Life Insurance Industry Navigates Challenges Amid Rising Automation and Digitalization
To maintain sales and profitability, players in the Zacks Life Insurance industry are actively redesigning and repricing their products and services. Increased automation is anticipated to enhance premium growth and boost the operational efficiency of notable firms like Aviva (AVVIY), NN Group (NNGRY), Jackson Financial (JXN), and Abacus Global Management (ABL). However, projections indicate two rate cuts this year could challenge life insurers, as they typically invest a significant portion of their premiums to fulfill contractually guaranteed obligations to policyholders. Furthermore, accelerated digital transformation may lead to higher expenses. Balancing effective pricing with customer preferences and claim costs remains a key challenge for the industry.
About the Industry
The Zacks Life Insurance industry comprises companies that provide life insurance coverage and retirement benefits for individuals and groups. The products offered include annuities, whole and term life insurance, accidental death insurance, health insurance, Medicare supplements, and long-term healthcare policies. The rising demand for protection products plays a vital role in sales growth. The sector also includes firms focused on wealth and asset management solutions. With the increasing number of baby boomers, demand for retirement benefits is on the rise, supported by economic growth. According to a Statista report, the life insurance market is projected to grow with a gross written premium expected to reach $1.34 trillion by 2025. However, rising mortality trends may pose profitability risks for insurers.
3 Trends Shaping the Life Insurance Industry’s Future
Interest Rate Cuts: In 2024, the Federal Reserve plans to cut interest rates three times, totaling 150 basis points after a prolonged period of stability. Further cuts are anticipated in 2025. Life insurers benefit from higher rates as they invest premiums to meet policyholder obligations. Nevertheless, rate reductions may negatively affect investment returns. In low-rate environments, insurers often redirect funds to alternative investments such as private equity and real estate, navigating inherent challenges within their commercial real estate portfolios.
Product Redesign: Industry participants are innovating solutions to enhance sales and profitability. Many insurers are moving away from long-duration term life insurance. They are increasingly offering investment products that bundle guaranteed retirement income, life insurance, and healthcare coverage for customers preferring “living” benefits. The growing awareness of insurance needs continues to bolster the sector. A robust product portfolio will support the industry’s sales efforts. Furthermore, careful pricing and an understanding of customer needs will be essential for growth. A report from ReporterLinker predicts global life insurance gross written premium will reach $2.5 trillion by 2026, with an expected annual growth rate (CAGR 2025-2029) of 3.54%. According to Deloitte, life premiums in advanced markets are projected to increase by 1.5% in 2025. Emerging markets such as China, India, and Latin America are expected to experience premium growth of 5.7% in 2025.
Embrace of Technology: The United States is witnessing a shift towards digital platforms and online sales in life insurance, making it appealing to a tech-savvy population. Carriers are now selling policies online while utilizing real-time data for more efficient premium calculations and risk management. Automation is expected to enhance premium growth and operational efficiency. Increased digitalization—evident in the acceleration of generative AI, cognitive intelligence, and blockchain—should help life insurers reduce operational costs and expand margins, although they also need to safeguard against cyber threats.
Zacks Industry Rank and Future Prospects
The Zacks Industry Rank for the Life Insurance sector, calculated as the average Zacks Rank of member stocks, indicates strong prospects for the near term. The Zacks Life Insurance industry sits at a ranking of #58, placing it in the top 24% out of 255 Zacks industries. Historical data shows that the top half of Zacks-ranked industries typically outperforms the bottom half by more than a 2-to-1 ratio.
The industry’s favorable positioning stems from a positive earnings outlook for its constituent companies as a whole.
Before discussing life insurance stocks worth considering for your portfolio, we will review the industry’s recent market performance and valuation metrics.
Industry vs. Sector & S&P 500 Performance
The Life Insurance industry has outperformed the Zacks S&P 500 composite over the past year, though it slightly lagged behind the Finance sector. Industry stocks collectively increased by 13.4%, compared to a 15.1% rise in the Finance sector and a 7.7% gain in the Zacks S&P 500 during the same time frame.
One-Year Price Performance
Current Valuation of the Life Insurance Industry
Based on trailing 12-month price-to-book (P/B) ratio, a common metric for valuing insurance stocks, the life insurance industry currently trades at 1.81X. In comparison, the S&P 500 trades at 7.84X, and the Finance sector at 4.05X. Over the last five years, the industry has seen its P/B ratio fluctuate between a high of 2.11X and a low of 0.77X, with a median value of 1.37X.
Price-to-Book (P/B) Ratio (TTM)
Price-to-Book (P/B) Ratio (TTM)
Four Life Insurance Stocks to Consider
Below are four stocks ranked #2 (Buy) by Zacks, worth considering for your portfolio.
Abacus Global Management: Based in Orlando, FL, Abacus Global Management is an alternative asset manager and market maker in the United States. Formerly known as Abacus Life, Inc., the company rebranded in February 2025. ABL remains focused on…
Leading Financial Companies Forecast Strong Earnings Growth Ahead
Several key players in the financial services sector are consolidating their positions as market leaders, driven by strategic partnerships, innovative technology adoption, and prudent capital management. Their prospects for growth appear robust, fueled by international expansion and enhanced institutional relationships. Below is a closer look at four companies poised for significant earnings growth in the coming years.
Abacus Life (ABL) Poised for Growth
Abacus Life (ABL) continues to strengthen its role as a market maker and global alternative asset manager. The company’s success can largely be attributed to its strong partnerships with carriers and reinsurers, which are critical to its performance. Enhanced marketing initiatives, increased assets under management, and a commitment to technology innovation play a crucial role in its growth strategy.
ABL estimates that its adjusted net income for 2025 will be between $70 million and $78 million, representing a considerable increase of 51% to 68% compared to 2024. The Zacks Consensus Estimate anticipates a year-over-year earnings rise of 16.7% for 2025, with projections for 2026 indicating a further 21.7% increase. In the past week, the consensus estimate for 2025 has risen by 2 cents. Historically, ABL has delivered an impressive four-quarter average earnings surprise of 34.80%.
Price and Consensus: ABL
Aviva’s Strategic Acquisitions Enhance Growth Potential
Aviva, headquartered in London, UK, offers a range of insurance, retirement, and wealth management products across the UK, Ireland, Canada, and beyond. The company reports strong results across all business lines, bolstering its growth outlook. Its proposed acquisition of Direct Line is set to strengthen Aviva’s position in the UK Personal Lines market, enhancing capital-light operations and generating cost synergies.
With a solid earnings trajectory and a robust balance sheet, Aviva is well-positioned to return value to shareholders through increased dividends and share buybacks while also focusing on business investments. The Zacks Consensus Estimate suggests an 8.1% earnings increase for 2025 and a 10.5% rise for 2026, with estimates for both years lifting by 3 cents in the last 30 days.
Price and Consensus: AVVIY
Jackson Financial’s Annuity Sales Surge
Jackson Financial, based in Lansing, MI, specializes in a variety of annuities tailored for retail investors in the United States. The company forecasts substantial growth in retail annuity sales spurred by diversified products and expanded distribution channels. Notably, the Registered Index-Linked Annuity (RILA) segment has now grown to account for over 30% of total retail annuity sales for Jackson Financial.
Looking ahead, Jackson Financial aims to return 11% to 27% more capital to shareholders in 2025, planning to allocate between $700 million to $800 million toward share buybacks and dividend increases. The Zacks Consensus Estimate reflects an 11% earnings growth for 2025, followed by a 9.5% increase in 2026. Recent adjustments have seen estimates for both years increase slightly—by 0.3% and 1.2%, respectively. Historically, the company has achieved an average earnings surprise of 8.91% across four quarters.
Price and Consensus: JXN
NN Group’s Performance Strengthens in Europe
NN Group, headquartered in The Hague, Netherlands, provides life and non-life insurance products internationally. The company anticipates continued growth from strong sales and improved margins, particularly in Europe. Increased defined benefit sales and pension buyouts in the Netherlands Life segment are expected to contribute significantly to this growth.
With an emphasis on enhancing shareholder value, NN Group is committed to steady dividend increases and stock buybacks. The Zacks Consensus Estimate for NN Group reflects a projected earnings growth of 25.5% in 2025, followed by 2.6% in 2026. Additionally, the long-term earnings growth rate is estimated at 9.9%. Recent trends show that estimates for 2025 increased by 2.7% in the past 30 days.
Price and Consensus: NNGRY
Top Stock Picks for Upcoming Growth
Recently, analysts have identified seven top stocks from Zacks Rank #1 Strong Buys that are projected for early price increases. Historical performance since 1988 shows that this group has surpassed market averages by more than two times, achieving an average annual return of +24.3%. Investors are encouraged to consider these selections carefully.
See the full list of top stocks now >>
The latest stock analysis reports are available for:
- Aviva PLC (AVVIY)
- NN Group NV Unsponsored ADR (NNGRY)
- Jackson Financial Inc. (JXN)
- Abacus Life, Inc. (ABL)
Read the full article on Zacks Investment Research.
The views and opinions expressed herein belong to the author and do not necessarily reflect those of Nasdaq, Inc.
