3 Insurance Stocks We Keep Off Our Radar

Insurance providers use their expertise in risk assessment to help protect assets while offering consumers peace of mind through comprehensive coverage options. Furthermore, favorable market conditions have supported premium growth and investment income, a trend that has enabled the industry to return 3.9% over the past six months, almost identical to the S&P 500.

Regardless of these results, investors must exercise caution as many insurers are sensitive to catastrophic events and economic cycles. Taking that into account, here are three insurance stocks that may face trouble.

Jackson Financial (JXN)

Market Cap: $7.57 billion

Spun off from British insurer Prudential plc in 2021 after more than 60 years as its U.S. subsidiary, Jackson Financial (NYSE:JXN) offers annuity products and retirement solutions that help Americans grow and protect their retirement savings and income.

Why Does JXN Fall Short?

1. Sluggish 1.9% annualized growth in net premiums earned over the last two years indicates the firm trailed its insurance peers
2. Efficiency has decreased over the last two years as its pre-tax profit margin fell by 32.8 percentage points
3. Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term

Jackson Financial’s stock price of $107.49 implies a valuation ratio of 0.7x forward P/B. Dive into our free research report to see why there are better opportunities than JXN.

Cincinnati Financial (CINF)

Market Cap: $25.38 billion

Founded in 1950 by independent insurance agents seeking stable market options for their clients, Cincinnati Financial (NASDAQ:CINF) provides property casualty insurance, life insurance, and related financial services through independent agencies across 46 states.

Why Do We Think Twice About CINF?

1. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 14.7% annually
2. Estimated book value per share growth of 4.3% for the next 12 months implies profitability will slow from its two-year trend

At $162.99 per share, Cincinnati Financial trades at 1.5x forward P/B. To fully understand why you should be careful with CINF, check out our full research report (it’s free).

Assurant (AIZ)

Market Cap: $11.15 billion

With roots dating back to 1892 when it was founded by a Civil War veteran, Assurant (NYSE:AIZ) provides specialized insurance products and services that protect major consumer purchases like mobile devices, vehicles, homes, and appliances.

Why Are We Cautious About AIZ?

1. Scale presents growth limitations compared to smaller competitors, evidenced by its below-average 4.8% annualized growth in net premiums earned for the last five years
2. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 13.1% annually
3. Sizable asset base leads to capital growth challenges as its 2.8% annual book value per share increases over the last five years fell short of other insurance companies

Assurant is trading at $224.05 per share, or 1.7x forward P/B. Check out our free in-depth research report to learn more about why AIZ doesn’t pass our bar.

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