Insurance companies serve as the backbone of risk management, providing essential protection and financial security for individuals and businesses. But worries about an economic slowdown and potential claims deterioration have kept sentiment in check, and over the past six months, the industry’s 3.8% return has trailed the S&P 500 by 23.5 percentage points.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Keeping that in mind, here is one insurance stock boasting a durable advantage and two we’re steering clear of.
Two Insurance Stocks to Sell:
Unum Group (UNM)
Market Cap: $13.04 billion
Tracing its roots back to 1848 when financial security for workers was virtually non-existent, Unum Group (NYSE:UNM) provides workplace financial protection benefits including disability, life, accident, critical illness, dental and vision insurance primarily through employers.
Why Does UNM Give Us Pause?
- Large revenue base constrains its growth potential, as seen in its unexciting 2.8% annualized increases in net premiums earned over the last five years fell below our expectations for the insurance sector
- Estimated sales growth of 2% for the next 12 months implies demand will slow from its two-year trend
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 9.7% annually
Unum Group’s stock price of $76.58 implies a valuation ratio of 1.1x forward P/B. To fully understand why you should be careful with UNM, check out our full research report (it’s free for active Edge members).
Employers Holdings (EIG)
Market Cap: $987 million
With roots in Nevada and a strong concentration in California where 45% of its premiums are generated, Employers Holdings (NYSE:EIG) is a specialty provider of workers' compensation insurance focused on small and select businesses engaged in low-to-medium hazard industries across the United States.
Why Do We Avoid EIG?
- Net premiums earned expanded by 3.4% annually over the last two years, falling below our expectations for the insurance sector
- Sales are projected to tank by 1.8% over the next 12 months as demand evaporates
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 3.8% annually
At $41.98 per share, Employers Holdings trades at 0.9x forward P/B. Check out our free in-depth research report to learn more about why EIG doesn’t pass our bar.
One Insurance Stock to Buy:
HCI Group (HCI)
Market Cap: $2.55 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 Are We Backing HCI?
- Net premiums earned expanded by 26.7% annually over the last two years, demonstrating exceptional market penetration this cycle
- Annual book value per share growth of 63.4% over the last two years was superb and indicates its capital strength increased during this cycle
- Expected book value per share growth of 23% for the next year suggests its capital position will strengthen considerably
HCI Group is trading at $196.92 per share, or 3x forward P/B. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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