In this article, we will take a look at the 10 Best Insurance Stocks to Buy According to Hedge Funds.
The insurance stocks have done better in 2025 despite the losses from wildfires earlier this year. The industry-leading ETFs, SPDR S&P Insurance ETF and iShares US Insurance ETF, have surged nearly 6% and 8.60% year-to-date, respectively. At the same time, the S&P 500 index, which tracks large-cap stocks, has plunged over 8%.
READ ALSO: 10 Most Undervalued Insurance Stocks to Buy Now
What’s Happening and Potential Outlook for Insurers?
Investors are holding back as the market feels uneasy due to the tariff policies. The Trump Administration has addressed to the market that it plans to reposition the U.S. economy as a leader. The government has imposed heavy tariffs to drive companies to invest in the domestic market. The U.S. Treasury Secretary Scott Bessent acknowledged that these policies may create short-term disruption, even if they turn out to be effective eventually.
Apart from the market-changing conditions in the U.S., there are geopolitical conflicts in Europe and the Middle East. Once again, the economic data is warning of a potential recession, and U.S. consumers are financially quitting.
The changing economic landspace in the U.S. could have significant implications for insurers, leading to potential supply chain changes and shifts in overall profitability. According to the Underwriting Director at Lloyd’s Market Association, Elizabeth Wooliston, the effects of tariffs on insurers will differ as increased uncertainty and market volatility could raise business risks.
“There is no doubt we are living in unpredictable times, and even looking at a 12-month insurance contract could feel as if we are trying to predict a long way ahead,” Wooliston added. She further said, “In the U.S., as the end price of goods is likely to rise, the most obvious and immediate concern for insurers will be managing their ‘value at risk’, with brokers paying close attention to avoid underinsureance for their customers.”
Apart from underwriting for profitability, insurers also rely on investing their capital in various financial instruments. If market uncertainty increases in the long term, it can hurt the overall profitability of insurers.
However, analysts at Keefe, Bruyette & Woods believe that insurers should be able to overcome the tariff challenges. Industry players will potentially have enough time to request rate increases, which state regulators are likely to approve. The analysts expect the tariffs to mainly impact personal insurance, along with auto damage, commercial property, surety, and marine lines. These segments will potentially be hit harder by tariffs due to increased claim costs.
Despite the current market circumstances and losses from wildfire, the insurance industry in the U.S. remains steady. The U.S. has some of the largest insurance companies that drive the overall market. With that said, let’s take a look at the 10 Best Insurance Stocks to Buy According to Hedge Funds.
A retail customer signing the paperwork of a credit insurance plan, with the help of an expert broker.
Our Methodology
We used a Finviz screener to shortlist insurance companies with a market capitalization of more than $1 billion. We then looked for the insurance stocks widely held by hedge funds. Data for the number of hedge fund investors for each stock was taken from Insider Monkey’s database, updated as of Q4 2024. Finally, the 10 best insurance stocks to buy were ranked in ascending order based on the number of hedge funds holding stakes in them.
Why are we interested in the stocks that hedge funds and billionaire investors pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Insurance Stocks to Buy According to Hedge Funds
10. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
No. of Hedge Fund Holders: 48
Willis Towers Watson Public Limited Company (NASDAQ:WTW) is an insurance company that provides commercial insurance, brokerage services, and strategic risk investment solutions. WTW recently announced its AdWrap program, a master-controlled insurance program that offers the production insurance needs of businesses and their contracted vendors. This program supports businesses to have a cost-effective and transparent approach to growing their businesses.
On March 18, UBS analyst Brian Meredith upgraded the rating on WTW from Neutral to Buy, increasing the price target from $344 to $395 per share. The analyst expects WTW to improve its operating and FCF margins, exceeding its peers in the insurance brokerage industry. Meredith expects WTW to sustain an organic revenue growth of almost 5.9% in 2025, compared to a consensus estimate of 5.2%.
Willis Towers Watson Public Limited Company (NASDAQ:WTW) posted mixed results in 2024. The revenue came in at $9.93 billion for the full year of 2024, growing by 5% year-over-year. The sale of TRANZACT is expected to improve growth rates, operating margins, and FCF in 2025. The analysts expect the company to achieve a 1.4% year-over-year increase in EPS in 2025.
9. The Travelers Companies, Inc. (NYSE:TRV)
No. of Hedge Fund Holders: 52
The Travelers Companies, Inc. (NYSE:TRV) provides property casualty insurance for auto, home, and businesses. It is the second-largest writer of U.S. commercial property casualty insurance and the sixth-largest in personal insurance via independent agents.
Meyer Shields from Keefe, Bruyette & Woods recently upgraded the rating on TRV shares from Market Perform to Outperform. The analyst increased the price target from $268 to $275, following strong fourth-quarter results. The company posted a record core income of nearly $2.1 billion in Q4 2024, up by 30% from a year ago. The core income for the full year reached $5 billion, a rise of 64% year-over-year. The earnings per share in 2024 were around $21.58, also growing by 64% compared to 2023.
The Travelers Companies, Inc. (NYSE:TRV) ended the year with record operating cash flows of $9.07 billion, indicating a strong financial position. For 2025, Shields expects the company’s EPS to be around $21.75, a slight downgrade from a previous estimate of $22 per share. The adjustment was made because of losses incurred from California wildfires earlier this year. However, the analyst raised the earnings estimate for 2026 from $24.35 to $24.60 per share.
