4 Multiline Insurers to Buy Amid Inflation, Low Interest Rate
Product diversification has been helping Zacks Multiline Insurance industry players lower concentration risk, ensure uninterrupted revenue generation and improve retention ratio. Better pricing, prudent underwriting, increased exposure and faster economic recovery should benefit Enact Holdings ACT, CNO Financial Group CNO, SiriusPoint SPNT and Slide Insurance Holdings SLDE. Accelerated digitalization will help in the smooth functioning of the industry. The increasing acceptance of embedded insurance is also expected to drive the industry. Per a report in Financial Services, premiums from embedded insurance are projected to exceed $722 billion globally by 2030.
The solid capital level of multiline insurers will fuel merger and acquisition (M&A) activities. The Fed has been lowering interest rates and has hinted at the possibility of more throughout the year. Though insurers are direct beneficiaries of an improved rate environment and rate cuts are headwinds, investment income is expected to remain strong, given insurers’ diverse investment portfolio as well as continued growth of private market investments. Also, an investment portfolio skewed toward fixed-income maturities provides some upside. Continued inflation also acts as a drag, making repairs, medical care, and replacement costs more expensive. Insurers’ focus on personalizing offerings to enhance customer experience and leveraging digitalization is the key. Given moderating pricing and increased competition, pricing competition will likely improve, according to an Insurance Business report.
About the Industry
The Zacks Multiline Insurance industry comprises companies that provide single insurance coverage, bundling automobile, homeowner, long-term care, and life and health insurance to individuals and businesses. The insured pays a single premium and is covered for many things through a single contract. These companies cover commercial and personal properties, automobiles, marine, livestock, aviation, personal accident, life, including permanent and term insurance, supplemental accident and health insurance, workers’ compensation, annuity products, private mortgage insurance, et al. The players also provide risk management services. Since the companies offer single insurance coverage for multiple products, customer retention improves. The insured stands to benefit from lower premium payments compared to paying individual premiums for insuring varied products.
3 Trends Shaping the Future of the Multiline Insurance Industry
Diversified portfolio lowers concentration risk: Given the nature of the business, multiline insurers’ product and service portfolios are diversified. This lowers concentration risk. Increased awareness, driving higher demand for protection products, should benefit sales and premiums of life insurance operations. An increase in exposure, with customized products and services, should support premium growth. However, moderating pricing keeps us cautious. Per Deloitte Insights, the transition to green energy and related insurance products, as well as exposure to intangible assets, offers growth opportunities. The increased adoption of artificial intelligence could increase potential cyber threats, thus fueling demand for cyber insurance. Pet insurance is also on the rise. While the life insurance business could be hurt by a low-interest-rate environment, prudent underwriting in the non-life insurance business will limit the downside. Yet, unpredictable catastrophes could weigh on the underwriting profitability of non-life insurers.
Merger and acquisitions: Consolidation in the multi-line insurance industry is expected to continue as players look to diversify their operations into new business lines and geographies. Buying businesses along the same lines is driven by the players’ need to gain a fair market share and grow in their niche areas. Consolidations that slowed down earlier due to inflation are expected to rise in 2026, driven by a higher number of technology-driven deals, per a report from Willis Towers Watson’s Quarterly Deal Performance Monitor. Insurance technology companies are expected to top the list, per media reports. The industry is undergoing accelerated digitalization.
Increased adoption of technology: Digitalization has increased by leaps and bounds. The industry is witnessing greater use of technology like blockchain, AI, advanced analytics, telematics, cloud computing and robotic process automation to expedite business operations and save costs. Many life insurers have started selling policies online that appeal to the tech-savvy population. At the same time, the use of real-time data is making premium calculation easier and reducing risk. Insurers remain focused on ramping up data and analytics capabilities as well as realizing the benefit of the technological infrastructure, per Deloitte Insights. Per a Deloitte FSI Predictions article, insurers have the capacity to generate nearly $4.7 billion in annual global premiums from AI-related insurance, translating to a compound annual growth rate of around 80%.
Zacks Industry Rank Indicates Bleak Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak prospects in the near term. The Zacks Multiline Insurance industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #144, which places it in the bottom 41% of 244 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is the result of a negative earnings outlook for the constituent companies in aggregate. The bleak outlook reflects that the industry’s earnings estimates have been revised 12.6% downward by analysts for the current year.
Before we present a few multiline insurance stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry vs. Sector and S&P 500
The Multiline Insurance industry has underperformed the sector and the Zacks S&P 500 composite in a year. The stocks in this industry have collectively lost 4.9% year to date compared with the Finance sector’s decrease of 0.3% and the Zacks S&P 500 composite’s rise of 3.2% in the same time frame.
Current Valuation
On the basis of its trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 2.47X compared with the S&P 500’s 8.3X and the sector’s 4.31X.
Over the past five years, the industry has traded as high as 2.89X, as low as 1.34X and at the median of 2.45X.
4 Multiline Insurance Stocks to Add
We are presenting two Zacks Rank #1 (Strong Buy) stocks and two Zacks Rank #2 (Buy) stocks from the Multiline Insurance industry.
You can see the complete list of today’s Zacks #1 Rank stocks here.
SiriusPoint: Headquartered in Pembroke, Bermuda, SiriusPoint is a specialty underwriter providing solutions to clients and brokers around the world. Its diverse and low-volatility portfolio, strong balance sheet with robust risk management, dynamic multi-channel global access and diversified business lines that are less correlated to P&C pricing cycles, such as Accident & Health and Surety, well-position the insurer for long-term growth. SiriusPoint sports a Zacks Rank #1.
The Zacks Consensus Estimate for SPNT’s 2026 earnings indicates no change year over year, while that for 2027 earnings indicates a year-over-year increase of 7.2%. The consensus estimate for 2026 earnings has moved 2 cents north in the past seven days, but that for 2027 witnessed no movement in the same time frame.
Slide Insurance Holding: Tampa, FL-based Slide is a technology-enabled insurance company that makes it easy for homeowners to choose the right coverage for their unique needs and budgets. This coastal P&C insurer is targeting underserved, high-risk markets where incumbents are retreating. Its data-driven underwriting, direct-to-consumer model, and policy acquisitions enable rapid scale and strong profitability metrics, including low combined ratios and high margins. Slide sports a Zacks Rank #1.
The Zacks Consensus Estimate for SLDE’s 2026 earnings indicates a year-over-year decrease of 3% but that for 2027 earnings indicates a year-over-year increase of 8.1%. The consensus estimate for 2026 earnings has witnessed no movement in the past 30 days.
Enact Holdings: Raleigh, NC-based Enact, through its subsidiaries, is a leading U.S. private mortgage insurance provider, offering borrower-centric products. The insurer is poised to grow given a solid insurance in-force (driven by strong new insurance written and strong persistency), lower claim rate and solid PMIERS sufficiency. Enact focuses on maintaining a strong position in the MI market through its prudent underwriting standards, innovations to drive efficiency and disciplined growth in attractive adjacent markets. It carries a Zacks Rank #2.
The Zacks Consensus Estimate for ACT’s 2026 and 2027 earnings indicates a year-over-year increase of 8% and 5%, respectively. The expected long-term earnings growth rate is pegged at 8.6%. The consensus estimate for 2026 and 2027 earnings witnessed a 1.2% and 1% upward movement, respectively, in the past seven days.
CNO Financial Group: Headquartered in Carmel, IN, this Zacks Rank #2 company is a top-tier holding company for a group of insurance companies operating throughout the United States. CNO Financial is well-positioned to sustain growth, supported by solid collected premiums from its life and health insurance offerings, increased new annualized premiums and higher fee-based income. Positive industry trends, pricing adjustments and ongoing investments in technology are also contributing to the company’s momentum.
The Zacks Consensus Estimate for CNO’s 2026 and 2027 earnings indicates a year-over-year increase of 6.7% and 9.6%, respectively. The consensus estimate for 2026 and 2027 earnings witnessed no movement in the past seven days.
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Enact Holdings, Inc. (ACT) : Free Stock Analysis Report
CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
SiriusPoint Ltd. (SPNT) : Free Stock Analysis Report
Slide Insurance Holdings, Inc. (SLDE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).