We recently compiled a list of the 7 Hot Insurance Stocks To Buy Right Now. In this article, we are going to take a look at where The Progressive Corporation (NYSE:PGR) stands against the other hot insurance stocks to buy.
Insurance Market Insights: Key Trends Shaping the Future
The insurance market plays a crucial role in our economy by providing financial protection to individuals, businesses, and communities against unexpected risks. The market is currently experiencing significant changes driven by evolving consumer expectations, technological advancements, and global economic conditions.
Analysts note that the market is currently favorable in general, with insurers reporting healthy profits and a growth-oriented environment. According to Deloitte’s 2025 global insurance outlook, insurance premiums are projected to grow by 3.3% in 2024, largely fueled by advanced markets, which are expected to contribute 75% of this growth.
Advancements in artificial intelligence (AI) continue to revolutionize how insurers assess risk and manage claims. AI technologies enable better data analysis and faster decision-making processes, which can enhance customer service and operational efficiency.
On October 22, CNBC reported that Near Space Labs, a Brooklyn, New York-based startup, has developed innovative technology to enhance the insurance claims process following natural disasters like hurricanes Helene and Milton. Their invention, called “Swifts,” consists of AI-enabled cameras mounted on weather balloons that fly at altitudes higher than airplanes. This allows them to capture high-resolution images over vast areas quickly, significantly speeding up damage assessments from weeks to just days. CEO Rema Matevosyan highlighted that their technology can gather data equivalent to what 800,000 drones would capture in one flight. The company has already conducted over 1,000 missions and is scaling operations to respond immediately to climate-related disasters, aiming to provide insurance companies with timely information for risk analysis and claims processing.
Another key trend shaping the industry is the rising demand for new and innovative products like cyber insurance. As cyber threats become more prevalent, companies are increasingly seeking coverage against data breaches and ransomware attacks. According to IBM, the average cost of a data breach was approximately $4.88 million in 2024, highlighting the urgent need for robust cyber protection. As a result of these trends, insurers are looking to innovate and develop new products that can address these emerging risks effectively.
Overall, experts believe that the insurance market is positioned for growth as it adapts to changing consumer needs and leverages technology to improve services. According to The Business Research Company, the insurance market was valued at $7.26 trillion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 7.2% during 2024-2028 to reach $10.28 trillion by the end of the forecast period.
With advancements in technology and a focus on customer-centric solutions, companies in this sector can enhance their profitability while providing better services to clients.
Our Methodology
To compile our list of the 7 hot insurance stocks to buy right now, we began by using the Finviz stock screener to identify insurance stocks that had a year-to-date performance of over 30%. From the remaining pool of more than 15 hot insurance stocks to buy, we focused on the top 7 stocks that are most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 7 hot insurance stocks to buy right now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Insurance house, car and family health live concept. The insurance agent presents the toys that symbolize the coverage.
The Progressive Corporation (NYSE:PGR)
Year-to-Date Performance: 52.97%
Number of Hedge Fund Holders: 89
The Progressive Corporation (NYSE:PGR) is a prominent American insurance provider, well-known for its diverse offerings, including auto, home, and commercial insurance. As the second-largest personal auto insurer in the US, the company has established a strong market presence. It is also a leading seller of commercial auto, motorcycle, and boat insurance.
The company is focused on enhancing its commercial auto and business owners’ policy (BOP) products. In the second quarter of 2024, The Progressive Corporation (NYSE:PGR) introduced a new commercial auto product model in two additional states and plans to expand this to 14 states by the end of the year. The company’s BOP product is currently available in 46 states. During the second quarter, Progressive also rolled out its newest BOP product model in 4 states, increasing its total to 22 states. Furthermore, the company initiated a pilot program for a multi-product quoting system that allows agents to quote both commercial auto and BOP products seamlessly.
Progressive (NYSE:PGR) reported impressive financial results for Q2 2024. The company achieved a 22% increase in net premiums written compared to the same period in the previous year, alongside a combined ratio of 91.9, indicating strong profitability despite challenges from severe weather events. Additionally, policies in force grew by 9% year-over-year.
The personal auto segment saw significant growth in Q2 2024, adding 1.1 million policies since Q1 2024 and totaling 2 million new policies in the first half of the year. This growth underscores Progressive’s (NYSE:PGR) ability to attract new customers.
The Personal Lines segment also exhibited robust performance with net premiums written reaching $14.6 billion in Q2 2024, a 26% increase year-over-year. This surge was fueled by a substantial rise in new business applications, resulting in nearly 28 million policies in force by the end of Q2.
Over the past five years, The Progressive Corporation (NYSE:PGR) has demonstrated solid financial health with a compound annual growth rate (CAGR) of 20% in net income and an 11% CAGR in levered free cash flow. These metrics reflect not only profitability but also a strong demand for its insurance products.
Given its strategic initiatives to enhance product offerings and its impressive financial performance, The Progressive Corporation (NYSE:PGR) presents itself as a compelling investment opportunity. The consistent growth in net premiums and policies indicates robust market demand and effective management strategies.
According to Insider Monkey’s Q2 database, 89 hedge funds held stakes in PGR. Middle Coast Investing stated the following regarding The Progressive Corporation (NYSE:PGR) in its Q3 2024 investor letter:
“Progressive Insurance (NYSE:PGR) is the best example of both a macro and micro transition. Used car repair cost inflation (macro) hurt its profitability. It was early in raising prices to deal with that, and has been growing new policies in force much faster than competitors. As it has overcome the cost inflation issue, its profits have soared, and should continue to grow. The stock price has doubled in the last 14 months.”
Overall PGR ranks 1st on our list of the hot insurance stocks to buy. While we acknowledge the potential of PGR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PGR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.