1 Insurance Stock with Exciting Potential and 2 We Ignore

Insurance providers use their expertise in risk assessment to help protect assets while offering consumers peace of mind through comprehensive coverage options. Still, investors are uneasy as insurers face challenges from catastrophic events and potential regulatory changes. These doubts have certainly contributed to insurance stocks’ recent underperformance - over the past six months, the industry’s 1.6% gain has fallen behind the S&P 500’s 15.3% rise.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, 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:

Brighthouse Financial (BHF)

Market Cap: $3.75 billion

Spun off from MetLife in 2017 to focus specifically on retail financial products, Brighthouse Financial (NASDAQ:BHF) provides annuity contracts and life insurance products designed to help individuals protect wealth, generate income, and transfer assets.

Why Do We Think BHF Will Underperform?

1. Insurance offerings face significant market challenges this cycle as net premiums earned contracted by 1.4% annually over the last five years
2. Book value per share tumbled by 11.1% annually over the last five years, showing insurance sector trends are working against its favor during this cycle
3. High debt-to-equity ratio of 1.3× shows the firm carries too much debt relative to shareholder equity, increasing bankruptcy risk

At $65.51 per share, Brighthouse Financial trades at 0.8x forward P/B. Check out our free in-depth research report to learn more about why BHF doesn’t pass our bar.

Enact Holdings (ACT)

Market Cap: $5.48 billion

Playing a critical role in helping first-time homebuyers access the housing market, Enact Holdings (NASDAQ:ACT) provides private mortgage insurance that enables lenders to offer home loans with lower down payments while protecting against borrower defaults.

Why Are We Cautious About ACT?

1. Stagnant net premiums earned over the last five years suggest the firm needs alternative growth strategies
2. Costs have risen faster than its revenue over the last two years, causing its combined ratio to worsen by 8.9 percentage points
3. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 4.3% annually

Enact Holdings is trading at $37.84 per share, or 1x forward P/B. To fully understand why you should be careful with ACT, check out our full research report (it’s free for active Edge members).

One Insurance Stock to Buy:

NMI Holdings (NMIH)

Market Cap: $2.88 billion

Founded in the aftermath of the 2008 housing crisis to bring new capacity to the mortgage insurance market, NMI Holdings (NASDAQ:NMIH) provides mortgage insurance that protects lenders against losses when homebuyers default on their mortgage loans.

Why Is NMIH a Good Business?

1. Insurance products connect with policyholders, demonstrated by its above-market 9.2% annual growth in net premiums earned over the last two years
2. Underwriting operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
3. Impressive 16.2% annual book value per share growth over the last five years indicates it’s building equity value this cycle

NMI Holdings’s stock price of $37.41 implies a valuation ratio of 1.1x forward P/B. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .

Stocks We Like Even More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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