Better pricing, prudent underwriting, increased exposure and faster economic recovery should help Multiline insurers to grow. The industry has returned 17.7% year to date compared with the Finance sector's growth of 15.3%. The Zacks S&P 500 composite has witnessed an increase of 19.6% in the said time frame. Product diversification helps insurance industry players lower concentration risk and improve retention ratio.
YTD Performance
Image Source: Zacks Investment Research
Accelerated digitalization will help the industry function smoothly. An improving rate environment should drive investment income higher as insurers are beneficiaries of a better rate environment.
Here we focus on two multiline insurers, namely Assurant, Inc. (NYSE: AIZ) and Old Republic International Corporation (NYSE: ORI).
Assurant, with a market capitalization of $10.26 billion, provides business services that support, protect and connect consumer purchases in North America, Latin America, Europe and the Asia Pacific. Old Republic International, with a market capitalization of $9.21 billion, through its subsidiaries, engages in the insurance underwriting and related services business primarily in the United States and Canada. AIZ and ORI carry a Zacks Rank #2 (Buy) each at present.
Multiline insurers benefit from a diversified portfolio that lowers concentration risk. While higher demand for protection products benefits sales and premiums of life insurance operations, better pricing and increased exposure to intangibles and cyber threats support premium growth of non-life insurance operations.
Also, per Deloitte Insights, the transition to green energy and related insurance ...
