Stock Insorace
Stock Insurance
Insurance stocks can make a great addition to any investor’s stock portfolio. Not only does the insurance business have the potential to produce excellent long-term returns, but it’s also a business that works in good times and bad.
With that in mind, here’s an overview of how the insurance business works, some important concepts to know, and three insurance stocks that investors should keep on their radar in 2023 and beyond.
Three top insurance stocks for 2023
1. MetLife (MET -0.42%)
MetLife is a great option for investors who want some insurance exposure. It’s the largest U.S. life insurer, and it also has a huge retirement solutions business. MetLife has an easy-to-understand business model and a history of strong returns on equity. Plus, the company pays one of the highest dividend yields of its peer group, which can significantly boost total returns over time.
Life insurance is also a relatively recession-resistant business, as illustrated by the fact that MetLife outperformed the S&P 500 by 20 percentage points through the first six months of 2022 during a market downturn.
2. Markel (MKL 0.44%)
Markel is a specialty insurer, choosing to insure unusual risks, which is a much-needed business in both strong economies and recessions. Not only does Markel typically run a nice underwriting profit, but the company has an interesting investment strategy.
Instead of solely focusing on safe investments, such as high-grade bonds, Markel puts about one-third of invested assets in publicly traded stocks and also buys entire businesses through its Markel Ventures segment. For this reason, Markel is often described as a smaller-scale version of Berkshire Hathaway (BRK.A -0.87%)(BRK.B -0.86%), which happens to be Markel's largest stock investment.
3. UnitedHealth (UNH 0.99%)
When you’re looking for beginner-friendly stocks, it’s often a smart idea to stick with industry leaders, such as top U.S. health insurer UnitedHealth. The company serves more than 75 million people worldwide and has one of the best net margins in the industry. In addition to its core UnitedHealthcare business, the company also owns Optum, which provides technology, analytics, and more to the healthcare and pharmaceutical industries.
UnitedHealth also has a track record of shareholder-friendly management. It’s increased its dividend every year since 2010 and spends billions on share buybacks. Over the 10-year period through mid-2022, UnitedHealth has delivered 900% total returns for investors, more than triple the S&P 500 production during the same period.
