We recently compiled a list of the 7 Hot Insurance Stocks To Buy Right Now. In this article, we are going to take a look at where The Allstate Corporation (NYSE:ALL) stands against the other hot insurance stocks to buy.
Insurance Market Insights: Key Trends Shaping the Future
The insurance market plays a crucial role in our economy by providing financial protection to individuals, businesses, and communities against unexpected risks. The market is currently experiencing significant changes driven by evolving consumer expectations, technological advancements, and global economic conditions.
Analysts note that the market is currently favorable in general, with insurers reporting healthy profits and a growth-oriented environment. According to Deloitte’s 2025 global insurance outlook, insurance premiums are projected to grow by 3.3% in 2024, largely fueled by advanced markets, which are expected to contribute 75% of this growth.
Advancements in artificial intelligence (AI) continue to revolutionize how insurers assess risk and manage claims. AI technologies enable better data analysis and faster decision-making processes, which can enhance customer service and operational efficiency.
On October 22, CNBC reported that Near Space Labs, a Brooklyn, New York-based startup, has developed innovative technology to enhance the insurance claims process following natural disasters like hurricanes Helene and Milton. Their invention, called “Swifts,” consists of AI-enabled cameras mounted on weather balloons that fly at altitudes higher than airplanes. This allows them to capture high-resolution images over vast areas quickly, significantly speeding up damage assessments from weeks to just days. CEO Rema Matevosyan highlighted that their technology can gather data equivalent to what 800,000 drones would capture in one flight. The company has already conducted over 1,000 missions and is scaling operations to respond immediately to climate-related disasters, aiming to provide insurance companies with timely information for risk analysis and claims processing.
Another key trend shaping the industry is the rising demand for new and innovative products like cyber insurance. As cyber threats become more prevalent, companies are increasingly seeking coverage against data breaches and ransomware attacks. According to IBM, the average cost of a data breach was approximately $4.88 million in 2024, highlighting the urgent need for robust cyber protection. As a result of these trends, insurers are looking to innovate and develop new products that can address these emerging risks effectively.
Overall, experts believe that the insurance market is positioned for growth as it adapts to changing consumer needs and leverages technology to improve services. According to The Business Research Company, the insurance market was valued at $7.26 trillion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 7.2% during 2024-2028 to reach $10.28 trillion by the end of the forecast period.
With advancements in technology and a focus on customer-centric solutions, companies in this sector can enhance their profitability while providing better services to clients.
Our Methodology
To compile our list of the 7 hot insurance stocks to buy right now, we began by using the Finviz stock screener to identify insurance stocks that had a year-to-date performance of over 30%. From the remaining pool of more than 15 hot insurance stocks to buy, we focused on the top 7 stocks that are most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 7 hot insurance stocks to buy right now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A homeowner happily smiling while holding a copy of their new insurance policy.
The Allstate Corporation (NYSE:ALL)
Year-to-Date Performance: 34.05%
Number of Hedge Fund Holders: 61
The Allstate Corporation (NYSE:ALL) is an American insurance company that offers a wide variety of insurance products, including auto, home, renters, business, and life insurance. Known for its comprehensive protection plans, Allstate provides coverage for cars, homes, electronic devices, and even identity theft. The company’s insurance and protection products are available through a broad distribution network, which includes Allstate agents, independent agents, and major retailers.
A significant milestone for the company was the acquisition of National General in January 2021 for $4 billion. This move greatly expanded its independent agent channel and added various businesses to its portfolio, including personal auto insurance and group health services. Since the acquisition, The Allstate Corporation (NYSE:ALL) has seen substantial growth in the number of customers the corporation protects through independent agents, adding nearly 1.7 million policies and achieving a compound annual growth rate (CAGR) of 8% in policies over the past four years. This expansion has contributed to over $5.1 billion in premiums written in the first half of 2024.
In the second quarter of 2024, Allstate (NYSE:ALL) reported revenues of $15.7 billion, reflecting a 12% increase from the previous year. This growth was driven by higher insurance premiums and increased investment income. The company handled almost 2 million customer claims during this period, demonstrating its commitment to supporting customers after events like storms and accidents.
The company’s Property-Liability profit improvement plan has also shown positive results, with an underlying combined ratio of 85.3. This indicates effective management of expenses relative to earned premiums. The net income applicable to common shareholders reached $301 million, translating to adjusted net income of $1.61 per diluted share.
Premiums written rose by 13.1% compared to the same quarter last year. This growth was fueled by a 10% increase in premiums for the Allstate brand and a 29.1% rise for National General.
The growth in premiums and policies suggests robust market demand and effective operational strategies. As The Allstate Corporation (NYSE:ALL) continues to adapt and grow its business, it presents a compelling case for investors looking for stability and growth in the insurance sector.
ALL ranks second on our list of hot insurance stocks to buy right now. As of the second quarter of 2024, The Allstate Corporation (NYSE:ALL) was held by 61 hedge funds, according to Insider Monkey’s database. Ariel Investments stated the following regarding The Allstate Corporation (NYSE:ALL) in its “Ariel Global Fund” second-quarter 2024 investor letter:
“We added property and casualty insurer, The Allstate Corporation (NYSE:ALL). A challenging macro-environment, inflation and lower reserve development led to significant underwriting losses across key markets, presenting us with an attractive entry point. Looking ahead, we expect the strong pricing environment, coupled with lower inflationary pressure and future premium growth to yield upside for shares. Additionally, management is committed to improving its adjusted expense ratio and recently made upgrades to its claims handling processes to minimize loss development and lower claim severities.”
Overall ALL ranks 2nd on our list of the hot insurance stocks to buy. While we acknowledge the potential of ALL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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