The Property and Casualty Insurance industry is currently undervalued compared to the Zacks S&P 500 composite and the Finance sector. Its price-to-book (P/B) ratio of 1.47 is lower than the Zacks S&P 500 composite’s P/B of 5.95 and the sector’s P/B of 3.3. This suggests potential for upside in the coming quarters.
Before their valuation expands, consider adding undervalued stocks with growth potential to your portfolio.
The industry has gained momentum due to improved pricing, technological advancements, increased exposure, underwriting profitability, reserve development, and global expansion. It has also exhibited an impressive solvency level.
While global commercial insurance prices have risen for 24 consecutive quarters, the magnitude slowed down. This better pricing ensures improved premiums. Gross premiums are estimated to increase six-fold to $722 billion by 2030. However, the industry remains exposed to significant catastrophe losses from natural disasters.
Despite these challenges, exposure growth, improved pricing, prudent underwriting, favorable reserve development, and a strong capital position are expected to help absorb catastrophe losses.
With four rate hikes in 2023, the industry’s investment income is likely to have improved. Insurers benefit from a rising rate environment. Industry players are also focused on digitalization to improve scale and efficiencies.
The insurance industry has outperformed the Finance sector, with a 16.8% increase compared to the sector’s 15.1% growth in the past year. Overall, better pricing, prudent underwriting, and increased exposure should help insurers retain momentum for the longer term.
Utilizing the Zacks Stock Screener, three insurance stocks with an impressive Value Score of A or B and a Zacks Rank #1 (Strong Buy) or #2 (Buy) have been selected.
Axis Capital Holdings Limited – This property and casualty insurer, headquartered in Bermuda, has a favorable long-term earnings growth rate of 5%. The company has beaten earnings estimates in each of the last four quarters, with an average beat of 22.45%. AXIS Capital is a leading specialty insurer and global reinsurer and currently carries a Zacks Rank #2.
Its P/B ratio stands at 1.04, and its shares have gained 0.05% in the past year.
RenaissanceRe Holdings Ltd. – This company, also headquartered in Bermuda, offers insurance and reinsurance products. It is strategically positioned for growth and has a market cap of $10.5 billion.
RenaissanceRe leverages rising premiums earned and improving underwriting results, with the favorable impacts of a high-interest-rate environment acting as a key driver. Its Casualty and Specialty business is expected to play a significant role in its top-line growth.
Insurance Companies Making Waves in the Market
Two insurance giants, RenaissanceRe Holdings Ltd. (RNR) and CNA Financial Corporation (CNA), are shaking up the industry with their robust performances and investor-friendly moves. Let’s take a closer look at what sets them apart and how they are making a significant impact on the market.
RenaissanceRe’s Strong Performance
RenaissanceRe has been on a roll with its strategic acquisition initiatives, fueling its business expansion and capturing attention in the market. The company’s impressive VGM Score of A speaks volumes about its solid position and performance, garnering positive investor sentiment.
With a remarkable track record of beating earnings estimates and a return on equity well above the industry average, RenaissanceRe has outpaced its peers. Additionally, the company’s P/B ratio of 1.46 and a 7% rally in share prices over the past year highlight its consistent growth and resilience in the market.
CNA Financial’s Strategic Moves
CNA Financial Corporation has been turning heads with its holistic approach towards growth. The company’s focus on better pricing, increased exposure, and higher new business and retention across its segments has positioned it as a formidable player in the insurance landscape.
Supporting its strong position is CNA Financial’s impressive VGM Score of B and a decent track record of beating earnings estimates, further solidifying its standing in the market. With a return on equity that surpasses the industry average, along with a commendable P/B ratio and a steady rally in share prices, CNA Financial has undoubtedly made its mark.
A Promising Outlook
Both RenaissanceRe and CNA Financial have displayed their potential for long-term growth and investor value. Their exceptional performances and strategic moves are signaling a wave of optimism among investors.
As the insurance industry continues to evolve, these companies are standing out as exceptional choices for discerning investors. The market is buzzing with the promise of growth and stability, and both RenaissanceRe and CNA Financial have firmly established themselves as major players in this narrative.
For investors seeking lucrative opportunities in the insurance sector, RenaissanceRe and CNA Financial are certainly worth keeping a close watch on. Their consistent performance and investor-friendly approaches are a testament to their potential and influence in the market.
It’s truly an exciting time in the insurance sector, and these companies are at the forefront of this exhilarating journey, poised to create ripples and set new benchmarks in the industry.
For more information about these companies, visit Zacks.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.