AFLAC Incorporated (AFL), RLI Corp. (RLI), Travelers Companies Inc (TRV): One Insurance Stock Investors Should Consider

Aflac’s sterling operations resulted in an annualized return on average equity of 22% for the second quarter. This performance beat Travelers Companies Inc (NYSE:TRV), which reported 14% return on equity in its own second quarter.

And, whereas Aflac reported 16.6% and 3.1% growth in investment income in Japan and the United States, respectively, RLI Corp. (NYSE:RLI) saw its investment income drop 15% over the first six months of the year.

Furthermore, in Japan, Aflac Chief Executive Officer Daniel Amos reiterated his belief in the company’s new products, including cancer and medical supplemental insurance, which Aflac refers to as third-sector products.

He recently stated: “We continue to believe consumer response to our third-sector products will be strong in the second half of 2013.” This is hard to disagree with, especially considering the rapidly evolving health care needs of aging global populations.

The Foolish conclusion
Successful companies in the insurance industry have the flexibility to provide shareholders the increasing stream of profits and dividends that most investors love. For investors looking to gain exposure to the financial-services industry who may be wary of buying stocks in banks, insurance companies should be on your watchlist.

Aflac’s strong operations, well-known brand, and commitment to shareholders makes it a compelling buy for income investors looking to diversify into financials. While Travelers Companies Inc (NYSE:TRV) and RLI Corp. (NYSE:RLI) are profitable and likely to serve their investors well, neither can match Aflac’s ability to generate returns on shareholder capital nor on investment performance. As a result, investors should give Aflac clear preference among these three companies.

The article 1 Insurance Stock Investors Should Consider originally appeared on Fool.com is written by Bob Ciura.

Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Aflac.

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