Long-term investing in insurance stocks
Insurance stocks are great to stock sectors to add to your portfolio. Most insurance stocks pay dividends.
Even when the stock market crashes, insurance stocks are pretty stable. The share prices of insurance stocks go up and down like lots of stocks do.
However, overtime insurance stocks can stabilize your investment stocks and shares portfolio.
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If you have bought enough shares in insurance stocks, when the stock market is down, you can profit by earning more dividends.
In uncertain times, people flock to insurance companies taking out all kinds of policies, including;
- Life insurance cover;
- Medical and Health insurance;
- Mortgage insurance;
- Business insurance;
- Home/Property insurance;
- Car insurance;
- Multi-cover insurance; and even;
- Pet insurance;
- Renters insurance;
- Shipping insurance;
- Liability insurance; and many other types of insurance policies.
Also post covid-19 lockdowns, travelers will buy Travel insurance.
The insurance business is a bit like the loans business. When banks give people loans and credit etc, there is a risk factor.
A certain percentage of debts will not be paid for xyz reasons. People default on repayments.
Banks, and lenders factor in the risk and potential losses. But the interest made on the loans that are paid back outweigh the losses. Insurance works in a similar way.
There will be those who make insurance claims and those who never or very seldom make insurance claims. Insurance companies raise premiums for those who make claims.
And over time, insurance companies are likely to receive more premiums in capital than they will pay out when insurance policy holders make insurance claims.
Insurance companies’ underwriting profits can add up to lots of profits over the years. All this money insurance companies make is floating around as invested capital.
This earns insurance companies further income for the insurance companies and their shareholders.
These businesses are there to make profits and these insurance companies use smart ways to limit losses such as using AI technology.
Investing in insurance companies is a safe haven for stashing your cash into stock market investments that can withstand, wars, recessions, stock market crashes and the raise and fall of interest rates.
Insurance companies are designed to make money in all market conditions. When there are natural disasters and there are many victims who are insured, you might think by paying out on many policies insurance companies will lose money.
But insurance company insure their own companies against greater unexpected, unforeseen risks, so that although they will take a hit, in the short-term, those businesses can keep functioning.
Selecting a handful of insurance companies to invest in for the long-term is a great way of building up profits
And if you have a regular incomes, you can always buy the dips, to top up, buy more insurance stocks and lower your share price average for each of your insurance stocks investments.
5 of the best insurance stocks to invest in now
In alphabetical order:
(1) Axis Capital Holdings Limited (NYSE: AXS) $AXS
AXIS group owns a number of insurance companies and risk management companies located all over the world. AXIS’ insurance services cover;
- Property; and more
It’s being reported that Axis are going to pay dividends in the near future. (27 March 2022)
Axis is a hot insurance stock to invest in and should make a great addition to the insurance stocks you may already hold in your stocks and shares portfolio.
(2) Markel Corporation (NYSE: MKL) $MKL
It is well worth buying shares in Markel because they have a team that pick stocks invest in. Part of their profits are invested in stocks. Another large part Markel’s income is used to buy businesses.
The business model is a good one, since the risk of merely investing profits in bonds is mitigated by making real world profits through the insurance business in different respects i.e. selling policies and owning the companies that operate insurance businesses.
Pre earnings for Markle is reported to be bullish by analysts. (27 March 2022)
(3) Metlife Inc (NYSE: MET) $MET
MetLife are big in the U.S. when it comes to life insurance and they cater for the over 50s, those retiring early and those who are investing in pensions to retire in later years.
MetLife are a strong company and for a insurance stock investor, you should know MetLife pay out very healthy dividends.
Their share price is reaching record highs +$71, and in terms of longevity vs, future share price growth, when comparing other insurance companies, MET’s share price growth has a long way up to go.
Currently, MET stock is outperforming the market (27 March 2022)
(4) UnitedHealth Group Inc (NYSE: UNH) $UNH
UnitedHealth, as they name suggests, are big when it comes to health insurance. United Health are a global company and have a customer base as large as the population of the UK.
UNH make big profits. Moreover this insurance stock giant look after their shareholders with increased dividends. If you are a dividend investor, then UNH is another great insurance stock to add to your portfolio.
Earnings are expected to be great (27 March 2022)
(5) White Mountains Insurance Group Ltd (NYSE: WTM) $WTM
White Mountains… No it’s not a coffee. It’s an Insurance Group. But they are also heavily invested in financial services.
White Mountains’ share price looks like a mountain. It seems as there’s no stopping the WTM share price from climbing higher and higher. Not even covid-19 could hold it back.
WTM pay dividends, and I would expect healthier returns in years to come.
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