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.
8. Chubb Limited (NYSE:CB)
No. of Hedge Fund Holders: 53
Chubb Limited (NYSE:CB) is a Swiss multinational insurance company that serves a range of insurance segments. It offers services in property and casualty (P&C), life insurance, and reinsurance. The company has a diverse clientele, including individuals, SMEs, and multinational corporations. Chubb is serving in more than 54 countries. The company has demonstrated exceptional underwriting expertise for more than 20 years and continues to do so.
Chubb Limited (NYSE:CB) holds an investment portfolio valued at around $150 billion. The company continues to capitalize on improved yields in fixed-income assets. In 2024, the company achieved $5.9 billion in net investment income. This marks a solid 20% growth from a year ago.
Vikram Gandhi from HSBC raised CB’s rating from Hold to Buy on March 5, increasing the price target from $298 to $323. Gandhi is optimistic about the company’s strategic expansion in reinsurance along with its efforts to improve certain sectors of its North American commercial insurance portfolio.
The London Company Large Cap Strategy stated the following regarding Chubb Limited (NYSE:CB) in its Q3 2024 investor letter:
“Chubb Limited (NYSE:CB) – CB engages in the provision of commercial and personal property and casualty insurance, personal accident and health (A&H), reinsurance, and life insurance. While the company is headquartered outside the U.S., roughly 2/3 of its profits are generated in the U.S. with Asian markets representing another 20% of earnings. CB has a portfolio of top-performing, multibillion-dollar businesses that have substantial scale and yet potential for growth. CB has a culture of superior underwriting discipline, and management has a strong track record of expense control. CB also has a well-balanced mix of business by customer and product, with extensive distribution channels. We are attracted to CB’s globally diversified business model, superior underwriting and expense management, consistent and best-in-class profitability, upside potential from growth in Asia, and the potential to benefit from higher interest rates in its investment portfolio.”
7. MetLife, Inc. (NYSE:MET)
No. of Hedge Fund Holders: 54
MetLife, Inc. (NYSE:MET) is a global financial services company that offers insurance, annuities, employee benefits, and asset management services. The company operates in more than 60 countries, serving individuals and institutional clients. The company operates through Group Benefits, Retirement, and Income Solutions segments.
MetLife, Inc. (NYSE:MET) is expanding its operations through its newly announced five-year growth strategy, New Frontier. Through this growth strategy, MetLife is focused on expansion in high-growth international markets. The company is leveraging its strong position in Latin America and Asia. On March 19, the company announced the launch of its latest business unit named MetLife Xcelerator in Latin America. Xcelerator expands the company’s embedded insurance platform, further diversifying its services in the region. Since its launch in November 2023, the platform has gained nearly 4.5 million active customers and gathered around $200 million in premiums and fees.
Through its New Frontier strategy, MetLife expects to achieve double-digit growth in adjusted EPS and a 15-17% growth in adjusted ROE. The life insurer is aiming to reduce its expenses and turn over $25 billion in free cash flow.
6. Aon plc (NYSE:AON)
No. of Hedge Fund Holders: 59
Aon plc (NYSE:AON) is a London-based professional services firm. It specializes in risk management, human capital consulting, and insurance brokerage. The company operates in more than 120 countries. Its services include Commercial Risk Solutions, Health Solutions, Reinsurance Solutions, and Wealth Solutions.
Aon plc (NYSE:AON) demonstrated strong performance in 2024. The company posted a revenue growth of 17% to $16 billion from a year ago. A 6% revenue growth was driven organically. Aon executed the first year of its 3 by 3 plan, which focuses on Risk Capital and Human Capital, Aon client leadership, and Aon Business Services. The company posted earnings of $15.60 per share, recording a 10% increase in adjusted earnings. In 2024, Aon generated around $2.8 billion in FCF and returned over $1.6 billion to shareholders. This reflects its ability to generate capital and return it to the shareholders.
Diamond Hill Large Cap Concentrated Fund stated the following regarding Aon plc (NYSE:AON) in its Q4 2024 investor letter:
“As valuations have continued rising and the economic cycle has gotten relatively long in the tooth, we’ve thought carefully about where and how we are exposed to more cyclical stocks. As such, we initiated just three new positions in Q4: Berkshire Hathaway, Aon plc (NYSE:AON) and Waste Management.”
5. Marsh & McLennan Companies, Inc. (NYSE:MMC)
No. of Hedge Fund Holders: 69
Marsh & McLennan Companies, Inc. (NYSE:MMC) is a professional services firm that offers insurance brokerage and related services. It provides services in the areas of risk, strategy, and people. MMC’s Risk and Insurance Services segment includes risk management activities, insurance, and reinsurance broking and services.
C. Gregory Peters from Raymond James recently upgraded the price target on MMC shares from $240 to $250, maintaining an Outperform rating. The analyst expects higher organic growth and adjusted operating income margin expansion in 2025 to be key reasons for growth.
Marsh & McLennan Companies, Inc. (NYSE:MMC) is integrating into the market with acquisitions. The acquisition of McGriff Insurance Services in late 2024 adds to MMC’s capabilities across commercial property and casualty, employee benefits, management liability, and personal insurance lines. This acquisition generated $1.3 billion in revenues in 2024 and between $400 to $ 500 million in EBITDA to MMC’s MMA segment. The company is also set to acquire SECOR Asset Management, a global provider of bespoke strategic and portfolio solutions, announced on February 18. This potential acquisition will further diversify Marsh & McLennan’s revenue.
4. The Allstate Corporation (NYSE:ALL)
No. of Hedge Fund Holders: 71
The Allstate Corporation (NYSE:ALL) provides a wide range of insurance services and products, including property and casualty, health, and protection products. Its offerings include auto, home, life, and supplemental insurance. The company also provides analytics solutions, roadside assistance, and consumer protection plans.
The Allstate Corporation (NYSE:ALL) has closed the divestiture of its Employer Voluntary Benefits business. Sold to StanCorp Financial Group, Allstate received nearly $2 billion from the sale of its business unit. This sale has ended in a pre-tax book gain of almost $625 million, while the funds will improve the company’s approach to capital management. It will also support Allstate’s $1.5 billion share repurchase program, which will run through September 2026.
Wall Street analysts expect ALL to post earnings per share of $3.68 for Q1 2025. The revenue estimates are around $16.50 billion, with rate hikes supporting the revenue. Paul Newsome from Piper Sandler recently reiterated an Overweight rating on ALL, maintaining a price target of $248. Newsome expects the company to achieve positive auto policy-in-force (PIF) growth in 2025.
Diamond Hill Large Cap Concentrated Strategy stated the following regarding The Allstate Corporation (NYSE:ALL) in its Q2 2024 investor letter:
“Among our bottom Q2 contributors were Abbott Laboratories, ConocoPhillips, and The Allstate Corporation (NYSE:ALL). Allstate, one of the US’s largest auto and homeowners’ insurance providers has seen the pace of premium price increases decelerate, weighing on investor sentiment around the stock. However, the company’s underlying fundamentals are intact, margin expansion should continue through the year, and the outlook remains constructive.”
3. Arthur J. Gallagher & Co. (NYSE:AJG)
No. of Hedge Fund Holders: 77
Arthur J. Gallagher & Co. (NYSE:AJG) is a leading global insurance brokerage and risk management firm. It offers brokerage and consulting services to entities of all types, including commercial, public sector organizations, nonprofits, insurance companies, insurance capital providers, and others. AJG has grown into one of the largest insurance providers globally, serving in more than 130 countries.
Recently, Truist analyst Mark Huges upgraded the price target on AJG shares from $290 to $310 per share, maintaining a Hold rating. The analyst sees higher peer valuations in AJG. However, Huges has cut the company’s 2025 earnings estimate to $10.65, which is still slightly higher than 2024’s actual earnings of $10.09 per share. Similarly, Keefe, Bruyette & Woods analyst Meyer Shields increased the price target of AJG from $308 to $314, keeping a Market Perform rating on the stock.
Andvari Associates stated the following regarding Arthur J. Gallagher & Co. (NYSE:AJG) in its Q3 2024 investor letter:
“Arthur J. Gallagher & Co. (NYSE:AJG) and Rollins are two other serial acquirers in Andvari’s client portfolios. Both are some of the largest and best businesses in their respective industries. AJG is a leading property and casualty insurance and reinsurance broker. Rollins is home to many of the top brands in the pest service industry in North America.”
2. The Progressive Corporation (NYSE:PGR)
No. of Hedge Fund Holders: 100
The Progressive Corporation (NYSE:PGR) is an insurance holding company that offers different insurance products. It operates through various subsidiaries and affiliates, serving in three main segments, including Personal Lines, Commercial Lines, and Property.
On March 20, Meyer Shields from Keefe, Bruyette & Woods increased the price target for PGR from $294 to $300 per share, reiterating an Outperform rating on the shares. The analyst says that PGR’s earnings outperformance compared to their estimates for February led to an increased price outlook. Shields has also raised EPS estimates for 2025 and 2026 to $15.60 and $14.40, up from previous estimates of $15.55 and $14.35. The upgrade in earnings estimate for 2025 is mainly attributed to better-than-expected reserve releases.
1. Berkshire Hathaway Inc. (NYSE:BRK-B)
No. of Hedge Fund Holders: 131
Berkshire Hathaway Inc. (NYSE:BRK-B) is involved in various business activities, including insurance and reinsurance, utilities and energy, manufacturing, and others. The company allocates the money it makes from its insurance and other operations to its portfolio of stock holdings and securities across multiple industries.
Berkshire Hathaway Inc. (NYSE:BRK-B) ended 2024 with a remarkable $334 billion in cash, while the insurance business drove the last quarter’s earnings. During Q4 2024, the company’s operating profit soared to $14.53 billion, up by 71% from a year ago. Insurance underwriting profit soared by a whopping 302% year-over-year to $3.41 billion. Berkshire’s insurance investment income reached $4.09 billion, a rise of 50% year-over-year. On top of that, Warren Buffet’s insurance holding firm has an AA credit rating from Standard & Poor’s.
While we acknowledge the potential of BRK-B to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BRK-B but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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