.
3 Trends Shaping the Future of the Multiline Insurance Industry
Diversified portfolio lowers concentration risk: Given the nature of the business, multiline insurers’ product and service portfolios are diversified. This lowers concentration risk. Increased awareness, driving higher demand for protection products, should benefit sales and premiums of life insurance operations. Continued improvement in pricing and an increase in exposure should support premium growth. Also, per Deloitte Insights, the transition to green energy and related insurance products, as well as exposure to intangible assets, offers growth opportunities. The increased adoption of artificial intelligence could increase potential cyber threats, thus fueling demand for cyber insurance. Per a report in Carrier Management, AM Best expects profitable commercial lines and improving personal lines in 2024.
Merger and acquisitions: Consolidation in the multi-line insurance industry is expected to continue as players look to diversify their operations into new business lines and geographies. Buying businesses along the same lines is driven by the players’ need to gain a fair market share and grow in their niche areas. Consolidations that slowed down earlier due to inflation are expected to be on the rise again in 2024. Insurance technology companies are expected to top the list per media reports. The industry is undergoing accelerated digitalization.
Increased adoption of technology: Digitalization has increased by leaps and bounds. The industry is witnessing greater use of technology like blockchain, AI, advanced analytics, telematics, cloud computing and robotic process automation to expedite business operations and save costs. Many life insurers have started selling policies online that appeal to the tech-savvy population. At the same time, the use of real-time data is making premium calculation easier and reducing risk. Insurers remain focused on ramping up data and analytics capabilities as well as realizing the benefit of the technological infrastructure per Deloitte Insights. Moreover, the adoption of technology has helped in seamless underwriting and claims processing. However, the adoption of technology comes with the risk of cyber threats.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging prospects in the near term. The Zacks Multiline Insurance industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #87, which places it in the top 35% of 249 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is the result of a positive earnings outlook for the constituent companies in aggregate. The rosy outlook reflects that the industry’s earnings estimates have been revised upward by analysts for the current year.
Before we present a few multiline insurance stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms Sector but Underperforms S&P 500
The Multiline Insurance industry has outperformed the sector over the past year but underperformed the Zacks S&P 500 composite over the same time frame. The stocks in this industry have collectively gained 5.3% in the past year compared with the Finance sector’s increase of 3.1% and the Zacks S&P 500 composite rise of 7% in the same time frame.
One-Year Price Performance
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Current Valuation
On the basis of its trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 2.48X compared with the S&P 500’s 6.14X and the sector’s 3.06X.
Over the past five years, the industry has traded as high as 2.81X, as low as 0.69X and at the median of 1.51X.
Price-to-Book (P/B) Ratio (TTM)
Price-to-Book (P/B) Ratio (TTM)
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5 Multiline Insurance Stocks to Keep an Eye on
We are presenting one Zacks Rank #2 (Buy) stock and four Zacks Rank #3 (Hold) stocks from the Multiline Insurance industry.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Old Republic International: Based in Chicago, IL, Old Republic engages in the insurance underwriting and related services business, primarily in the United States and Canada. The company’s solid market presence, niche focus, low property catastrophe exposure in its General Insurance segment and strong capital position poise it well for growth. It has a Zacks Rank #2.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 3.8% and 4.4%, respectively. ORI delivered a four-quarter average earnings surprise of 6.61%.
Price and Consensus: ORI
American International Group: Headquartered in New York, AIG provides insurance products for commercial, institutional and individual customers in North America and internationally. Strategic business de-risking, acquisitions, cost-control efforts and accelerated capital deployment will drive this Zacks Rank #3 insurer’s growth.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 4.4% and 16%, respectively. The expected long-term earnings growth rate is pegged at 11.9%. The consensus estimate for 2024 and 2025 has moved 1 cent and 2 cents north, respectively, in the past 30 days. AIG delivered a four-quarter average earnings surprise of 9.18%.
Price and Consensus: AIG
MetLife: This New York-based insurance-based global financial services company provides protection and investment products to a range of individual and institutional customers. This Zacks Rank #3 insurer’s focus on businesses with growth potential and strategies to control costs and increase efficiency bodes well for growth.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 17.6% and 13.7%, respectively. Its expected long-term earnings growth rate is pegged at 13.9%. MET delivered a four-quarter average earnings surprise of 0.71%.
Price and Consensus: MET
Prudential Financial: Headquartered in Newark, NJ, Prudential is a financial services leader offering an array of financial products and services. It carries a Zacks Rank #3. Its solid asset-based businesses, improved margins in the Group Insurance business, solid international operations, a high-performing asset management business and deeper reach in the pension risk transfer market are catalysts for long-term growth. A vast distribution network, a compelling product portfolio and a superior brand image give it a competitive edge. PRU is on track to become a higher-growth, less market-sensitive business.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 15.4% and 8.3%, respectively. The expected long-term earnings growth rate is pegged at 10%. PRU delivered a four-quarter average earnings surprise of 0.23%.
Price and Consensus: PRU
The Hartford Financial Services Group: Headquartered in Hartford, CT, this Zacks Rank #3 insurer is one of the major multi-line insurance and investment companies in the country. It is poised to grow on improvement in the quality and size of mortgage insurance in force, a decline in claim payments, given the strong credit characteristics of the new loans insured, maintenance of capital in compliance with regulations and its solid capital position.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates a year-over-increase of 11.9% and 14.3%, respectively. Its expected long-term earnings growth rate is pegged at 12.2%. HIG delivered a four-quarter average earnings surprise of 10.85%.
Price and Consensus: HIG
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