1 Insurance Stock to Target This Week and 2 We Find Risky

Insurance firms play a critical role in the financial system, offering everything from property coverage to life insurance and specialized risk solutions. But concerns about claims severity and tightening regulations have tempered enthusiasm, limiting the industry’s gains to 1.3% over the past six months. This return lagged the S&P 500’s 10.4% climb.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here is one resilient insurance stock at the top of our wish list and two we’re steering clear of.

Two Insurance Stocks to Sell:

Corebridge Financial (CRBG)

Market Cap: $14.67 billion

Spun off from insurance giant AIG in 2022 to focus on the growing retirement market, Corebridge Financial (NYSE:CRBG) provides retirement solutions, annuities, life insurance, and institutional risk management products in the United States.

Why Are We Cautious About CRBG?

1. 15.4% annual declines in net premiums earned for the past two years indicates policy sales struggled this cycle
2. Efficiency has decreased over the last four years as its pre-tax profit margin fell by 22.4 percentage points
3. High debt-to-equity ratio of 1.1× shows the firm carries too much debt relative to shareholder equity, increasing bankruptcy risk

Corebridge Financial is trading at $28.19 per share, or 1x forward P/B. If you’re considering CRBG for your portfolio, see our FREE research report to learn more.

MGIC Investment (MTG)

Market Cap: $6.33 billion

Founded in 1957 when the modern mortgage insurance industry was in its infancy, MGIC Investment (NYSE:MTG) provides private mortgage insurance that protects lenders when homebuyers default on their loans, enabling borrowers to purchase homes with smaller down payments.

Why Does MTG Give Us Pause?

1. Insurance offerings face significant market challenges this cycle as net premiums earned contracted by 1.1% annually over the last five years
2. Anticipated sales growth of 2.1% for the next year implies demand will be shaky
3. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 11.7% annually

MGIC Investment’s stock price of $28.48 implies a valuation ratio of 1.2x forward P/B. Read our free research report to see why you should think twice about including MTG in your portfolio.

One Insurance Stock to Buy:

Erie Indemnity (ERIE)

Market Cap: $15.5 billion

Operating under a unique business model dating back to 1925, Erie Indemnity (NASDAQ:ERIE) serves as the attorney-in-fact for Erie Insurance Exchange, managing policy issuance, claims handling, and investment services for this reciprocal insurer.

Why Are We Bullish on ERIE?

1. Impressive 13.2% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Annual book value per share growth of 13.1% over the last five years was superb and indicates its capital strength increased during this cycle
3. ROE punches in at 27.2%, illustrating management’s expertise in identifying profitable investments

At $296.26 per share, Erie Indemnity trades at 21.4x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .

High-Quality Stocks for All Market Conditions

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