Trupanion Grows in Pet Insurance Amid Rising Veterinary Care Costs

Trupanion TRUP, a provider of insurance for cats and dogs in the United States, Canada, Continental Europe and Australia, operates in a total addressable market worth more than $34.1 million, which is a large but underpenetrated market. This pet insurer is well-poised to grow, courtesy of its heightened focus on pets’ health and well-being in an underpenetrated pet insurance market, product launches, extended operating boundaries and a solid capital position. 

TRUP outperformed its industry in the first six months of 2025, gaining 14.8% compared with the industry’s rise of 4.8%. Shares are trading above the 50-day moving average, indicating a bullish trend. 

Trupanion's Earnings Surprise History

Trupanion has a decent earnings surprise history. Its earnings beat estimates in three of the last four quarters and missed in one, with the average surprise being 243.75%.

Factors to Consider for Trupanion

Average monthly retention continues to remain strong, coupled with an increase in total enrolled subscription pets and average revenue per unit (ARPU). This, in turn, has been driving mid-teens revenue growth. The cost of veterinary care continues to rise, outpacing consumer discretionary income, as noted by management. The role of pricing, thus, plays an important part, both in keeping the growth pace alive and comforting pet parents.

The insurer has also been expanding globally as part of its five-year growth plan, apart from strengthening its compelling portfolio. TRUP noticed increasing contributions from European endeavors. Given the underpenetrated market, it sees opportunities to enroll more pets with increasing acquisition spend.  

To ramp up growth, it is introducing new products. Its portfolio of products consists of Chewy and Aflac, medium and low ARPU products, Firkin and Phi Direct and products in continental Europe. TRUP also launched a Trupanion-branded product, Trupanion technology and engaged with strategic automation partners in Germany and Switzerland.

A solid capital position, aided by operational strength, supports investment in new product development and international expansion. Trupanion expects these investments to extend its moat and expand the addressable market in the long run.

TRUP projects revenues in the range of $1.417-$1.434 billion in 2025, up 10.9% year over year at midpoint. Subscription revenues are projected between $983 million and $992 million, up 15.3% year over year at the midpoint. Total adjusted operating income is expected in the range of $141-$151 million, up 27.5% year over year at the midpoint.

Over the long term, TRUP remains focused on growing adjusted operating income and deploying increasing amounts at high internal rates of return. 

However, TRUP’s trailing 12-month ROE of 3.3% is lower when compared with the industry average of 15%, reflecting TRUP’s inefficiency in using shareholders' funds. Also, the return on invested capital in the trailing 12 months was 5.4%, comparing unfavorably with the industry average of 7.3%, reflecting the insurer’s inefficiency in utilizing funds to generate income.

Some Key Industry Players

Other players from the Accident and Health insurance industry include Aflac Incorporated AFL, Reinsurance Group of America RGA and Globe Life, Inc. GL.

Aflac’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 6.57%.

Aflac’s top line benefits from strategic growth investments, robust persistency rates and enhanced productivity. Aflac introduces new products and upgrades existing ones to address the changing needs of its customers, as well as integrates digital solutions into its offerings to align with the ongoing trend of digitization. This, in turn, should support strong profit margins. The Argus buyout will provide it with a platform to build the company’s network of dental and vision products and further strengthen its U.S. segment.

RGA’s earnings surpassed estimates in two of the last four quarters, met one and missed one, the average surprise being 1.3%.

RGA benefits from a mix of organic initiatives and strategic transactions, supported by its international presence. Its individual mortality business provides a steady earnings base, while product and market expansion drive growth. Diversified investments reduce risks and strong recent investment income adds further support. Ongoing improvements in products, underwriting, and innovation remain key growth drivers.

Globe Life’s earnings surpassed estimates in three of the last four quarters and missed in one, the average surprise being 2.77%.

Globe Life has been witnessing a positive trend in revenues, driven by premium growth in its Life Insurance and Health Insurance segments and net investment income. The strong performance of the American Income and Liberty National divisions should drive the top line in the future. Liberty National is likely to continue to benefit from improved productivity and agent count. GL’s expansion initiatives to capture heavily populated and less penetrated areas should drive growth in the future. Net life sales, as well as net health sales, are expected to grow in the mid-teens for Liberty National.

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

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