Chicago, IL – February 21, 2025 – Today, Zacks Equity Research discusses MetLife Inc. MET, American International Group Inc. AIG, Prudential Financial Inc. PRU, Radian Group RDN and CNO Financial Group CNO.
Product diversification has been helping Zacks Multiline Insurance industry players lower concentration risk, ensure uninterrupted revenue generation and improve retention ratio. Better pricing, prudent underwriting, increased exposure, faster economic recovery on the receding impact of the pandemic and increased vaccinations should benefit MetLife Inc., American International Group Inc., Prudential Financial Inc., Radian Group and CNO Financial Group.
Accelerated digitalization will help in the smooth functioning of the industry. Increasing acceptance of embedded insurance should also drive the industry. Per a report in Financial Services, premiums from embedded insurance are projected to exceed $722 billion globally by 2030.
The solid capital level of multiline insurers will fuel merger and acquisition (M&A) activities. However, rate cuts by the Federal Reserve are a concern as insurers are direct beneficiaries of an improved rate environment. A lower rate will weigh on net investment income. Given moderating pricing and increased competition, pricing competition will likely improve in 2025, per the Insurance Business report.
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. An increase in exposure with customized products and services should support premium growth. However, moderating pricing keeps us cautious.
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.
While the life insurance business could be hurt by a low interest rate environment as they invest a major portion of the premiums earned, prudent underwriting at the non-life insurance business will limit the downside. Yet, unpredictable catastrophes could weigh on the underwriting profitability of non-life insurers. Swiss Re estimates near mid-single-digit premium growth in 2025.
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 rise 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. Per the Deloitte FSI Predictions article, nonlife insurers have the capacity to generate nearly $4.7 billion in annual global premiums from AI-related insurance, translating to a compounded annual growth rate of around 80%.
Zacks Industry Rank Indicates Weak Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak prospects in the near term. The Zacks Multiline Insurance industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #128, which places it in the bottom 48% of 251 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 bottom 50% of the Zacks-ranked industries is the result of a negative earnings outlook for the constituent companies in aggregate. The weak outlook reflects that the industry’s earnings estimates have been revised downward by analysts for the current year. Estimates for the current year moved 28.1% down in a 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 Underperforms Sector and S&P 500
The Multiline Insurance industry has underperformed the sector and the Zacks S&P 500 composite year to date. The stocks in this industry have collectively gained 11.1% in the past year compared with the Finance sector’s increase of 25.6% and the Zacks S&P 500 composite’s rise of 24.1% in the same time frame.
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 2.38X compared with the S&P 500’s 8.07X and the sector’s 3.71X.
Over the past five years, the industry has traded as high as 2.78X, as low as 0.71X and at the median of 1.97X.
5 Multiline Insurance Stocks to Keep An Eye On
We are presenting two Zacks Rank #2 (Buy) stocks and three 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.
Radian Group: Headquartered in Philadelphia, PA, Radian Group is a credit enhancement company that supports homebuyers, mortgage lenders, loan servicers and investors with a suite of private mortgage insurance and related risk-management products and services. Its improving mortgage insurance portfolio, declining claims, well-performing homogeneous segment, solid capital position and effective capital deployment poise this Zacks Rank #2 insurer well for growth.
New business, combined with increasing annual persistence, should drive continued growth of the insurance-in-force portfolio. Radian’s mortgage insurance portfolio creates a strong foundation for future earnings.
The Zacks Consensus Estimate for 2026 earnings indicates a year-over-increase of 3.4%. RDN delivered a four-quarter average earnings surprise of 17.42%. The consensus estimate for 2025 has moved 3% north in the past 30 days. The expected long-term earnings growth rate is pegged at 5%.
CNO Financial Group: Headquartered in Carmel, IN, this Zacks Rank #2 company is a top-tier holding company for a group of insurance companies operating throughout the United States. It develops, administers and markets supplemental health insurance, annuity, individual life insurance and other insurance products.
The Zacks Consensus Estimate for 2026 earnings indicates a year-over-increase of 10.3% and has moved 2 cents north in the past 30 days.
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 2025 and 2026 earnings indicates a year-over-increase of 19% and 9.6%, respectively. Its expected long-term earnings growth rate is pegged at 13.1%. It has a VGM Score of B.
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 2025 and 2026 earnings indicates a year-over-increase of 27.7% and 20.8%, respectively. The expected long-term earnings growth rate is pegged at 12.2%. AIG delivered a four-quarter average earnings surprise of 0.53%.
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 2025 and 2026 earnings indicates a year-over-increase of 13.6% and 6.2%, respectively. The expected long-term earnings growth rate is pegged at 7.9%.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
