In this article, we discuss 10 cheap insurance stocks to buy now.
The insurance sector has been one of the few sectors of the stock market that has generally been predictable and stable. This has changed over the past few years as tech-enabled disruption reshapes conventional economics. According to a report by professional services firm PwC, some of the other reasons for the changes in the sector include changes to risk profiles because of the climate crisis, distribution needs becoming omni-channel, and customers who expect products tailored just for them.
Some of the top insurance stocks to monitor in this context include Humana Inc. (NYSE:HUM), Cigna Corporation (NYSE:CI), and MetLife, Inc. (NYSE:MET). These firms are working on areas such as digitization, data and integration, brand and distribution, innovative products, strategic partnerships, and effective structuring to stay ahead of the competition. As the industry involves, per PwC, a focus on discipline is helping private equity, asset managers, and other new entrants to capitalize on the disruption.
Consulting firm EY contends that ecosystems, open insurance, workforce transformation, and sustainability are set to define near-term prospects for the insurance industry. However, labor shortages and changes in the delivery of care and cybersecurity threats are likely to force health insurance towards embracing new approaches to risk management. Some of these new approaches include the digitization of core processes, migrations to the cloud, and the embrace of flexible sourcing models.
Research firm Deloitte has identified rising inflation, interest rates, loss costs, the threats of recession, climate change, and geopolitical upheaval as some of the headwinds for the insurance sector in the coming months. The firm claims that the transformation in the life insurance industry is key to sustainable growth for the sector, as insurance firms double down on their pandemic-spurred digital enhancements, introduce new products, services, and distribution options, and seek out previously underserved customer niches.
Our Methodology
The companies that operate in the insurance sector and are trading at a discount compared to peers were selected for the list. All stocks are priced under $50 as of October 20. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
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Cheap Insurance Stocks to Buy Now
10. FG Financial Group, Inc. (NASDAQ:FGF)
Number of Hedge Fund Holders: 1
Share Price as of October 20: $1.57
FG Financial Group, Inc. (NASDAQ:FGF) operates as a reinsurance and investment management holding company in the United States. It is one of the best insurance stocks to invest in. On September 13, FG Financial Group noted that it plans to grow through the formation of a new merchant banking division. The firm announced in a statement that it will work with Fundamental Global along with other strategic investors. This announcement was revealed only a few weeks after the firm reported an increase in its reinsurance premiums.
At the end of the second quarter of 2022, 1 hedge fund in the database of Insider Monkey held a position worth $76,000 in FG Financial Group, Inc. (NASDAQ:FGF), compared to 2 in the preceding quarter worth $168,000.
Just like Humana Inc. (NYSE:HUM), Cigna Corporation (NYSE:CI), and MetLife, Inc. (NYSE:MET), FG Financial Group, Inc. (NASDAQ:FGF) is one of the best insurance stocks to buy now.
9. Waterdrop Inc. (NYSE:WDH)
Number of Hedge Fund Holders: 1
Share Price as of October 20: $1.29
Waterdrop Inc. (NYSE:WDH) provides online insurance brokerage services to match and connect users with related insurance products underwritten by insurance companies in China. It is one of the top insurance stocks to invest in. On August 22, Waterdrop stated that it has become a member of the world’s largest corporate sustainability initiative, United Nations Global Compact. The company said it will actively respond to relevant initiatives of the United Nations Global Compact and will promote the sustainable development of healthcare in this partnership.
On September 16, Morgan Stanley analyst Jenny Jiang upgraded Waterdrop (NYSE:WDH) stock to Overweight from Equal Weight with a price target of $2.10, up from $2, noting that the company’s revenue continued to recover sequentially, and earnings have been positive for the past three quarters.
At the end of the second quarter of 2022, 1 hedge fund in the database of Insider Monkey held a position worth $95,000 in Waterdrop Inc. (NYSE:WDH), compared to 4 in the previous quarter worth $165,000.
8. Aegon N.V. (NYSE:AEG)
Number of Hedge Fund Holders: 7
Share Price as of October 20: $4.13
Aegon N.V. (NYSE:AEG) provides insurance, pensions, and asset management services in the Americas, the Netherlands, and the United Kingdom. It is one of the premier insurance stocks to invest in. On October 1, Aegon NV revealed that it has successfully completed divestment of its 50% stake in a joint venture with Liberbank to Unicaja Banco. The sale follows a change of control in Liberbank after its merger with Unicaja Banco. Aegon N.V. (NYSE:AEG) Spain plans to upstream the net proceeds of the transaction to Aegon Group.
On September 13, Societe Generale analyst Nick Holmes upgraded Aegon (NYSE:AEG) stock to Buy from Hold with an unchanged price target of EUR 5.25, noting that the company holds a strong case for additional buybacks in 2023.
At the end of the second quarter of 2022, 7 hedge funds in the database of Insider Monkey held stakes worth $16.9 million in Aegon N.V. (NYSE:AEG), compared to 7 the preceding quarter worth $34.4 million.
7. Sun Life Financial Inc. (NYSE:SLF)
Number of Hedge Fund Holders: 12
Share Price as of October 20: $40.85
Sun Life Financial Inc. (NYSE:SLF) is a financial services company that provides insurance, wealth, and asset management solutions to individuals and corporate clients worldwide. It is one of the elite insurance stocks to invest in. On September 26, Sun Life Financial announced that it plans to redeem all outstanding $400 million of series 2017-1 subordinated unsecured 2.75% fixed/floating debentures. The redemption will be funded with existing cash and liquid assets. The debentures are redeemable at SLF’S option on or after November 23.
On October 12, Barclays analyst John Aiken maintained an Overweight rating on Sun Life Financial (NYSE:SLF) stock and lowered the price target C$63 from C$67, noting that the continued decline in equity valuations driven by lower asset levels within the wealth operations and seed losses will likely dampen earnings growth in the quarter.
At the end of the second quarter of 2022, 12 hedge funds in the database of Insider Monkey held stakes worth $103 million in Sun Life Financial Inc. (NYSE:SLF), compared to 10 in the previous quarter worth $88 million.
6. American Equity Investment Life Holding Company (NYSE:AEL)
Number of Hedge Fund Holders: 14
Share Price as of October 20: $40.53
American Equity Investment Life Holding Company (NYSE:AEL) provides life insurance products in the United States. It is one of the prominent insurance stocks to invest in. On August 8, the firm posted earnings for the second quarter of 2022, reporting earnings per share of $0.98, beating market estimates by $0.27. The revenue over the period was $121 million.
On October 7, Piper Sandler analyst John Barnidge maintained an Overweight rating on American Equity Investment Life Holding Company (NYSE:AEL) stock and raised the price target to $47 from $46, noting that firm rates kept moving noticeably higher despite the market’s ongoing volatility in Q3.
At the end of the second quarter of 2022, 14 hedge funds in the database of Insider Monkey held stakes worth $103 million in American Equity Investment Life Holding Company (NYSE:AEL), compared to 17 in the previous quarter worth $155.7 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Pzena Investment Management is a leading shareholder in American Equity Investment Life Holding Company (NYSE:AEL), with 1.7 million shares worth more than $63 million.
Along with Humana Inc. (NYSE:HUM), Cigna Corporation (NYSE:CI), and MetLife, Inc. (NYSE:MET), American Equity Investment Life Holding Company (NYSE:AEL) is one of the best insurance stocks to buy now according to hedge funds.
In its Q2 2022 investor letter, First Pacific Adivsors, an asset management firm, highlighted a few stocks and American Equity Investment Life Holding Company (NYSE:AEL) was one of them. Here is what the fund said:
“American Equity Investment Life Holding Company (NYSE:AEL), a leading writer of fixed index annuities, has continued to transition to its American Equity Investment (AEL) 2.0 business model. The plan’s main goals are to diversify the company’s assets into a broader array of investments, including private debt through strategic partnerships, and to increase its use of reinsurance to free up capital. We think this is an interesting, but somewhat aggressive plan. Thus far, the results have been impressive, but we continue to monitor the credit quality of their assets as they move toward achieving their target of having 40% of their portfolio invested in private assets, up from 15.4%.”
5. Manulife Financial Corporation (NYSE:MFC)
Number of Hedge Fund Holders: 15
Share Price as of October 20: $21.93
Manulife Financial Corporation (NYSE:MFC) provides financial products and services internationally. It is one of the best insurance stocks to invest in. On October 17, the company announced that Manulife Investment Management, the global wealth and asset management division of the firm, had acquired two agricultural properties in California totaling 1.4K acres of land. The properties consist of a 500-acre almond and citrus orchard as well as a 900-acre pistachio orchard.
On October 12, Barclays analyst John Aiken maintained an Overweight rating on Manulife Financial (NYSE:MFC) stock and lowered the price to C$29 from C$30.
At the end of the second quarter of 2022, 15 hedge funds in the database of Insider Monkey held stakes worth $155 million in Manulife Financial Corporation (NYSE:MFC), compared to 19 in the preceding quarter worth $517.5 million.
In its Q2 2022 investor letter, Harding Loenver, an asset management firm, highlighted a few stocks and Manulife Financial Corporation (NYSE:MFC) was one of them. Here is what the fund said:
“Manulife Financial Corporation (NYSE:MFC), the Canadian life insurer operating primarily in North America and Asia, is a new holding. Manulife offers a full suite of life insurance products as well as retirement and wealth management services. While the wealth management and retirement products appeal to the aging populations of the Western world, long-term life insurance products address the needs of the growing number of middle-class families in places like China and southeast Asia. COVID-19-induced lockdowns in China brought the shares down to a significant discount to our estimate of long-term value. The holding now serves as a nice diversifier to our Asia-centered insurers AIA and Ping An.”
4. Arch Capital Group Ltd. (NASDAQ:ACGL)
Number of Hedge Fund Holders: 23
Share Price as of October 20: $48.72
Arch Capital Group Ltd. (NASDAQ:ACGL) provides insurance, reinsurance, and mortgage insurance products worldwide. It is one of the top insurance stocks to invest in. On September 30, Arch Mortgage Insurance, a wholly owned subsidiary of Arch Capital Group, stated that it obtained over $358 million indemnification reinsurance on a pool representing approximately $51.7 billion of mortgages from Bellemeade Re, a Bermuda-based special purpose firm.
On October 14, investment advisory Barclays maintained an Overweight rating on Arch Capital (NASDAQ:ACGL) stock and raised the price target to $55 from $53. Analyst Tracy Benguigui issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, San Francisco-based investment firm FPR Partners is a leading shareholder in Arch Capital Group Ltd. (NASDAQ:ACGL), with 10.5 million shares worth more than $476.6 million.
3. Old Republic International Corporation (NYSE:ORI)
Number of Hedge Fund Holders: 25
Share Price as of October 20: $22.81
Old Republic International Corporation (NYSE:ORI) engages in the insurance underwriting business primarily in the United States and Canada. It is one of the major insurance stocks to invest in. On October 13, the company said it had acquired the operating assets of Veritas Title Partners. The terms of the deal were not disclosed. Veritas is a Houston-based commercial escrow services and underwriting services provider.
At the end of the second quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth 231 million in Old Republic International Corporation (NYSE:ORI), compared to 28 in the previous quarter worth $314.7 million.
2. Lincoln National Corporation (NYSE:LNC)
Number of Hedge Fund Holders: 34
Share Price as of October 20: $48.47
Lincoln National Corporation (NYSE:LNC) operates multiple insurance and retirement businesses in the United States. It is one of the prominent insurance stocks to invest in. On September 27, Lincoln Financial Group, a subsidiary of Lincoln National Group, revealed that its wholesale distribution franchise, Lincoln Financial Distributors, has signed a partnership deal with a tech enabled life insurance brokerage, Modern Life. In this partnership, Lincoln’s life insurance product portfolio will be delivered on the digital platform of Modern Life.
On October 7, JPMorgan analyst Jimmy Bhullar maintained an Overweight rating on Lincoln National Corp (NYSE:LNC) stock and lowered the price target to $68 from $77, noting that the rise in interest rates is a notable positive and should alleviate, although not eliminate, tail risk in legacy blocks.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Lyrical Asset Management is a leading shareholder Lincoln National Corporation (NYSE:LNC), with 3.97 million shares worth more than $185.6 million.
In its Q2 2022 investor letter, Chartwell Investment Partners, an asset management firm, highlighted a few stocks and Lincoln National Corporation (NYSE:LNC) was one of them. Here is what the fund said:
“The three worst-performing stocks in the Dividend Equity accounts includes Lincoln National (NYSE:LNC, 1.9%), down 27.9%. Lincoln’s quarterly results were weak in both life insurance and annuity sales, but we remain positive on the stock given the company’s ongoing de-risking initiatives, leverage to higher rates, and discounted valuation.”
1. Equitable Holdings, Inc. (NYSE:EQH)
Number of Hedge Fund Holders: 38
Share Price as of October 20: $28.14
Equitable Holdings, Inc. (NYSE:EQH) operates as a diversified financial services company worldwide. It is one of the elite insurance stocks to invest in. On August 17, Equity Holdings revealed that it has acquired Penn Investment Advisors, a portfolio risk analysis and wealth management service provider, to expand its wealth management business. Equitable Advisors has 4,200 financial and administration assets worth $70.8 billion.
On August 18, Barclays analyst Tracy Benguigui maintained an Overweight rating on Equitable Holdings (NYSE:EQH) stock and raised the price target to $36 from $32, highlighting the company’s institutional deal with Global Atlantic.
At the end of the second quarter of 2022, 38 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Equitable Holdings, Inc. (NYSE:EQH), compared to 44 the preceding quarter worth $1.6 billion.
You can also take a peek at 10 Best MLP Dividend Stocks to Buy and 10 Best Stocks to Buy According to Billionaire Dan Loeb.
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Disclosure. None. 10 Cheap Insurance Stocks to Buy Now is originally published on Insider Monkey.
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