Insurance providers use their expertise in risk assessment to help protect assets while offering consumers peace of mind through comprehensive coverage options. Market leaders have certainly capitalized on strong underwriting results and rising investment income to boost profitability, helping fuel a 3.3% gain for the industry over the past six months. This was a good place to be as the S&P 500 was stuck in neutral.

Although insurers have produced good results, only a handful will thrive over the long term as insurtech disruptors are rapidly taking market share from the incumbents. Keeping that in mind, here are two insurance stocks we think can generate sustainable market-beating returns and one we’re swiping left on.

One InsuranceStock to Sell:

Old Republic International (ORI)

Market Cap: $9.09 billion

Founded during the Roaring Twenties in 1923 and weathering nearly a century of economic cycles, Old Republic International (NYSE: ORI) is a diversified insurance holding company that provides property, liability, title, and mortgage guaranty insurance through its various subsidiaries.

Why Do We Think Twice About ORI?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.2% annually over the last four years
2. Annual net premiums earned growth of 1.6% over the last two years was below our standards for the insurance sector
3. Earnings per share lagged its peers over the last two years as they only grew by 7% annually

At $37.30 per share, Old Republic International trades at 1.5x forward P/B. If you’re considering ORI for your portfolio, see our FREE research report to learn more.

Two Insurance Stocks to Buy:

HCI Group (HCI)

Market Cap: $1.72 billion

Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.

Why Will HCI Beat the Market?

1. Impressive 24.2% annual net premiums earned growth over the last two years indicates it’s winning market share this cycle
2. Annual book value per share growth of 52.2% over the last two years was superb and indicates its capital strength increased during this cycle
3. Notable projected book value per share growth of 22.2% for the next 12 months hints at strong capital generation

HCI Group’s stock price of $148.62 implies a valuation ratio of 2.6x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.

Erie Indemnity (ERIE)

Market Cap: $17.85 billion

Operating under a unique business model dating back to 1925, Erie Indemnity (NASDAQ: ERIE) serves as the attorney-in-fact for Erie Insurance Exchange, managing policy issuance, claims handling, and investment services for this reciprocal insurer.

Why Is ERIE a Good Business?

1. Impressive 15.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 34.9% over the last two years outstripped its revenue performance
3. Market-beating return on equity illustrates that management has a knack for investing in profitable ventures

Erie Indemnity is trading at $352.60 per share, or 4.6x trailing 12-month price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

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