With strong economic growth, evolving consumer demand, and rising adoption of digital technologies, the insurance industry is expected to experience robust growth in the coming years.
Given the industry’s bright prospects, fundamentally sound insurance stocks like NN Group N.V. (NNGRY), Unum Group (UNM), and Primerica, Inc. (PRI) could be solid portfolio additions offering high dividends and stability.
Insurance companies operate by collecting premiums from customers upfront, and while some policyholders might never file a claim or only make minor ones, this often leaves insurers with extra funds. They use this surplus for investments, which benefits both the company and its shareholders, leading to steady cash flow and profits.
According to a BCC research report, the global insurance market is set to reach $9.8 trillion in 2027, growing at a CAGR of 12%.
With the growing population and evolving needs, insurers are expanding their product offerings. Plus, technological advancements such as AI, machine learning, and data analytics are transforming the industry. These technologies enable better risk assessment, enhance customer experiences, and help develop personalized products.
Moreover, AI in the insurance market is expected to grow at a CAGR of 33.1%, reaching around $79.86 billion by 2032. All these factors contribute to a thriving insurance sector, boosting investor confidence and creating a promising environment for growth.
Considering this favorable backdrop, let’s assess the fundamentals of the three insurance stocks.
NN Group N.V. (NNGRY)
Headquartered in Hague, NNGRY is a financial services company that provides life and non-life insurance products in the Netherlands and internationally. It offers Life insurance products, such as group and individual pension products, retail life insurance, and SME life insurance products.
On September 25, NNGRY announced an agreement to sell its Turkish operations to Zurich Türkiye. With being in the insurance business in Turkey for 15 years, the company expects that a divestment of its Turkish activities would be in the best interest of its local customers, employees, and other stakeholders.
NNGRY pays an annual dividend of $1.83, which translates to a 7.56% yield at the current price level. Moreover, the fund’s dividend payouts have increased at a CAGR of 11% over the past five years.
For the fiscal year that ended December 2023, NNGRY’s total revenues increased 20.6% year-over-year to €10.26 billion ($11.33 billion). The company’s operating income also increased 108.8% to €1.52 billion ($1.67 billion). The company’s net income and EPS came in at €1.17 billion ($1.29 billion) and €4.04, respectively.
Analysts expect NNGRY’s revenue and EPS for the fiscal year ending December 2025 to increase 1.3% and 22.2% year-over-year to $15.55 and $3.87, respectively.
Over the past year, NNGRY’s stock has surged 44% to close the last trading session at $24.15. The company also has a beta 24-month beta of 0.55.
NNGRY’s POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #2 out of 26 stocks in the Insurance - Life industry. It has an A grade for Momentum and a B for Value and Stability. Click here to see NNGRY’s Growth, Sentiment, and Quality ratings.
Unum Group (UNM)
UNM and its subsidiaries provide financial protection benefit solutions primarily internationally. It operates through Unum US; Unum International; Colonial Life; and the Closed Block segment.
On June 18, UNM launched Unum Broker Connect for Employee Navigator, improving integration and efficiency for brokers. This service simplifies case setup, automates plan creation, and enables smooth data exchange.
UNM pays an annual dividend of $1.68, which translates to a 2.78% yield at the current price level. Moreover, the fund’s dividend payouts have increased at a CAGR of 7.3% over the past five years. UNM has increased its dividends for 15 consecutive years.
UNM’s total net revenue for the second quarter ending June 30, 2024, increased 3.9% year-over-year to $3.23 billion. The company’s after-tax operating income was $411.40 million, or $2.16 per share, up 1% and 4.9% from the year-ago values, respectively. During the same period, the company’s net income stood at $389.50 million, with net income per share at $2.05, up 3.5% year-over-year.
Street expects UNM’s EPS for the quarter ended September 2024 to increase 5.3% year-over-year to $2.04. Its revenue for the same quarter is expected to increase 4.5% year-over-year to $3.26 billion. It surpassed the consensus EPS estimates in three of the four trailing quarters.
UNM’s stock has gained 32.2% over the past nine months to close the last trading session at $60.42. Its 24-month beta is 0.10.
UNM’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It is ranked first out of eight stocks in the Insurance - Accident & Supplemental industry. It has an A grade for Momentum.
To see UNM’s grades for Growth, Value, Stability, Sentiment, and Quality, click here.
Primerica, Inc. (PRI)
PRI provides financial products and services to middle-income households. The company operates through four segments: Term Life Insurance; Investment and Savings Products; Senior Health; and Corporate and Other Distributed Products.
PRI’s trailing-12-month gross profit and EBIT margins of 66.52% and 30.40% are 10.8% and 32.4% higher than the respective industry averages of 60.02% and 22.96%. Likewise, the stock’s trailing-12-month levered FCF margin of 32.83% is 81.2% higher than the industry average of 18.12%.
PRI pays an annual dividend of $3.60, which translates to a 1.33% yield at the current price level. Moreover, the company’s dividend payouts have increased at a CAGR of 19.2% over the past five years. Notably, PRI has increased its dividends for 13 consecutive years.
During the second quarter that ended June 30, 2024, PRI’s total revenues increased 16.7% year-over-year to $803.37 million, and its total adjusted operating income before income taxes grew 11.6% year-over-year to $212.14 million. The company’s adjusted net operating income and adjusted EPS came in at $162.75 million and $4.71, respectively, up 11.9% and 18% from the prior year’s quarter.
Analysts expect PRI’s revenue and EPS for the third quarter (ending September 2024) to grow 4.7% and 12% year-over-year to $744.13 million and $4.80, respectively. Moreover, the company has exceeded the consensus revenue estimates in all four trailing quarters, which is remarkable.
Shares of PRI have surged 7.9% over the past six months and 38.5% over the past year to close the last trading session at $269.72. It has a 24-month beta of 0.67.
PRI’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
PRI has an A grade for Momentum and a B for Growth and Stability. It is ranked #9 among 26 stocks in the B-rated Insurance - Life industry.
In addition to the POWR Ratings highlighted above, you can check PRI’s ratings for Value, Sentiment, and Quality here.
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NNGRY shares were trading at $24.44 per share on Wednesday afternoon, up $0.29 (+1.18%). Year-to-date, NNGRY has gained 31.45%, versus a 22.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
3 Insurance Stocks Offering High Dividends and Stability StockNews.com
