{"id":448858,"date":"2021-02-28T13:10:04","date_gmt":"2021-02-28T18:10:04","guid":{"rendered":"https:\/\/financhill.com\/blog\/?p=448858"},"modified":"2021-01-22T17:28:50","modified_gmt":"2021-01-22T22:28:50","slug":"top-insurance-stocks-to-buy","status":"publish","type":"post","link":"https:\/\/financhill.com\/blog\/investing\/top-insurance-stocks-to-buy","title":{"rendered":"3 Top Insurance Stocks To Buy"},"content":{"rendered":"<p>Insurance is a long-standing industry for a reason. Disasters happen, and insurance companies underwrite policies to protect people against catastrophic losses. Whether it\u2019s your health, life, house, car, or even your pet, there\u2019s a good chance an agent can find a policy to cover you.<\/p>\n<p>These companies earn their money by charging customers monthly and annual premiums for their policies. <strong>A loss ratio is the difference between how much premium money is collected and how much claim money is paid.<\/strong> <strong>The leftover profit, called \u201cfloat,\u201d is then invested on the market to generate profits.<\/strong><\/p>\n<p>Which companies are best at acquiring customers and investing the float? In other words, what are the top insurance stocks to buy?<\/p>\n<p><strong>High infection rates and unemployment both affected the number of policyholders and claims payouts.<\/strong> The 2020s are going to be a rough ride for the industry, but these three companies have a solid road map to get through it.<\/p>\n<h2>AFLAC Is A Supplemental Insurance Provider<\/h2>\n<p>You\u2019ve likely heard Gilbert Gottfried or <a href=\"https:\/\/www.reuters.com\/article\/us-aflac\/aflac-picks-new-duck-voice-to-replace-gilbert-gottfried-idUSTRE73P6OU20110426\" target=\"_blank\" rel=\"noopener noreferrer\">Dan McKeague<\/a> voicing the infamous duck from the commercials that screams \u201cAFLAC!!!\u201d like a Pok\u00e9mon.<\/p>\n<p><strong>Aflac (<a href=\"https:\/\/financhill.com\/search\/valuation\/AFL\" target=\"_blank\" rel=\"noopener noreferrer\">NYSE:AFL<\/a>)<\/strong> is the largest supplemental insurance provider in the United States, and it has a global footprint too. <strong>The company makes its money covering all the out-of-pocket expenses left in other insurance policies.<\/strong><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/AFL?defaultOverlays=EMA5%2CSMA5%2CSMA20%2CSMA200&amp;defaultIndicators=ADL%2CMACD&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"600\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p><a href=\"https:\/\/investors.aflac.com\/financials\/quarterly-results\/default.aspx\" target=\"_blank\" rel=\"noopener\">AFL share price<\/a> got pummeled by the worldwide slowdown. Its biggest problem is payroll insurance is one of its more prolific product offerings, and that came up a lot since the COVID-19 outbreak.<\/p>\n<p>On top of this, <strong>record high unemployment rates mean a lot of people and businesses are cutting back on expenses, and it could have trouble holding onto customers are renewal.<\/strong><\/p>\n<p>Aflac could find itself on the hook for a lot of money and having its loss ratios squeezed, but it\u2019s also expanding its footprint to bring more revenue.<\/p>\n<p>The company spent $200 million to buy a 9 percent stake<span style=\"color: black;\">&nbsp;in pet insurance company&nbsp;<\/span><strong>Trupanion&nbsp;Inc (<a style=\"background-color: inherit; color: #0563c1;\" href=\"https:\/\/financhill.com\/search\/valuation\/TRUP\" target=\"_blank\" rel=\"noopener noreferrer\">NASDAQ:TRUP<\/a><\/strong><span style=\"background-color: inherit; color: black;\"><strong>) near the end of 2020<\/strong>. In what they call a \u201cdistribution alliance,\u201d Aflac gets a unique product offering for its customers, while Trupanion gains exposure to a broader audience.<\/span><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/TRUP?defaultOverlays=EMA5%2CSMA5%2CSMA20%2CSMA200&amp;defaultIndicators=ADL%2CMACD&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"600\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p><span style=\"color: black;\"><strong>This win-win scenario, coupled with over 30 years of consistent quarterly dividend payments have bulls singing Aflac\u2019s praises through the 2020s<\/strong>. <\/span><\/p>\n<p><span style=\"color: black;\">It also has less exposure to the housing market than its competitors, which protects it from any potential foreclosure crisis looming ahead.<\/span><\/p>\n<h2>Allstate Has Targeted Younger Customers &amp; Won<\/h2>\n<p><strong>Allstate (<a href=\"https:\/\/financhill.com\/search\/valuation\/ALL\" target=\"_blank\" rel=\"noopener noreferrer\">NYSE:ALL<\/a>)<\/strong> was originally part of Sears, Roebuck and Co before being spun off as its own public company in 1993. It\u2019s a component of both the S&amp;P 100 and <a href=\"https:\/\/financhill.com\/search\/charts\/SPY\">S&amp;P 500<\/a> and one of Fortune 500\u2019s largest corporations in the U.S. by total revenue.<\/p>\n<p>It\u2019s a traditional insurer from the 20th Century, but it also made moves over the 2010s to modernize and increase <a href=\"https:\/\/www.allstateinvestors.com\/financials\/sec-filings\" target=\"_blank\" rel=\"noopener\">revenue stream<\/a>s with younger consumers.<\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/ALL?defaultOverlays=EMA5%2CSMA5%2CSMA20%2CSMA200&amp;defaultIndicators=ADL%2CMACD&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"600\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p><strong>The company has its own unique advertising campaigns utilizing actors Dennis Haysbert and Dean Winters in a variety of TV and streaming video commercials.<\/strong> It expanded its footprint in 2011 by acquiring Esurance, a popular online insurance platform, for $1 billion.<\/p>\n<p>It also bought SquareTrade for $1.4 billion in 2017 to expand into consumer electronics and appliance insurance. In the aftermath of the pandemic, the company announced a $4 billion acquisition of <a href=\"https:\/\/www.insurancejournal.com\/news\/national\/2020\/07\/08\/574808.htm\" target=\"_blank\" rel=\"noopener\">National General Insurance<\/a> to further expand.<\/p>\n<p><strong>Allstate remains relevant by offering insurance products to meet every need. Its safe driver program, for example, provides a discount for anyone who doesn\u2019t report an accident each year.<\/strong><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/stock-score\/ALL?periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"500\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p>Because it\u2019s still a traditional insurance company, Allstate is increasing its customer base and revenues the traditional way. <strong>It pours money into advertising, buys new companies with coveted customers, and shifted its agent commission structure to better serve customers.<\/strong><\/p>\n<p>It brought in <a href=\"https:\/\/www.dailyherald.com\/business\/20201105\/allstate-reports-revenue-increase-for-third-quarter\" target=\"_blank\" rel=\"noopener\">$11.5 billion in revenues<\/a> in the first nine months of 2020 and earned $923 million in profits from it. The company has been on a hot streak since 2019, and the economic slowdown hasn\u2019t hurt it much so far.<\/p>\n<p>Unlike Aflac, however, <strong>Allstate does have exposure in mortgages and could face issues as the economy recovers over the next decade.<\/strong> It could experience a slow, steady decline while losing market share to its younger competitors.<\/p>\n<h2>Lemonade = Artificial Intelligence + FinTech<\/h2>\n<p><strong>Lemonade (<a href=\"https:\/\/financhill.com\/search\/valuation\/LMND\" target=\"_blank\" rel=\"noopener noreferrer\">NYSE:LMND<\/a>)<\/strong> is a fintech company that disrupted the insurance industry by placing a sleek user interface over intelligent machine learning algorithms. This helps it to reach potential customers in markets other insurance companies miss.<\/p>\n<p>And because it has such a robust technology infrastructure, it saves a lot on operational costs. Much of Lemonade\u2019s customer-facing support is automated. It\u2019s an omnichannel approach that includes in-app chat, email, and more.<\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/stock-score\/LMND?periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"500\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p>By reducing costs and optimizing the entire insurance process, Lemonade stands to achieve better loss ratios than its competition. In fact, <strong>its loss ratios in 2020 were 10 percent below industry averages, while catastrophic (CAT) losses were 75 percent below the competition.<\/strong><\/p>\n<p>It\u2019s also growing at an extremely fast rate&nbsp;\u2013&nbsp;<strong>the company reached <a href=\"https:\/\/www.businesswire.com\/news\/home\/20201231005145\/en\/Lemonade-Ends-2020-With-Over-One-Million-Active-Customers\" target=\"_blank\" rel=\"noopener\">one million customers<\/a> within five years, compared to competitors like Geico and State Farm, which took about 20 years to hit that milestone<\/strong>.<\/p>\n<p>Still, it\u2019s valued like both a tech and insurance stock. Lemonade\u2019s trading price is over 86 times its trailing 12-month sales. That\u2019s closer to an <strong>Amazon (<a href=\"https:\/\/financhill.com\/search\/charts\/AMZN\">AMZN<\/a>)<\/strong> than an Allstate, which trades under 10, and gives investors pause when seeing its $17.3 million in profits over the first nine months of 2020.<\/p>\n<p>When life hands you lemons, this $9 billion Lemonade could be the way to quench your thirst. <strong>Bulls believe this company has more growth potential than traditional insurers, but bears argue everyone has similar tech.<\/strong><\/p>\n<p>Between these three insurance stocks, investors can hedge their bets across the industry. Each competes in some overlapping markets. But they largely work in their own lanes.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Insurance is a long-standing industry for a reason. Disasters happen, and insurance companies underwrite policies to protect people against catastrophic losses. Whether it\u2019s your health, life, house, car, or even your pet, there\u2019s a good chance an agent can find a policy to cover you. These companies earn their money by charging customers monthly and [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":448859,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[22],"tags":[],"class_list":["post-448858","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/financhill.com\/blog\/wp-content\/uploads\/2021\/01\/top-insurance-stocks-to-buy.jpg","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9czeV-1SLE","_links":{"self":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/448858","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/comments?post=448858"}],"version-history":[{"count":7,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/448858\/revisions"}],"predecessor-version":[{"id":448866,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/448858\/revisions\/448866"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media\/448859"}],"wp:attachment":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media?parent=448858"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/categories?post=448858"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/tags?post=448858"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}