We recently compiled a list of the 10 Best Health Insurance Stocks to Buy. In this article, we are going to take a look at where Globe Life Inc. (NYSE:GL) stands against the other health insurance stocks.
Health insurance remains a contentious issue in the United States, where many people struggle to afford basic medical care. Although widely seen as essential, it remains inaccessible to many Americans. Despite the availability of public and private health insurance options, individuals often find themselves between qualifying for federal assistance and affording private insurance, leaving many without coverage. On that front, the Kaiser Family Foundation reports that 64.2% of uninsured non-elderly adults (ages 18 to 64) cite high costs as the primary reason for not having health insurance.
Conversely, private insurance, primarily provided through employers, remains the most common form of coverage in the U.S., with around 60% of Americans insured this way—roughly three times the number covered by Medicaid. The number of Americans with private health insurance began gradually increasing in 2013 after a sharp decline in the late 1990s and early 2000s, with coverage averaging around 61% of the population from 2016 to 2023. This rise has boosted revenues for private insurers in recent years.
As of 2023, the U.S. health insurance exchanges, established under the Affordable Care Act (ACA) in 2014, are marking their tenth year in operation. Over the past decade, the individual market has seen notable fluctuations in insurer participation, pricing, and plan options. With a recent surge in exchange enrollment, commercial insurers that previously avoided these marketplaces may need to reassess, as exchanges have become a vital part of health coverage. That said, this unprecedented growth may be temporary. The return of the subsidy cliff—if enhanced subsidies are not renewed in 2025—could reverse some of the progress. The 2024 election results may also influence the future of ACA coverage and subsidies, bringing potential changes under scrutiny.
Global consulting firm McKinsey reports that health insurers could gain significant advantages by fully integrating AI and automation across their business processes. The firm estimates that for every $10 billion in revenue, insurers could save $150 million to $300 million in administrative costs and $380 million to $970 million in medical expenses. Additionally, these technologies could generate an extra $260 million to $1.24 billion in revenue.
The global health insurance industry is poised for significant growth, with projections from Straits Research forecasting a Compound Annual Growth Rate (CAGR) of 9.8% from 2024 to 2032. By 2032, the market is expected to reach a value of $176.04 billion.
Our Methodology
To create our list of top health insurance stocks to buy, we first compiled an initial list of 20 health insurance stocks by sifting through ETFs, stock screeners, and online rankings. We then used Insider Monkey’s Q2 2024 database to identify the 10 stocks most widely held by hedge funds. The list is sorted in ascending order of the hedge fund sentiment for each stock.
At Insider Monkey, we are obsessed with the stocks that hedge funds 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A doctor and patient discussing an insurance policy with an insurance underwriter.
Globe Life Inc. (NYSE:GL)
Number of Hedge Fund Holders: 33
Globe Life Inc. (NYSE:GL) offers a wide range of products and services across various segments, including life insurance, supplemental health insurance, annuities, and investments. The company targets the middle-income market through multiple distribution channels, including direct-to-consumer platforms and agency networks.
In its second-quarter 2024 earnings report, Globe Life Inc. (NYSE:GL) posted a 20% increase in net income, totaling $258 million, surpassing both analysts’ estimates and consensus expectations. This strong performance was driven by growth in premiums, higher underwriting and investment income, and a reduction in shares due to buybacks. Following the results, CFRA upgraded Globe Life’s shares from Sell to Hold and raised the price target to $92 from $68, while Piper Sandler maintained an Overweight rating and adjusted its price target to $106 from $105.
Although Globe Life Inc. (NYSE:GL) faces financial misconduct allegations, the company is cooperating with investigations from the SEC and DOJ. Additionally, it is implementing capital management strategies, aiming for a $1.3 billion authorization by the end of 2025.
In the first quarter of 2024, 33 hedge funds held positions in Globe Life Inc. (NYSE:GL), with investments totaling $492.2 million.
Overall GL ranks 10th on our list of the best health insurance stocks to buy. While we recognize the potential of GL as an investment, we believe certain deeply undervalued AI stocks offer greater prospects for higher returns in a shorter period. If you’re seeking an AI stock with even more promise than GL and trading at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
