Some say that “risk happens slowly, then all at once.” This notion highlights the value of minimizing risk and protecting yourself €”and getting insurance is an excellent way to do both. They help consumers safeguard their livelihood, health, and other assets.
Recent turbulent years have increased consumer interest in insurance, opening the door to potentially successful investments in insurance stocks. Their risk management-centric businesses can be great defensive additions to your portfolio. However, the market is full of insurance companies, and it may take some time to comb through their ranks to find the best ones. So, here are three of the most promising insurance stocks for your consideration.
Universal Insurance Holdings (UVE)
Universal Insurance Holdings (NYSE:UVE) is a property, casualty, and value-added insurance services company specializing in marketing, developing, and underwriting consumer insurance products for residential homeowners. The company offers risk management, claims management, distribution, and other insurance-related services. It has entities and subsidiaries for its various operations, like policy distribution for residential insurance, advisory services for claims payment and actuarial issues, and allied lines and personal property coverages.
While UVE’s latest quarterly report ended at a $5.9 million net loss, this is a significant step up from the $72.3 million loss from the same quarter last year. Several revenue items also improved: direct premiums written grew 6.3%, direct premium earned increased by 4.8%, and net investment income shot up by 110%. All this resulted in a 15% increase in total revenue.
Universal Insurance also repurchased 894,000 shares and returned a total capital of $17.2 million to shareholders. Its CEO, Stephen J. Donaghy, is optimistic about UVE’s improving numbers and differentiation through its reinsurance capabilities and claims infrastructure. The company is confident with its market position despite the effects of Hurricane Idalia. Its expansion in additional territories potentially allows investors to ride the positive trend early. That’s why we see UVE as one of the insurance stocks investors should buy in January 2024.
Arch Capital Group (ACGL)
Next on our list of insurance companies to buy in 2024 is Arch Capital Group (NASDAQ:ACGL) an American insurance, mortgage insurance, and reinsurance provider based in Bermuda. Its operations are comprised of three segments: the insurance segment, which offers underwriting, professional lines, and other solutions; reinsurance for reinsurance underwriting, property reinsurance, specialty product lines, and other reinsurance solutions; and mortgage for its U.S and international-focused mortgage insurance business and services that offer both mortgage solutions and credit-risk transfers.
ACGL’s latest financials boast strong results with a 20.2% annualized net income return available to common shareholders and a 24.8% annualized operating return on average common equity YoY. The company also had a substantial 23.2% uptick in net premiums written. In addition, ACGL reported a 26.0% surge across its insurance and reinsurance segment.
CEO Marc Grandisson emphasized the company’s remarkable underwriting performance, substantial growth in net premiums written, and enhanced investment returns, which were vital parts of its impressive quarter. These solid numbers and positive feedback from management make a compelling case for ACGL as one of the best buy-rated insurance stocks.
Oscar Health (OSCR)
The last insurance stock on our list to buy in January 2024 is Oscar Health (NYSE:OSCR). This technology-based health insurance company offers a full-stack technology platform to help its customers find quality and affordable care. Its offering caters to individuals and family clients that purchased insurance through a health insurance market and Medicare Advantage plans for eligible 65 and older adults. OSCR’s Campaign Builder is a +Oscar modularized solution that helps with workflow automation and personalized interventions.
OSCR’s latest reported quarter showcased impressive growth. To start, premiums earned saw a substantial 46% YoY increase. The medical loss ratio improved by 608 basis points or 83.8%. InsuranceCo’s combined ratio improved by 934 bps or 101.3%. Adjusted EBITDA losses came in at $20.3 million €”a significant improvement from last year’s $139.5 million. Net loss also shrank from $192.9 million to $65.4 million YoY.
These positive developments led to forecast improvements, with profits from its insurance business expected to reach $155 million to $165 million. OSCR is also confident that it will achieve adjusted EBITDA profitability in 2024. The company’s strategic initiatives include targeted rate increases, cost-efficiency improvements, and a disciplined pricing strategy. Couple that with its bright prospects, and you have a great potential insurance stock to buy.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.