3 P&C Insurance Stocks That Have Rallied More Than 25% YTD

The Zacks Property and Casualty Insurance industry has performed well so far this year, riding on better pricing, prudent underwriting standards, increased exposure, streamlined operations, a wider global presence, and a solid capital position. Increased technology advancements and an improving rate environment have added to the upside.

Price Performance

The property and casualty (P&C) insurance industry has returned 7.9% in the year-to-date period compared with both the Finance sector and the Zacks S&P 500 composite’s growth of 14.9%.

Banking on strong fundamentals and benefiting from a favorable macro backdrop, three P&C insurance stocks, Heritage Insurance Holdings, Inc. HRTG, ProAssurance Corporation PRA and HCI Group, Inc. HCI have not only outperformed the industry but also crushed the Zacks S&P 500 composite and the Finance sector in the year-to-date period.

Driving Forces

Global commercial insurance rates declined 4% in the second quarter of 2025. This marked the fourth consecutive decrease in the composite rate following seven years of increases, per the Marsh Global Insurance Market Index.

Price hikes, operational strength, higher retention, strong renewal, and the appointment of retail agents should help write higher premiums. Per Deloitte Insights, gross premiums are estimated to exceed $722 billion by 2030.

Non-life insurers are exposed to catastrophe losses, and their profitability is vulnerable to the same. According to the Swiss Re Institute, the global insured losses from natural catastrophes reached $80 billion in the first half of 2025. This is nearly double the 10-year average and more than half of the $150 billion (in 2025 prices) estimated for 2025, following the long-term annual growth trend of 5-7%. Insured losses from severe convective storms were $31 billion in the first half of 2025, per the Swiss Re Institute. According to Aon, global insured losses from natural catastrophe events reached $100 billion, the second-highest first-half total on record. Total global economic losses (including insured and uninsured) from natural catastrophes increased to $162 billion in the first half of 2025, per Aon. Higher catastrophe losses continue to provide impetus to policy renewal rates. 

The insurance industry is rate-sensitive. An improving rate environment is a boon for insurers, especially long-tail insurers. In a recent meeting, the Federal Reserve lowered its benchmark interest rate by 25 bps to 4-4.25%. This marked the U.S. Fed's first reduction since December 2024. Fed also signals two more cuts in 2025. With a large invested asset base, investment income should remain healthy, even if the Fed cuts rates later this year. Also, the insurance players are investing heavily in technology to improve scale and efficiency. This should help them generate higher margins and improve profitability.

A solid capital level supports insurers in pursuing strategic mergers and acquisitions to gain market share, expand in niche areas, and diversify operations into new business lines and geography, as well as increase dividends, pay special dividends, and buy back shares. 

Players in the insurance industry are investing heavily in technology to expedite business operations. Increased use of blockchain, artificial intelligence, advanced analytics, telematics, cloud computing, Chatbot, RoboAdvisory, and insurtech solutions curbs costs and improves basis points, scale, and efficiencies. Per the Deloitte FSI Predictions article, insurers are likely to generate around $4.7 billion in annual global premiums from AI-related insurance by 2032, yielding a CAGR of nearly 80%.

Picks for Better Returns

With the help of the Zacks Stock Screener, we have selected three P&C insurance stocks that have rallied more than 25% year to date and sport a Zacks Rank #1 (Strong Buy) and 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Heritage Insurance: HRTG offers personal residential insurance, commercial residential insurance for properties, and personal residential and wind-only property insurance, licensed in the state of Pennsylvania. Its growing commercial residential business, expanding the excess and supply (E&S) business, and improving pricing are expected to deliver better margins and boost earnings. Rate adequacy, selective profit-oriented underwriting criteria, and restricting new business in over-concentrated markets or products should drive profitability for Heritage Insurance. 

The E&S business is another growth lever for Heritage. HRTG stated that it will consider and evaluate growth opportunities in a greater number of states. The stock has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth, and the most promising momentum.

The Zacks Consensus Estimate for HRTG’s 2025 and 2026 revenues grew 3% and 6.8% year over year, respectively, while the estimate for HRTG’s 2025 and 2026 earnings suggests 103.9% and 1.2% year-over-year growth, respectively. It has a Growth Score of B. The consensus estimate for 2025 and 2026 has moved up 26.1% and 12.8%, respectively, in the past 60 days. Earnings have grown 17.6% in the past five years. The company delivered an earnings surprise of 360.66%, on average, in the trailing four quarters.

Heritage Insurance currently has a Value Score of A. Shares of HRTG have rallied 125.5% in the year-to-date period. 

ProAssurance: The company benefits from strong premium growth, driven by higher new business and solid contributions from its Specialty P&C and Workers’ Compensation segments. Inorganic growth through strategic acquisitions, like NORCAL Mutual, has bolstered its position in the Medical Professional Liability Insurance market. Additionally, improved net investment income and effective cost-control measures further strengthen the company’s margins and overall performance.

The Zacks Consensus Estimate for PRA’s 2025 earnings grew 16.8% year over year. ProAssurance’s earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 116.36%. Earnings have grown 76.5% in the past five years, better than the industry average of 20.9%. PRA shares have rallied 50% year to date.

HCI Group: It is a holding company that conducts its business activities through its subsidiaries. HCI is engaged in diverse business activities, including property and casualty insurance, information technology, real estate, and reinsurance. HCI provides property and casualty insurance. HCI’s insurance product includes property and casualty homeowners’ insurance, condominium-owners' insurance, and tenants’ insurance for individuals owning property.

The Zacks Consensus Estimate for HCI’s 2025 and 2026 revenues suggests 18.8% and 4.1% year-over-year growth, respectively, while the estimate for HCI’s 2025 earnings suggests 120.2% year-over-year growth. HCI has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company. 

The consensus estimate for 2025 and 2026 has moved 5% and 0.6% north, respectively, in the past 60 days. It delivered a four-quarter average earnings surprise of 41.7%. Earnings have grown 19% in the past five years. The stock currently has a Value Score of B and an impressive VGM Score of B. HCI shares have rallied 56.5% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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