Best Insurance Stocks for 2021!

March 09, 2021 14:07 UTC
Reading time: 22 minutes

Did you know the insurance industry generates more than $5 trillion in revenue each year?

It’s just one reason why legendary investor Warren Buffett LOVES insurance stocks.

More and more investors are now investing in insurance companies as it’s a business model that generally works when the economy is strong or weak.

Read on to discover some of the best insurances stocks for this year, the different type of insurance company stocks available and how to get started!

In this article, you will learn:

What insurance company stocks are and the different types to invest in.

Why Warren Buffett’s Berkshire Hathaway company is the largest insurance company in the world!

An insurance stocks list to consider this year, including health insurance stocks, business insurance stocks, medical insurance stocks, property-casualty stocks and many others!

How to start investing in some of the best insurance stocks for this year from the Admirals (formerly Admiral Markets) Invest.MT5 account which can be opened with a minimum of just €1, offering low commissions from just $0.01 on US stocks and ETFs.

How to supercharge your investing platform to receive actionable and investing ideas in real-time on thousands of different markets, including the top insurance stocks, from using the exclusive MetaTrader Supreme Edition platform which is FREE to download!

And much, much more!

What are Insurance Stocks?

Insurance stocks represent companies whose job is to provide insurance for individuals and businesses. One of the most obvious revenue streams for insurance companies is through the selling of insurance policies to collect regular premiums from the customer. Many insurance companies would make more in premiums than they would payout as a claim, a concept called ‘underwriting profit.’

Another big revenue stream for most insurance companies is the profits they receive from investing the premium collected from the customer. Most insurance companies would keep their customers’ premiums invested in safe products such as bonds, in case a claim ever needs to be paid out.

The money insurance companies invest in the market is known as the ‘float.’ As insurance companies grow they have a bigger float - free money to invest in the market. There’s a reason why billionaire investor Warren Buffett has made insurance the cornerstone of his empire at Berkshire Hathaway, as we discuss in a bit more detail next!

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Insurance Stocks and Warren Buffett

Warren Buffett’s Berkshire Hathaway company holds stakes in more than 60 different business including Apple, Amazon, Bank of America, Procter & Gamble, Visa and many others. His portfolio of companies is worth nearly $300 billion. However, in 2018 the company appointed two CEOs for the two parts of the company it was divided into - insurance and everything else.

Because of Berkshire Hathaway’s insurance operations, they have more than $110 billion of float available to invest. While most insurance companies would invest it in high-quality government bonds, Berkshire uses this to buy more shares of companies it owns or fund new acquisitions.

It’s just one reason why Berkshire Hathaway is the largest insurance company in the world!

Source: Statista, 9 March 2021

While there are other revenue streams insurance companies have, one reason Warren Buffett has made the insurance industry the hallmark of his more than $200 billion portfolio, is because most insurance companies make a lot on what they invest in.

Of course, the way Berkshire Hathaway run the business is pretty unique. Most people would not even think of the company being involved in insurance. Let’s have a look at some of the different types of insurance companies there are before we look at the best insurance stocks for this year.

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No matter what type of insurance stocks you are looking for, you can find a huge selection from the more than 3,000+ instruments available from the platform provided by Admirals (formerly Admiral Markets).

Click on the banner below to start your FREE download today!

The Different Types of Insurance Stocks

The insurance industry can be divided into several different categories. You will find a few more familiar names within these categories as most individuals tend to focus on specific types of insurance when buying a policy.

Below is a list of the different types of insurance there are.

▶️ Life Insurance

This type of insurance is designed to pay a sum of money to a designated beneficiary when the insured person dies. It’s a policy designed to protect loved ones with financial support in the case of death. The insurance company will collect premiums over the insured person’s lifetime to pay out a certain sum in the event of death.

The top three biggest life insurance companies in the world from direct premiums are MetLife Inc, Prudential Financial Inc, Equitable Holdings.

▶️ Property and Casualty Insurance

These insurers write policies that aim to provide liability protection and cover property damage. Examples of these would be car insurance and home insurance. This is one of the most common types of insurance policies available.

Some of the top property and casualty insurance companies by net premiums written include Berkshire Hathaway, Liberty Mutual and Travelers Group.

▶️ Health Insurance

This type of insurance is designed to help cover any healthcare costs for the insured person.

These type of policies can be purchased individually or through an employer. Many governments act as health insurance providers, such as the United States with its Medicare program.

Some of the biggest health insurance stocks in the world include United Healthcare, Aetna, CIGNA Corp and others.

There are also other types of insurance companies that are involved in speciality insurance, travel and business insurance, as well as reinsurance.

How to Start Investing in Insurance Stocks

To start investing in insurance companies stock, just follow the steps below.

  1. Open your MetaTrader 5 trading platform provided by Admirals (formerly Admiral Markets) or start your free download here.
  2. From the options at the top of the platform, select View and Market Watch.
  3. In this window, right-click and select Symbols. Here you can search from the +3,000 instruments available to trade on via Admirals (formerly Admiral Markets).
  4. Once you’ve chosen your stock, press OK to add it to your Market Watch list.
  5. To view a live price chart of the stock, drag the name from the Market Watch window onto the chart.
  6. To open a trading ticket, right-click on the chart and select Trading and then New Order. A trading ticket will open up for you to input your own entry, stop loss and take profit levels as well as your position size.

A screenshot showing the MetaTrader 5 trading platform provided by Admirals (formerly Admiral Markets) with a trading ticket open on the chart. 9 March 2021.

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The Best Insurance Stocks for This Year!

Now you know a bit more about the different types of insurance stocks available and how they make their income, let’s have a look at some of the best insurance stocks for this year.

There are many different ways to find the top insurance stocks to invest in. Some investors will use fundamental analysis and some will rely solely on technical analysis. Using a combination of both can be powerful.

Some investors may also choose to focus on high momentum, growth-based insurance stocks for short-term trading. Some investors may choose to focus on value-based insurance stocks which exhibit more longer-term invest characteristics.

The selection below will cover a wide range of ideas to get started with. Let’s begin!

#1. Berkshire Hathaway (BRKB)

Berkshire Hathaway is considered the largest insurance company in the world. But the business also has a lot of other interests, as it is the investment vehicle of choice for legendary investor Warren Buffett. The company holds stakes in well-known companies such as Apple, Coca-Cola, Bank of America, American Express and many more.

Berkshire is also considered to be the largest financial services company in the world, as well as the eighth-largest public company in the world although this will change over time. While the company has interests in insurance and reinsurance businesses, they also operate in the utilities and energy sector, as well as manufacturing and retailing.

Source: Admirals (formerly Admiral Markets) MetaTrader 5, BRKB, Monthly - Data range: from 1 Nov 2004 to 9 Mar 2021, accessed on 9 Mar 2021 at 12:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.

In the long-term, monthly price chart of Berkshire Hathaway (Class B shares), it is clear to see the uptrend that has developed. This is confirmed by the 20-period (blue), 50-period (red) and 100-period (green) exponential moving averages all pointing higher.

Before the coronavirus pandemic, the stock price was held in a range between ~$228.00 and ~$186.00 as shown from the two black horizontal lines on the chart. However, in early 2021, the price managed to break through the range.

Interestingly, research shows that there has been an unusual amount of buying in Berkshire Hathaway’s Class A shares - which is mainly used by institutional investors. With the net premiums for insurance companies forecasted to increase Berkshire Hathaway is in an interesting position to capitalise on this and on an economic recovery given its diverse portfolio of shares.

#2. UnitedHealth (UNH)

UnitedHealth was founded in 1977 and is now one of the largest health insurers in the United States. In 2020, revenue was more than $257 billion with the company serving more than 75 million people from its 350,000 employees. The company has been an industry leader for decades and is part of the Dow Jones 30 index.

Perhaps more interestingly, UnitedHealth could be considered once of the best insurance dividend stocks as it has increased its dividend every year since 2010. While the company gave conservative guidance in early 2021, the company is still forecasting earnings per share (EPS) growth of 13% to 16%.

The stock is a favourite among fund managers who believe the company could outperform the market as we move into a strong secular growth period for the healthcare industry.

Source: Admirals (formerly Admiral Markets) MetaTrader 5, UNH, Monthly - Data range: from 1 Nov 2004 to 9 Mar 2021, accessed on 9 Mar 2021 at 12:35 pm GMT. Please note: Past performance is not a reliable indicator of future results.

The long-term, monthly price chart above shows a clear uptrend for UnitedHealth stock. All of the moving averages on the chart are moving upwards confirming this bias. During the period between 2010 and 2018, the trend was so strong that the price only pulled back to one of the moving averages (the 20-period blue line) once.

The volatility of the coronavirus pandemic period saw buyers step in around the 50-period (red) moving average. These lines could represent potential buy zones for investors. Alternatively, some may choose to switch to a lower timeframe such as the weekly chart to find more opportunities.

 

#3. Allianz (ALV)

Allianz is a European financial services company headquartered in Munich, Germany. The company’s core business is insurance and asset management, making it the fourth-largest insurer in the world. In 2020, total revenue exceed €140 billion.

The company serves more than 100 million customers in more than 70 countries, providing property and casualty insurance, health and life insurance and business insurance. They also have an asset management division.

In early 2021, the German insurance company announced that is expecting higher operating profit for the year, even though they reported a weak earnings report for 2020. The company is also a contender for one of the best insurance dividend stocks as it currently pays €9.60 per share.

Source: Admirals (formerly Admiral Markets) MetaTrader 5, ALV, Monthly - Data range: from 1 Jul 2013 to 9 Mar 2021, accessed on 9 Mar 2021 at 12:45 pm GMT. Please note: Past performance is not a reliable indicator of future results.

In the long-term, monthly price chart of Allianz’s share price, it is clear to see just how choppy it is has been in the past. The coronavirus pandemic massively impacted the company’s share price which dropped nearly 50%.

However, the price has started to recover and at the beginning of 2021 was up more than 80% from its pandemic lows. With more optimism around the insurance industry, the company could capitalise on a wave of investor flows into the industry, with price moving back to its pre-pandemic high of ~€232.00 and beyond.

Due to the volatility of the market, shorter-term investors may opt to focus on the lower timeframes. By using Contracts for Difference (CFDs) to speculate on the company’s share price direction, investors can potentially profit from both rising and falling markets by trading long and short.

CFDs also allow investors to trade on margin which means you could potentially control a large position size with a small deposit. You can learn more about the risk and benefits of using CFDs in this ‘CFD Trading Guide,’ or by clicking on the banner below to open an account.

#4. Prudential PLC (PRU)

Prudential is a British-based multinational insurance company that is headquartered in London, England. The company was founded in 1848 and recorded total revenue of more than $55 billion in 2020. Prudential has multiple listings of its shares which trade on the London Stock Exchange, Hong Kong Stock Exchange and New York Stock Exchange.

Many European insurers are currently going through a re-rating as dividend payments normalise after the coronavirus pandemic. Many investment banks such as Deutsche Bank believe there is much further to go in the recovery of the sector.

Prudential provides an interesting focus for investors as the company’s primary market is now in Asia but also serves UK customers and retirees in the United States. Bullish forecasts for the Asia economy could attract more investors to Prudential.

Source: Admirals (formerly Admiral Markets) MetaTrader 5, PRU, Monthly - Data range: from 1 Nov 2004 to 9 Mar 2021, accessed on 9 Mar 2021 at 12:55 pm GMT. Please note: Past performance is not a reliable indicator of future results.

Prudential PLC’s share price has been extremely volatile since collapsing more than 65% from its high in 2018 to the lows of the coronavirus pandemic period. However, since the pandemic lows, the share price is already up more than 120%, suggesting investors are now much more optimistic about Prudential’s future share price.

A move back towards the all-time high of March 2018 at ~£1987 GBX still represents a more than 70% move higher from the beginning of 2021.

#5. Anthem (ANTM)

Anthem is the largest for-profit managed healthcare company in the United States and is also the fifth-largest insurer in the world based on market capitalization. Yearly revenues exceed $100 billion as the company services more than 40 million members.

The company has made some big changes in recent months, which has attracted interest from many large institutional investors. Anthem overhauled its leadership with a new Chief Health Officer, Executive Vice President and Chief Legal Officer. It also expanded its operations by acquiring InnovaCare Health LP.

Revenue, net income and earnings per share have all been growing over the past three years suggesting the company is moving in the right direction.

Source: Admirals (formerly Admiral Markets)  MetaTrader 5, PRU, Monthly - Data range: from 1 Nov 2004 to 9 Mar 2021, accessed on 9 Mar 2021 at 12:55 pm GMT. Please note: Past performance is not a reliable indicator of future results.

Anthem’s share price has been ranging for much of the past few years, in line with broader industry trends. However, the company’s share price has started to break out from this range with the price now trading above the ~$308.00 level which was the upper resistance of the range.

If the price can hold above this level it may benefit from better sentiment towards the insurance industry and start a new secular trend such as the one from 2012 to 2015 or 2016 to 2018.

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To access this follow the steps below:

  1. Open a live account. If you haven’t done so already click here.
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  3. Click on the Premium Analytics tab in the client portal dashboard. Search for your stock such as #ANTM (the symbol for Anthem).
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Source: Admirals (formerly Admiral Markets) Premium Analytics, 9 March 2021

The above screenshot shows that there are 24 technical events taking place on Anthem’s stock price across the short-term, intermediate-term and long-term. It details what the event is, with an explanation of why it is important, as well as a chart to visualise the event.

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Why Invest in Insurance Stocks with Admirals (formerly Admiral Markets)?

✔️ Invest with a well-established company authorised and regulated by the UK Financial Conduct Authority (FCA) and the Cyprus Securities and Exchange Commission (CySEC), among other well-known financial regulators.

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You can also read about the best shares to buy and test your trading and investing ideas in a virtual environment until you are ready to go live!

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About Admirals (formerly Admiral Markets)

Admirals (formerly Admiral Markets) is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks

Jitanchandra Solanki
Jitanchandra Solanki Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.