We recently published a list of the 10 Best Insurance Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where The Allstate Corporation (NYSE:ALL) stands against the other insurance stocks held by 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 More: 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.
A suburban home with people walking in front, representing the protection provided by the Property & Casualty Insurance.
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 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).
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.”
Overall, ALL ranks 4th among the 10 best insurance stocks to buy now. While we acknowledge the potential of insurance companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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 ALL but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
