We recently published a list of the 10 Best Performing Insurance Stocks to Buy Now. In this article, we are going to take a look at where Arthur J. Gallagher & Co. (NYSE:AJG) stands against the other Insurance stocks.
The Size of Insurance Market in the U.S.
The United States has the largest insurance market in the world. The combined value of America’s insurance market is around $1.7 trillion, as of 2025. The United States has some of the largest insurance companies by assets that influence the global insurance markets.
Life and health insurance remain one of the largest segments in the industry. According to a Fortune Business Insights report, the global health insurance market was valued at around $2.14 trillion in 2024. The market is expected to grow to $4.45 trillion in 2032 from an estimated $2.32 trillion in 2025, growing at a CAGR of 9.7%. North America dominated the health insurance market, with a market share of 62.15% in 2024.
According to a report by Deloitte, the property and casualty (P&C) insurance sector in the U.S. generated $9.3 billion in underwriting gain during the first quarter of 2024, a significant increase from an $8.5 billion loss in the first quarter of 2023. The industry also boosted its combined ratio to 94.2%, driven by increases in rates in the personal lines sector outweighing the cost of claims.
Losses from Natural Catastrophes
Insurers in the U.S. are cautious of the commercial lines segment as they expect to address growing loss trends across employment practices liability insurance. Social inflation is another concerning factor for insurers not only in the U.S., but for the rest of the world as well. According to WTW’s Natural Catastrophe Review, the global insured losses exceeded $140 billion in 2024, marking the fifth consecutive year insured damages surpassed $100 billion. The total economic damages were around $350 billion, reflecting the grave impact of climate-related risks.
Lately, the U.S. property insurance industry has been resetting its business models to cope with the losses incurred by the California wildfires. A new report from the UCLA Anderson Forecast indicates that wildfires in L.A. County may have caused total losses ranging between $95 billion and $164 billion, with insured losses estimated at $75 billion.
“Insurance companies have been very clear-eyed about climate change for a long time and the effect that has on their balance sheets,” Wharton professor of real estate and finance Benjamin Keys said on a radio show that airs on SiriusXM. Keys added, “And that will lead to higher premiums in risky areas. That’s what my research has borne out over these last few years. Insurers have sharply increased the ways in which they price disaster risk.”
Keys sees the insurance premiums to increase in the areas vulnerable to climate and expects them to be capitalized into house prices. He further added “But regardless, the position that homeowners will be in is one of substantially higher premiums.”
With that, let’s take a look at the insurance stock.
An experienced insurance agent explaining the benefits of an insurance product to a customer.
Our Methodology
We used Finviz to find companies in the insurance industry with a market capitalization of more than $5 billion. We selected the companies with returns of over 15% in the last 1 year, as of January 26. We have ranked the best performing insurance stocks to buy based on the number of hedge fund holders, as of Q4 2024.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Arthur J. Gallagher & Co. (NYSE:AJG)
1-Year Returns: 36.38%
No. of Hedge Fund Holders: 77
Arthur J. Gallagher & Co. (NYSE:AJG) is a global insurance brokerage, risk management and consulting services company. The insurance company operates through three segments, including brokerage, risk management, and corporate.
Arthur J. Gallagher & Co. is expanding its network in Brazil with the latest acquisition of Case Group. Case is an employee and health benefits brokerage and consulting firm serving clients throughout Brazil. This will add to the company’s revenue stream and diversify its product portfolio.
AJG posted strong quarterly results in Q4 2024, with adjusted EPS of $2.51 exceeding estimates of $2.06 per share by 22.3%. Revenue was $2.69 billion for the quarter, up by 12% year-over-year.
Arthur J. Gallagher & Co. (NYSE:AJG) continues to improve its business through expansion. During Q4 2024, the company completed 20 new tuck-in mergers, representing around $200 million of estimated annualized revenue. AJG has signed the agreement to acquire AssuredPartners, which is expected to close in the first quarter of 2025. The acquisition of AssuredPartners is expected to expand AJG’s commercial market focus and enhance its M&A reach, bringing more revenue opportunities.
Overall, AJG ranks 3rd on our list of best performing Insurance stocks to buy right now. While we acknowledge the potential of AJG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AJG but that trades 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.