We recently published a list of the 10 Most Undervalued Insurance Stocks to Buy Now. In this article, we are going to take a look at where The Allstate Corporation (NYSE:ALL) stands against the other undervalued insurance stocks.
The insurance industry has performed better in 2025 than the broader market. The S&P 500 index, which tracks large-cap stocks, has declined over 4.50% so far in 2025. In comparison, two of the leading insurance ETFs, the S&P Insurance ETF and the iShares US Insurance ETF, have surged over 3% and 4.50% year-to-date, respectively.
Insurance Industry in the United States
Despite the losses from wildfires, the analysts see a higher upside for insurance stocks compared to the broader market. There are different reports on the insured losses in Los Angeles. Verisk anticipates insured losses between $28 billion and $35 billion. At the same time, a new report from the UCLA Anderson Forecast indicates that wildfires in L.A. County may have caused total losses ranging between $95 billion and $164 billion, with insured losses estimated at $75 billion.
Earlier in January, Fitch Ratings reported that the losses are likely to “materially exceed” highs from past wildfire events but are unlikely to impact the ratings of property and casualty (P&C) insurers and reinsurers.
“Insured losses should remain within rating sensitivities for affected insurers, given ample capital levels, diversified risk exposure, and insurers’ ability to increase premium rates,” Fitch Ratings said.
Despite the losses, the insurance industry in the U.S. is overall balanced and remains positive. The U.S. has the largest insurance market in the world. The combined value of America’s insurance market is approximately $1.7 trillion, as of 2025. The U.S. has some of the largest insurance companies by assets that influence the global insurance markets.
The P&C insurance sector in the U.S. generated $9.3 billion in underwriting gains during the first quarter of 2024, according to a report by Deloitte. This was a major improvement from an $8.5 billion loss in Q1 2023. The industry also increased its combined ratio to 94.2%, driven by increases in rates in the personal lines sector outweighing the cost of claims.
A suburban home with people walking in front, representing the protection provided by the Property & Casualty Insurance.
Our Methodology
We used a Finviz screener to shortlist Insurance companies with a forward P/E under 20. Finally, we listed the most undervalued insurance stocks based on the number of hedge fund holders, as of Q4 2024. The stocks are ranked in ascending order of the hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
The Allstate Corporation (NYSE:ALL)
Forward P/E: 11.49
No. of Hedge Fund Holders: 71
The Allstate Corporation (NYSE:ALL) is an American insurance provider that offers a range of property and casualty, health, and protection products. Its products include auto, home, life, and supplemental insurance. The company also offers consumer protection plans, roadside assistance, and analytics solutions. These are distributed through agents, online platforms, and various partnerships. ALL is primarily engaged in the property and casualty insurance business in the U.S. and Canada.
On February 28, Piper Sandler analyst Paul Newsome reiterated an Overweight rating on ALL shares and kept the price target at $248 per share. The analyst is optimistic about Allstate’s outlook as Newsome anticipates that the company will overcome its ongoing challenges and achieve positive auto policy-in-force (PIF) growth in 2025. The Allstate Corporation (NYSE:ALL) has been under scrutiny due to concerns over the decline in auto insurance PIF within its auto segment. The change in Allstate’s situation is expected due to the current market conditions and the management’s proactive strategies.
Newsome expects the underwriting environment to remain favorable for Allstate throughout 2025, which could further enhance the company’s valuation. The conducive underwriting climate as well as management’s efforts should possibly mitigate risks in auto PIF this year.
Diamond Hill Large Cap Concentrated Strategy stated the following regarding The Allstate Corporation (NYSE:ALL) in its Q2 2024 investor letter:
“Among our bottom Q2 contributors were Abbott Laboratories, ConocoPhillips, and The Allstate Corporation (NYSE:ALL). Allstate, one of the US’s largest auto and homeowners’ insurance providers has seen the pace of premium price increases decelerate, weighing on investor sentiment around the stock. However, the company’s underlying fundamentals are intact, margin expansion should continue through the year, and the outlook remains constructive.”
Overall ALL ranks 2nd on our list of the Most Undervalued Insurance Stocks to Buy Now. 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.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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